Control and Trust

Paper Summary:

Trust has been proposed as an alternative and more appropriate way to controlling uncertainties under the emergence of new developing economies and the shift from traditional national markets to global markets. This paper attempts to outline the definition of control and trust and how they are seen as useful tools in managing uncertainty that stems from the agency problem within the organization. It also addresses the likely problems that are caused when managing new organizational forms using a traditional management accounting system.

From the Paper:

"There are a variety of ways to categorize and conceptualize control systems: formal versus informal controls, behavior versus outcome controls; mechanistic versus organic controls; bureaucratic versus social controls. However, with regards to formal designed controls, some researchers make a distinction between outcome controls and behavior controls (Ouchi, et al, 1979) Performance measurement is one of the techniques used as an outcome controls measure and to monitor the outputs of operations or behaviors. Whereas behavior controls, such as rules and standard operating procedures, are being utilized to specify and monitor individuals' behaviors (Ouchi, et al, 1979)."

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