How does Inter-organizational Control Mechanisms Affect Enterprises' Radical Innovation: An Empirical Analysis from the Perspective of “System View” of Management Controls

Abstract

Abstract:

Finding out the factors that influence enterprises' innovation is significantly meaningful in both theory and practice. Based on the systematic view of management control, this paper examines the impact of inter-organizational control mechanisms on enterprises' radical innovation and their contingency conditions by using the survey data of the relationship between Chinese manufacturing enterprises and their suppliers. The empirical results show that both formal control mechanisms (outcome control and behavior control) and informal mechanisms (trust control) have direct positive effects on enterprises' innovation. Outcome control and behavior control have a substituting effect on innovation outcomes; the effect of trust control and behavior control on innovation outcomes exhibit a complementary relationship. Further study shows that environmental uncertainty weakens the relationship between outcome control and innovation outcomes, but strengthens the relationship between behavior control and innovation outcomes. The moderating effect of environmental uncertainty on the relationship between trust control and innovation is not significant. Our study indicates that in the case of higher degree of environmental uncertainty, strengthening the behavior control for the inter-organizational partnership will better drive enterprises' innovation.

Key words: outcome control, behavior control, trust control, environmental uncertainty, radical innovation

Lou Zhukun, Zhang Chuan, Yin Wenwei. How does Inter-organizational Control Mechanisms Affect Enterprises' Radical Innovation: An Empirical Analysis from the Perspective of “System View” of Management Controls[J]. , 2019, 31(2): 71-81.

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