The questions below are based on the following three case studies of systems/services development initiatives. Apply the content of Chapters 13 and 14, plus your own independent research into the concepts, notions, and theories in these two chapters to address these questions.
- How multinational corporations use information technology to manage global operations (.pdf)
- How to structure business transformation projects: The case of Infineon's finance IT roadmap (.pdf)
- Exercising formal control in a large information systems project (.pdf)
- Assess the management, organization, and technology factors that contributed to each organization’s pre- IT-initiative condition.
- What were the key risk factors of each systems initiative? How well did each organization control, or plan to control, these risks? What would you have done additionally or differently to manage these risks?
To coerce or to enable? Exercising formal control in a large information systems project Jakob Heumann1, Martin Wiener2,1, Ulrich Remus3, Magnus Mähring2
1University of Erlangen-Nuremberg, Germany; 2Stockholm School of Economics, Sweden; 3University of Innsbruck, Austria
Correspondence: J Heumann, University of Erlangen-Nuremberg, Chair of Information Systems III, Lange Gasse 20, Nuremberg, 90403, Germany. Tel: +49 911 5302-801; Fax: +49 911 5302-860
Abstract In virtually every information systems (IS) project, control is exercised on multiple hierar- chical project levels. For example, senior managers exercise control over project team leaders, who in turn exercise control over distinct groups of project team members. Most prior studies have exclusively focused on one specific controller-controllee dyad. As a result, there is little understanding of how IS project control is exercised across different hierarchical levels. To close this research gap, we conducted a case study of a large IS project at a major engineering firm. Our study helps enrich the traditional mode-based typology of control with the dimension of control style, that is, the distinction between enabling and coercive control. Our research contributes novel insights to the IS control literature in three ways: (1) we find that the senior management level and the project management level differ in the use of control style but not in the use of control modes, (2) we identify several factors that influence the choice of a particular control style, and (3) we find that senior managers can influence project activities on lower levels by implementing controls that can be readily emulated by project leaders as well as transmitted through hierarchical levels with little distortion. Journal of Information Technology (2015) 30, 337–351. doi:10.1057/jit.2014.11; published online 27 May 2014 Keywords: IS project control; formal control; control style; coercive; enabling; hierarchical control transmission
Information systems (IS) projects involve a wide variety ofinterdependent tasks, requiring individuals with diverseknowledge and skills (Kirsch, 1997, 2004). Completing such projects on time, within budget, and at acceptable quality is not an easy endeavour. Control, broadly defined as any attempt to align individual behaviours with organisational objectives (Kirsch, 1996), is one important managerial tool to master this challenge. Prior research on IS project control has studied a wide range of issues (Wiener et al., 2013), including the antecedents (e.g., Kirsch, 1996, 1997; Kirsch et al., 2002), the effects (e.g., Henderson and Lee, 1992; Nidumolu and Subramani, 2003; Maruping et al., 2009), and the dynamics (e.g., Mähring, 2002; Choudhury and Sabherwal, 2003; Kirsch, 2004) of control choices.
Although providing important insights, these earlier studies widely neglect that most IS projects comprise multi- ple hierarchical levels: (1) senior managers exercise control over (2) project team leaders, who in turn control (3) distinct groups of project team members. Here, existing studies almost exclusively focus on one specific control dyad (e.g., Henderson and Lee, 1992; Kirsch, 1996, 1997; Kirsch et al., 2002, 2010), and those studies that look at multiple dyads seem to ignore the hierarchical position of controllers (Soh et al., 2011). As a consequence of this lack of multi-level analyses, we do not know whether control actions systematically differ across hierarchical project levels. This is an important research gap, since con- troller priorities, knowledge and skills, as well as available
Journal of Information Technology (2015) 30, 337–351 © 2015 JIT Palgrave Macmillan All rights reserved 0268-3962/15 palgrave-journals.com/jit/
information, competing demands, and time constraints may all change from one level to another. Thus, we can suspect some differences in the use of IS project control across hierarchical levels (Ouchi and Maguire, 1975; Ouchi, 1978). Against this backdrop, the study examines the following research question: How is control exercised on different hierarchical levels of an IS project?
