Quantitative research contributing to a better relationship between management and employees within an organization.

Master Thesis Management Accounting and Control track

Quantitative research contributing to a better relationship between management and employees within an organization.

“How do personality traits affect the perception of a management control system within an organization?”

Abstract

The purpose of my research is to investigate if there is a relationship between the personality traits openness and neuroticism and the degree to which employees perceive the management control system in which they operate

as enabling, to ultimately contribute to a better relationship between employees and management. This study tries to find evidence for this relationship using detailed primary data collected through a survey conducted at a

large Dutch health insurance company’s customer service department. The first hypothesis set up in this study predicted that individuals scoring high on openness are positively associated with the degree to which they

perceive the MCS implemented within their organisation as enabling. The second hypothesis predicts that individuals scoring high on neuroticism are positively associated with degree to which they perceive the MCS implemented within their organisation as enabling. The study has not been able to find statistically significant evidence for there to be a relationship between openness and neuroticism and the degree to which employees perceive the MCS in which they operate as enabling and ultimately has not been able to prove that there is a

relation between these personality traits and the management-employee relationship.

by

Jeroen Rones de Vries – S3196798 Supervisor: Dr. Bellora-Bienengräber

University of Groningen Faculty of Economics and Business

June 2020 Word count: 10809

2 Abstract

The purpose of my research is to investigate if there is a relationship between the personality traits openness and neuroticism and the degree to which employees perceive the management control system in which they operate as enabling, to ultimately contribute to a better relationship between employees and management. This study tries to find evidence for this relationship using detailed primary data collected through a survey conducted at a large Dutch health insurance company’s customer service department. The first hypothesis set up in this study predicted that individuals scoring high on openness are positively associated with the degree to which they perceive the MCS implemented within their organisation as enabling.

The second hypothesis predicts that individuals scoring high on neuroticism are positively associated with degree to which they perceive the MCS implemented within their organisation as enabling. The study has not been able to find statistically significant evidence for there to be a relationship between openness and neuroticism and the degree to which employees perceive the MCS in which they operate as enabling and ultimately has not been able to prove that there is a relation between these personality traits and the management-employee relationship.

Title

How do personality traits affect the perception of a management control system within an organization?

Introduction

There has been done extensive research examining management control systems (MCS) and their effectiveness from the perspective of managers’ intentions (Chenhall, 2003; Flamholtz et al., 1985; Merchant and Van Der Stede, 2007; Ouchi, 1977/1979). Less research however has been done regarding the relationship between management control systems and the perception of employees toward said systems. With this research I extended the literature covering the perception of employees toward management control systems. There has not been done a lot of research regarding MCS’s focusing on the people performing by the rules of such MCS’s, the employees. This research does not only examine the perception of employees toward MCS’s, but combines this perception with the personality traits openness and neuroticism of these employees, to try and find evidence for the hypothesised relation between these personality traits and the perception of MCS’s by employees. Before I can determine the relationship between these personality traits and the perception of a MCS, I need to define what is meant by a such a ‘trait’. A mix of personality traits defines a character.

A single trait is thus an individual building block of the overall character of a person.

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As will become clear in the literature review, previous research focuses heavily on measuring and quantifying to what degree a MCS helps achieve goals or supports strategies. There is very few research considering the effect MCS’s have on the employees falling under the regime of these MCS’s and the other way around, how personality of these employees could steer the development of the MCS. It is interesting to investigate said gap because of both theoretical implications and practical implications. An expected theoretical implication could be an improved relationship between management and employees because management has a better understanding of the perception of employees toward the MCS within the organisation. A practical implication in line with this expected theoretical implication could be that an organisation must evaluate the level of openness and neuroticism of their (potential) employees in order to construct a ‘employee-tailored’ MCS.

Because I will conduct research in an area that can be labelled as a literature gap, I hope to pave a way for further research in this field. I would like to investigate the relationship between two personality traits and the perception of a management control system by individuals. The introduction of personality traits and the relationship with perception is a starting point for further research in which for example multiple personality traits can be assessed and eventually the relationship between employee perception of the MCS and firm performance can be investigated. There is a significant positive correlation between employees’ satisfaction and employee productivity, ultimately leading to a higher business- unit level profitability (Krekel et al., 2019). Investigating the effect of personality traits on the perception of a MCS within an organisation has an important reason. If I were to only investigate the perception of a MCS, it would not be possible to find ways to alter with the perception. With the addition of these personality traits I hope to be able to find the drivers for the perception and find explanatory variables for perception. If there are significant explanatory variables of perception, it is easier for management to interpret these perceptions and ultimately enable them to improve the perception of the employees toward the MCS within the organisation.

