The Juxtaposition of Social Surveillance Controls with Traditional Organizational Design Components

The Juxtaposition of Social Surveillance Controls with Traditional Organizational Design Components*

SALLY K. WIDENER, Rice University MARGARET B. SHACKELL, Cornell University ELIZABETH A. DEMERS, INSEAD 1. Introduction Theoretical and empirical accounting, economics, and management literatures have long recognized both the importance of, and interdependencies among, the three primary components of organizational architecture: incentive compensation, the delegation of decision rights, and performance measurement (e.g., see Abernethy, Bouwens, and Van Lent 2004).1 As Roberts (2004, 36) states, “The substitution and complementarity relations among choice variables give structure to the problem of organizational design.” Our study directly addresses this notion of complements and substitutes by empirically examining the relations among the relatively contemporary concept of social surveillance controls and the firm’s traditional architectural design choices. Social surveillance controls consist of vertical surveillance mechanisms, which involve monitoring from the top level of the organization, as well as horizontal surveillance controls, such as teams that include peer monitoring. Our study is motivated by the fact that, although surveillance controls are known to play an integral role within organizations (Sewell 1998; Devine, Clayton, Phillips, Dunford, and Melner 1999; Engel, Gordon, and Hayes 2002), their role within the overall design of the firm’s architecture is not well understood.2 We hypothesize that incentives (percentage of annual bonus and stock option compensation), performance measures (output measures), and the allocation of decision rights (delegation

* Accepted by Michel Magnan. The authors appreciate helpful discussions with Mark Bolino, Bob Bozeman, Kevin Bradford, Glen Dowell, Jae Heme, and Dave Regn related to this project. Valuable research assistance was provided by Michael France, Tricia de Groot, Hang Li, Luke Ratke, Garett Skiba, Jessica...