As part of our study, we are particularly interested in factors influencing the exercise of control on different hierarchical levels, as well as control transmission patterns across levels. Our study focuses on formal control, that is, outcome and behaviour control (Ouchi, 1979; Eisenhardt, 1985; Kirsch, 1996), for three reasons: First, formal control has been found to be the dominant form of control in organisations in general (Eisenhardt, 1985; Cardinal, 2001), and in IS projects in particular (Henderson and Lee, 1992; Kirsch, 1997). Second, to enhance our ability to detect potential differences in the exercise of formal control across hierarchical levels, we extend the traditional mode-based typology of control by formal control styles, namely, the distinction between coercive and enabling control (Adler and Borys, 1996; Wiener et al., 2013). Third, informal control, with its focus on norms and value- based activity and individual or group self-monitoring (Kirsch, 1996), is not necessarily transmitted through hier- archy the same way formal controls are (Ouchi, 1978).
In the next section, we summarise prior research on formal control and introduce the concepts of enabling and coercive control. We then describe the research methodology, present our results, and discuss our findings. We conclude by account- ing for study limitations and discussing future research opportunities.
Control theory In the context of IS projects, managerial control is defined as ‘attempts to ensure that individuals working on organi- zational projects act according to an agreed-upon strategy to achieve desired objectives’ (Kirsch, 1996: 1). Here, control is often thought to be dyadic in the sense that there is a controller (the person exercising control) and a controllee (the target of control) (Kirsch, 1997, 2004). Prior research distinguishes between formal and informal con- trol. Formal control relies on the application of organisa- tional authority or power to control, whereas informal control is exercised with minimal reliance on organisational authority (Soh et al., 2011; Chua et al., 2012). As already noted above, the focus of this study is on formal control, which is commonly divided into two modes: outcome and behaviour control (Ouchi, 1979; Eisenhardt, 1985; Kirsch, 1996). Because recent findings suggest that the mode-based control typology alone does not sufficiently describe control actions carried out in an IS project (Harris et al., 2009; Cram and Brohman, 2013), our study will also draw on the concepts of coercive and enabling control (Adler and Borys, 1996; Wiener et al., 2013). These concepts have been successfully applied in the accounting and management literature to explain the use of formal control systems (e.g., Ahrens and Chapman, 2004; Chapman and Kihn, 2009; Jorgensen and Messner, 2009), and have recently been suggested as a promising extension of theory on IS project control (Wiener et al., 2013).
Formal control modes With outcome control, the controller focuses on the (interim and final) outputs regardless of the process by which these outputs are achieved (Kirsch, 1996). Corresponding control mechanisms specify (e.g., project milestones) or measure (e.g., software testing) desired outputs. The controller then rewards or sanctions the controllee based on how well she or he meets the prespecified outputs (Kirsch, 1997).
When behaviour control is exercised, the controller pre- scribes specific work tasks, procedures and rules, monitors their implementation, and rewards the controllee based on the extent to which she or he adheres to these prescriptions (Kirsch, 1996). Corresponding mechanisms specify beha- viours and processes (e.g., software development methodol- ogy) or enable the controller to evaluate the controllee’s behaviour (Kirsch, 1997), by either direct observation or reporting systems (Eisenhardt, 1985). Thus, outcome control is concerned with what the controllee should accomplish, whereas behaviour control is concerned with how the con- trollee should achieve desired outcomes (Henderson and Lee, 1992, Kirsch et al., 2002).
Influencing factors Ouchi’s (1979) seminal framework of control antecedents predicts conditions under which a controller will employ a certain control mode to exercise control over a controllee. According to Ouchi’s framework, the choice of outcome or behaviour control is a function of outcome measurability and knowledge of the transformation process. High levels of outcome measurability trigger the use of outcome controls. When a controller’s knowledge of the transformation process (i.e., the ability to understand means-ends relationships) is high, she or he can use behaviour controls. Eisenhardt (1985) supplemented Ouchi’s model by arguing that high behaviour observability (i.e., the ability to gather information about controllee behaviour) also increases controller propensity to use of behaviour controls (see Table 1).
