Strategy and structure

About this book

This thesis consists of two separate but related studies of divisional control practices in divisionalized multi-business firms. The first study investigates the factors driving the choice of measures used to evaluate division managers in divisionalized firms. Accounting and information economic theories suggest that the usefulness of a measure of agent performance is a function of the measure's informativeness of the agent's actions and/or efforts. I examine whether patterns in the types of measures used to monitor and control division managers in divisionalized firms are related to the characteristics of the firm which affect the relative informativeness of alternative measure types. I test hypotheses with survey data obtained from 110 medium-size US public companies. ... The second study of this thesis explores the role of ex post evaluation in the overall divisional control process, and its importance relative to other mechanisms used to control divisional activity. In-depth field studies of eight firms, drawn from the larger sample of 110 firms, are used to obtain data.