The Role of Informal Controls in the Management Control Package : A Case Study of a Hybrid Organization

Abstract: Purpose – This thesis aims to investigate the use and design of informal controls inan organization’s management control package (MCP). Informal controls areoperationalized as the intra-organizational social network.  Design/methodology/approach – An inductive case study is used to investigate ahybrid organization. The thesis uses data from interviews, documents, and a surveyto gather information about the organization’s MCP and intra-organizational socialnetwork.  Findings – It was found that the use of informal controls in the case organizationwas related to the spreading of clans and beliefs. The intra-organizational socialnetwork acts as conduits for clans, while the social network at the individual levelrelates to the spreading of certain beliefs. Furthermore, it was found that informalcontrols play a part in the design of different groups’ MCPs. Specifically, thatcertain groups use informal controls differently depending on whether theycoordinate other groups or directly work with the ongoing operations.  Research limitation/implications – This study has implications for the MCPresearch, as it is the first empirical study to operationalize informal controls associal networks in an MCP. It shed light on the role of informal controls in theMCP. A limitation is that no observational data has been used to analyze theorganizational culture, which may have affected the conclusions. Originality/value – This is the first empirical study that operationalizes informalcontrols as social networks in an MCP. The study also presents the MCPs of 38intra-organizational groups and classifies them according to configurations.