Formal control styles Important aspects regarding the use of formal control refer to the degree and type of formalisation. While prior studies on IS project control have focused on the degree of formalisation (e.g., Kirsch and Cummings, 1996; Nidumolu and Subramani, 2003), so far no empirical study has considered the type of formalisation (Adler and Borys, 1996) to explain how formal controls are exercised (Wiener et al., 2013).
Adler and Borys (1996) differentiate between enabling and coercive types of formalisation, referred to as (formal) control styles in the following (Wiener et al., 2013). Coercive control is ‘designed to force reluctant compliance and to extract recalcitrant effort’ (Adler and Borys, 1996: 69), and therefore represents a rather top-down control style (Adler, 1999; Ahrens and Chapman, 2004). In contrast, enabling control is ‘designed to enable employees to deal more effectively with [the work process’] inevitable contingencies’ (Adler and Borys, 1996: 69). Specifically, enabling control seeks to facilitate successful interaction between individuals and is therefore viewed as a more collaborative control style (Adler, 1999).
Whether formal controls have an enabling or coercive influence on controllees thus depends on how they are designed and implemented. There are four generic design
Coercive or enabling IS project control? J Heumann et al 338
principles that distinguish an enabling control style from a coercive control style (Adler and Borys, 1996; Ahrens and Chapman, 2004):
(1) Repair as design principle anticipates breakdowns of control processes and provides capabilities for fixing them. In coercive control, any deviation from controller prescriptions is seen as suspect. In contrast, enabling control facilitates responses and appreciates controllee feedback to real work contingencies.
(2) Internal transparency is concerned with the visibility of local processes. Controls designed in a coercive logic are formulated as lists of flat assertions of controllee duties. In contrast, enabling controls provide the controllee with an understanding of the rationale of the applied controls as well as feedback on performance.
(3) Global transparency is concerned with the visibility of the overall context in which controllees perform their specific tasks. In coercive control, the controller considers global transparency as a risk to be minimised. In enabling control, the controller provides the controllee with a wide range of contextual information that helps the controllee interact creatively with the broader project organisation and its environment.
(4) Flexibility refers to the controllees’ discretion over the use of control mechanisms. In the coercive logic, controls are designed to minimise reliance on control- lees’ skills and discretion. Conversely, enabling con- trol is designed to support controllees by providing them with choices and options in completing their tasks.
Influencing factors Adler and Borys (1996) discuss a number of factors that may influence the choice of a particular control style. First, asymmetries of power allow individuals in higher hierarchical positions to shape the extent and type of formal control exercised. Such asymmetries also allow controllers to more easily make controllees responsible for negative outcomes, while, at the same time, controllees can less easily claim credit for positive outcomes. Thus, Adler and Borys (1996) expect a greater reliance on coercive control when asymmetries in
power are high. Second, performance pressuresmay play a role in the selection of control styles. However, Adler and Borys are indecisive as to whether such pressures facilitate a coercive or an enabling control style. On the one hand, they argue that in the presence of performance pressures an enabling control style is used to ensure adaptiveness. On the other hand, they acknowledge that performance pressures may legitimise power asymmetries and thus authorise a more coercive control orientation. Third, legitimacy concerns may encourage controllers to use an enabling control style because a coercive style may not be appropriate in the eyes of the controllee, invoke conflict, and eventually trigger negative consequences for the organisation. Finally, in settings where task complexity is high, individuals are increasingly faced with learning rather than doing tasks. The latter demands higher skill levels and discretion from them, and thus control that enables rather than coerces.