It is important to conduct research in this area because it can greatly enhance the relationship

between employees and the organization they work for. If there is a link between the manager-

employee relationship and employee satisfaction, there could be evidence that a ‘employee-

tailored’ MCS’s could lead to improved business performance. Organizations have always

been interested in ways to close the gap between management and employees (Teple, E. R.,

1949), this can be done through investigating the perception employees have toward the MCS

in practice through surveys or interviews. The MCS can then be tailored toward the employee

and the relationship between employees and management can be strengthened. According to

previous research by Taylor et al. in 2003, perceived job autonomy is found to be a highly

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significant determinant of five separate domains of job satisfaction. In combination with research from Tansel & Gazîoğlu, in 2014, stating that there exists a link between job satisfaction and the management-employee relationship, one could assume that there exists a relationship between job autonomy and the management-employee relationship. The practical contribution of this study would be directed toward management. If management could better understand the perception of the MCS in practice of different types of people with different characteristics/traits, there would be better understanding of why different MCS’s work better within an organization than other MCS’s. Ultimately the goal is to link these perceptions and the findings of my research to practice and come up with solutions and recommendations to improve the management-employee relation within an organisation.

In the remainder of this thesis I will start by imposing the research question, continue with a literature review and hypotheses development. Afterwards, conduct a detailed survey among a large organization to collect primary data with which I can test my hypotheses. Then I will continue with discussing and concluding my work.

Based on the literature gap indicated in the introduction, and based on the aim of this study, I came up with the following broad research question which will be specified more when I introduce my hypotheses:

RQ: “How do personality traits of employees affect their perception of the management

control system implemented within the organization they work for?”

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Literature review

One of the earliest descriptions of MCS’s: “the process by which managers ensure that resources are obtained and used effectively and efficiently in the accomplishment of the organization’s objectives.” has been regarded as a complete description for almost 20 decades (Anthony, 1965, cited by Zizlavsky, 2014). MCS’s were later described as processes for influencing behaviour of employees (Flamholtz et al., 1985). A more recent description of a management control system is: “a MCS is a tool to help management for steering an organization toward its strategic objectives and a competitive edge” (Anthony et al., 2007) with a MCS being a system exchanging information within a company to evaluate the performance of different organizational resources like financial, human and physical capital as well as the organization as a whole in achieving goals and objectives.

What I can gather from these different descriptions and previous research about management control systems is that there are very few differences. There are multiple descriptions that are very heavily focused on the achievement of goals within a company. This is the reason for which MCS’s are developed and it is important to assess MCS’s on their goal-achieving capabilities. However, as previously mentioned, there is a literature gap in MCS research because there is very few research assessing MCS’s from an employee perspective. MCS’s are in research very often taken together with the goals they help achieve or with the strategies they support. In most previous research (Anthony, 1965, cited by Zizlavsky, 2014; Chenhall, 2003) it is measured and quantified to what degree a MCS helps achieve goals or supports strategies.

I can conclude that there is no universal description for a management control system. There are different ways in which the phenomenon ‘management control system’ can be explained.

There are very broad and unspecific descriptions mainly focusing on the achievement of goals and objectives. Recent research describes MCS’s in a more technical manner: “a combination of control mechanisms designed and implemented by management to increase the probability that organisational actors will behave in ways consistent with the objectives of the dominant organisational coalition” (Abernethy & Chua, 1996, cited by Malmi & Brown, 2008 (p. 289)).

An even more recent description is for example much more behaviour-oriented:

“Management controls are necessary to guard against the possibilities that people will do something the organisation does not want them to do or fail to do something they should do.

If all employees could always be relied on to do what is best for the organisation, there would

be no need for MCS” (Merchant & van der Stede, 2007). What I can infer from these

descriptions is that the descriptions of MCS’s have gradually evolved into descriptions of

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behaviour-steering mechanisms. This change, where the focus shifts from a broad interpretation of a goal achievement tool to a more behaviour-steering description, provides reason to investigate the perception of these behaviour-steering control systems by the employees, because the change toward a behaviour-steering-oriented framework could influence the perception of the MCS within the organization. Building upon social studies of Dijksterhuis and Bargh (2001), who argue that there is a link between social perception and social behaviour, I would like to introduce the idea that not only the actual MCS drives behaviour but also that the perception of this MCS might be an important driver of behaviour in an organizational setting.