Extended control typology: Combining formal control modes and styles In this study, we integrate the notion of control styles (Adler and Borys, 1996; Wiener et al., 2013) into the traditional mode-based typology (e.g., Ouchi, 1979; Eisenhardt, 1985; Kirsch, 1996, 1997) used by most prior research on IS project control. Distinguishing between control styles within the two formal control modes potentially offers a more nuanced understanding of how formal control over IS projects is exercised in practice (Wiener et al., 2013). For example, the controller may need to decide on a specific software implementation procedure. Here, the controller may either specify in detail a specific sequence of steps to be followed and then force the controllee to adhere to this sequence (coercive behaviour control); or the controller may first provide the controllee with relevant context information, discuss options of leveraging existing best practices the controllee is already using, and then decide on the final implementation procedure (enabling behaviour control). Similarly, the controller may need to adjust the delivery date of a software module due to changing user requirements. Here, again, the controller may either request the controllee to deliver the software based on the new schedule (coercive outcome control); or the controller may
Table 1 Formal control modes and mechanisms
Formal control modes
Outcome control Behaviour control
Key characteristics ● Specify and evaluate outputs (both interim and final)
● Reward (or sanction) the controllee based on the quality and timing of delivered outputs
● Specify and evaluate procedures, rules, and processes ● Reward (or sanction) the controllee based on her or his
adherence to the specified behaviours
Influencing factors ● Measurability of controllee outputs ● Controller’s knowledge of the transformation process ● Observability of controllee behaviour
Examples of control mechanisms
● Project plan ● Defined project milestones ● Weekly status meetings ● Expected level of performance
● Work assignment ● Assignment of roles and responsibilities ● Direct monitoring ● Software development methodology (e.g., agile vs
Coercive or enabling IS project control? J Heumann et al 339
provide the controllee with information as to why delivery dates changed, ask for controllee feedback on whether the new schedule is realistic, and then adjust the schedule if necessary (enabling outcome control). Table 2 shows the extended framework of formal control.
Hierarchy and control Control on different hierarchical levels Virtually every IS project consists of multiple hierarchical levels. However, most prior studies have either focused on the control relationship between the IS manager and the project leader (e.g., Kirsch, 1996, 1997; Kirsch and Cummings, 1996), or the project leader and the project team members (e.g., Henderson and Lee, 1992; Kirsch et al., 2010). Other studies seem to neglect the presence of hierarchical differences among controllers by focusing on one ‘principal controller group’ while conceptualising all other project members as controllees (e.g., Soh et al., 2011; Chua et al., 2012).
Although no single study has so far systematically com- pared how IS project control is exercised across different management levels, there seems to be an implicit assumption in the literature that control actions and portfolios do not differ between levels. However, earlier studies on organisa- tional control suggest that high consistency of managerial control across levels is unlikely (e.g., Franklin, 1975; Ouchi and Maguire, 1975; Ouchi, 1978), and that patterns of leader- ship behaviour strongly differ between hierarchical levels (Katz and Kahn, 1966). One reason for this disconnect between different streams of the literature on control may be that most prior research relies on the traditional classification into modes as the only dimension to analyse control actions in an IS project. However, given the multi-dimensional character of control practices (Snell, 1992; Kirsch, 2004), adding other dimensions, such as the dimension of control style, may be useful in order to uncover differences in how control is exercised across hierarchical levels.
Control transmission through hierarchical levels One major problem in any organisation with multiple levels is that control often gets distorted as it moves through the hierarchy because of the hierarchical distance and the number of nodes that control has to travel before impacting operative behaviour (Ouchi, 1978). Prior research in the context of ‘ordinary’, non-temporary organisations found that outcome control is relatively less susceptible to hier- archical attenuation than behaviour control (Ouchi, 1978). However, these results may not be transferrable to the IS project context as such projects have distinctively different characteristics that change the conditions for control activ- ities. IS projects evolve over a finite lifespan during which a non-repetitive task is completed, and thus are temporary in
nature (Bechky, 2006). In this situation, managers often cannot rely on established corporate control practices. This further intensifies the problem of control transmission (loss) and increases the need for enhancing our under- standing about the mechanisms whereby higher-level man- agers can exert influence on lower levels.
Research methodology We chose to examine a single case to study in depth (1) how formal control is exercised on different hierarchical levels, and (2) what factors influence the exercise of formal control on the respective levels of a large IS project. The approach used in this study can be characterised as ‘soft positivism’ (Kirsch, 2004), and is guided by the processes described in Eisenhardt (1989), Yin (2009), and Miles and Huberman (1994). This means that our study is designed to examine pre-identified constructs as in the positivist view, but also draws from interpretivists and grounded theorists to surface new constructs.
Site description Our research was conducted at a major engineering firm headquartered in Germany. The firm designs, manufactures, and sells industrial technology on a global scale. In 2007, the firm embarked on a strategic product lifecycle management (PLM) project. Previously, each of the six business units (BUs) involved in the project operated its own customised PLM system. The new PLM system was to replace the ageing systems in the BUs as well as to integrate production processes across BUs in an effort to facilitate global collaboration and improve product quality. The estimated project budget was 160 million euros.
The new PLM system was to be rolled out in four major system releases, with each release representing a fully functioning system in its own right. The third system release was considered a major success throughout the entire project organisation. In our study, we focus on this release for two key reasons. First, the third release of the new system represented the largest release, which comple- tely replaced the legacy systems used by 10,000 end users in more than 100 locations in 15 countries and engaged more than 200 persons. Therefore, the third release seemed to be representative of the circumstances and conditions existing in large, complex IS projects (Yin, 2009). Second, we preferred real-time analysis of the third system release to retrospective sensemaking of earlier releases in order to ensure that study participants accurately recalled critical events and reliably reported on their perceptions of control actions. Notably, the first and second system release had already been finished in 2009 and 2011, respectively. Con- sequently, for these releases, the actual events related to control might have been misremembered or misinterpreted
Table 2 Formal control modes and styles
Formal control modes
Formal control styles Enabling Enabling outcome control Enabling behaviour control Coercive Coercive outcome control Coercive behaviour control
Coercive or enabling IS project control? J Heumann et al 340
by the participants. In addition, at the time we did our study, the fourth system release had not yet started. Overall, we believe that our clear focus on the third release of the new PLM system allows for an in-depth, multi-level analysis of control actions without sacrificing the analytic generalisability of our results to other system releases and large-scale IS projects (cf. Lee and Baskerville, 2003; Yin, 2009).
We were granted access to project staff from all hierarchical levels, enabling us to comprehensively study the exercise of formal control. Two senior managers were responsible for controlling 11 team leaders. The senior managers were supported by a project management office, which facilitated meetings, created project management documents, and per- formed other support functions. The team leaders were responsible for controlling their respective team members, who were engaged in a variety of tasks, such as programming, data migration, testing, implementation, and training. The average team size was 18.
We focused on the control relationship between the senior management and the project management level as well as the control relationship between the project management and the project team level. This distinction is in line with Mähring (2002), who differentiates between control over the project (exercised on the senior management level), and control within the project (exercised on the project management level). Figure 1 shows the organisational chart of the studied IS project depicting the various stakeholders and their formal relationships as controllers and controllees.
Data collection Consistent with best practices in case research, we obtained data from multiple sources (Eisenhardt, 1989; Yin, 2009). Figure 2 provides an overview of the data collection process.
Kick-off workshop Before beginning with the main data collection, we conducted a two and a half-hour workshop with the senior managers to learn about the history and context of the project as well as key events and issues. This allowed us to gain a deep under- standing of the project and helped us prepare the interview guide. The senior managers also provided us with archival data, including project progress reports, project management plans, presentation slides, as well as documentation concern- ing the project members and their mandates.
Qualitative interviews The main data collection consisted of 30 semi-structured, qualitative interviews with representatives from all hierarchi- cal levels and functional teams. Before each interview, we reviewed our notes and transcripts of previous interviews and discussed arising issues with the interviewees. We started the interview by asking interviewees about their role in the project, the tasks in which they were involved, and the deliverables for which they were responsible. We continued by asking them about their perceptions of the controls used in the project. To understand how senior management exercised control over project management, we interviewed senior
Senior manager 1
Team leader 1
Senior management level
Senior manager 2
Team leader 2
Team leader 3
Team leader 11
management level (Controllers & controllees)
Project team level
Figure 1 Hierarchical project control relationships
Phase 1: Kick-off workshop
Phase 2: Semi-structured interviews (August –October 2012)
Phase 3: Online survey
(October 2012 –January 2013)
Phase 4: Follow-up workshop
Senior management presentation of project context, history, and future
Detailed presentation of research focus, goals, and procedure
On site face-to-face interviews with both senior managers, 10 team leaders, and 18 team members
Quantitative questionnaire filled in by both senior managers, 5 team leaders, and 32 team members
Presentation and interpretation of key results
Discussion of “lessons learned”
Qualitative phase Qualitative phaseQuantitative phase
• • •
Figure 2 Overview of data collection process
Coercive or enabling IS project control? J Heumann et al 341
managers about the mechanisms used to control team leaders (control exercised), and asked team leaders about their perceptions of the controls exercised by senior managers (control recognised). Similarly, to examine how control was exercised between the project management level and the project team level, we asked team leaders about the mechan- isms used to control their respective team members (control exercised), and interviewed team members about their percep- tions of the controls exercised by their respective team leader (control recognised). The distinction between exercised and recognised control is based on Ouchi’s (1978) distinction between control given and received. By collecting and triangu- lating data from both sides of the control dyad, we increased our ability to make valid and well-substantiated conclusions. Finally, we asked interviewees to describe problems encoun- tered during the project, steps taken to resolve these problems, their personal relationships with colleagues, as well as their perceptions of project performance.
The interview language was German for all interviewees, except for two team members with an Indian background, where the interview language was English. All interviews were conducted in person by two researchers, the first author together with a research assistant. Following the recommended practice of assigning interviewers different roles (Eisenhardt, 1989; Dubé and Paré, 2003), one researcher would use the interview guideline to run the interview, while the other researcher listened, took notes, and asked for clarifications when necessary. All interviews were tape-recorded and tran- scribed. The transcripts were aggregated into a case protocol that comprised more than 260 pages of text and more than 130,000 words. The transcripts were encoded using the software NVivo. Table 3 provides an overview of the interviews.
Quantitative questionnaire In addition to the qualitative data, which was our main source of data, we also collected quantitative data. Next to triangula- tion purposes, these data particularly helped us to make inferences on how formal control modes transmitted through the hierarchical levels of the IS project organisation. To develop the survey instrument (see Table A1 in the appendix), we adapted items from previous control studies (Kirsch et al., 2002; Tiwana and Keil, 2009) to the context of our study. All items were measured on 7-point Likert scales with ‘strongly agree’ and ‘strongly disagree’ anchors. Controllers (senior managers and team leaders) were asked about the extent to which they exercised outcome and behaviour control. Con- trollees (team leaders and team members) were surveyed on their perceptions of the extent to which outcome and behaviour control was used by their controller counterpart.
The two senior managers, five team leaders, and 32 team members from nine teams filled in the questionnaire.
Follow-up workshop The data collection process was complemented by a 2-hour workshop with the senior managers to interpret the findings of the study. This approach allowed us both to validate the study results and to gain additional insight into how formal control was exercised in the project.
Data analysis We approached our qualitative analysis with a deep under- standing of the theoretical domain (‘IS project control’) of our study. We were particularly interested in identifying the composition of individual control portfolios as well as how these portfolios were exercised …
How Multinational Corporations Use Information Technology to Manage Global Operations Jonathan Whitakera, Peter Ekmanb, and Steve Thompsona
aUniversity of Richmond, Richmond, VA, USA; bMälardalen University, Västeräs, Sweden
ABSTRACT Despite a generally acknowledged importance of information technology (IT) in enabling global strategy and a broad understanding of the manner in which IT enhances coordination and reduces cost, few studies have focused precisely on how multinational corporations (MNCs) use IT to facilitate globaliza- tion. To address this gap in the literature, we conduct a case study across four large MNCs, and use primary data to develop predictive propositions on the characteristics of products, processes, and customers that impact the ways in which MNCs use IT to manage their global operations.
KEYWORDS Multinational; MNC; international; information technology; global
Over the past 50 years, international markets have contributed an increasing share of revenues and profits for multinational corporations (MNCs). For example, the share of international profits as a percentage of total profits for US firms rose from 5% in the 1960s to over 25% during the 2000s . The increase has been particularly dramatic over the past decade, as US corporate overseas profits increased at a double-digit pace for 22 consecu- tive quarters . US firms have also found higher returns on sales in foreign markets than in domestic markets, and less variability in earnings compared with domestic operations .
This trend is expected to continue and accelerate in the future, because globalization is an important vehicle for MNCs to manage revenue growth