Perception

Management control systems can either be enacted and perceived in an enabling way or in a more coercive way (Adler and Borys, 1996). Perception of a MCS can be measured through the degree to which employees perceive the MCS as enabling. An enabling MCS can be characterised as very autonomy-focused, a control system with a lot of freedom for the employees operating in these systems. A coercive MCS can be characterised as a strict system in which employees operate by a lot of predetermined rules and regulations with very limited freedom. In the work of Adler and Borys, the characterisation of organizational bureaucracy is based upon four design principles: repair, internal transparency, global transparency and flexibility. These tools can also be used to characterise a MCS and to unveil the degree to which employees perceive the MCS as enabling. I will discuss these constructs shortly to clarify the concept of characterisation.

Repair is based on the fact that not every contingency has been programmed and built into the formal system. Therefore, there may occur situations that require employees to use their own judgements to make the necessary repairs to the prescribed rules, standards, or procedures. In an enabling environment, workers are not only trusted but are also actively encouraged to discuss practical problems to their development (Ahrens and Chapman, 2004). Repair represents the degree to which autonomous decision making within an organizational context is encouraged.

Internal transparency occurs when employees develop a better understanding of their local

processes (Ahrens and Chapman, 2004). Transparency refers to the visibility and

intelligibility of routines and procedures that provide employees with understanding of the

work processes (Englund & Gerdin, 2014). Local processes are defined by Chapman and Kihn

(2009) as a business unit, product type or a preparation method. Key components of processes

can be highlighted, and best practice routines can be codified (Ahrens and Chapman, 2004).

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Global transparency occurs when employees develop a better understanding of the firms’

business strategy (Ahrens and Chapman, 2004). Global transparency, in contradiction to internal transparency, is wider and includes the overall context in which employees are performing their work (Englund & Gerdin, 2014). It provides employees with an understanding of how their work fits in the whole and that there is information beyond the specific domain in which the employee is active (Wouters & Wilderom, 2008).

The final principle, flexibility, occurs when users are allowed to depart from procedures in their work if the given situation requires it. (Jorgensen & Messner, 2009) and gives organizational members discretion how to use the procedure (Ahrens & Chapman, 2004).

Flexibility can be essential for process change: deviations from procedures are not just seen as risks but are also perceived as learning opportunities when flexibility is allowed (Ekström, 2018).

In combination with research from Taylor et al. in 2003, who found out that job autonomy is a highly significant determinant of job satisfaction, the link between an enabling MCS and job satisfaction can be established. Because according to the Adler and Borys framework and the repair principle and flexibility principle, an enabling MCS emphasizes autonomy on the job in decision-making and allows employees to depart from procedures in their work. The positive link between an enabling MCS and job satisfaction automatically leads to a positive link between an enabling MCS and the relationship between management and employees given the fact that job satisfaction enhances the management-employee relationship (Tansel

& Gazîoğlu, 2014). The last relationship is of great importance in our research because it provides evidence that one can enhance the management-employee relationship through utilizing enabling MCS’s. In order make effective use of MCS’s, management would be interested in the different personality types and their perception toward such MCS’s to maximize the management-employee relationship. If one personality perceives the same MCS as more enabling than a different personality, organisations should employ individuals based on their personality to maximize the relationship between management and employees.

Combining the finding that there exists a positive link between perceiving an enabling MCS and job satisfaction (Taylor et al., 2003) through job autonomy with the finding of Krekel et al. in 2019 stating that there exists a significant positive correlation between employees’

satisfaction and employee productivity, ultimately leading to a higher business-unit level

profitability, one could even assume that the degree to which employees perceive the MCS in

which they operate as enabling could be positively associated with profitability.

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In the following section two personality traits are introduced which could be assumed to increase the degree to which employees perceive the MCS in which they operate as enabling, and the motivation behind this assumption will be discussed.

Personality traits

There is a lot of research already investigating the relationship between personality traits and different organisational factors: the relationship between personality traits and counterproductive (work) behaviour (Mount et al., 2006), the relationship between personality traits and job performance (Nikolaou, 2003) and the relationship between personality traits and performance with self-monitoring as a moderator (Barrick et al., 2005).

The results of earlier research supported the existence of relationships between personality traits and job satisfaction but not between personality traits and the performance‐related variables (Nikolaou, 2003). Job satisfaction partially mediates the relationship between personality traits and counterproductive behaviour at work (Mount et al., 2006). Job satisfaction thus is a key variable when linking personality traits to organisational constructs.

The perception of a management control system could have lots of common ground with the job satisfaction variable and I predict that there is a relationship between personality traits and the degree to which employees perceive the MCS in which they operate as enabling based on the established relationship between personality traits and job satisfaction by Nikolaou.

In order to investigate the relationship between openness and the degree to which employees perceive the MCS in which they operate as enabling and the relationship between neuroticism and the degree to which employees perceive the MCS in which they operate as enabling, it is important to examine the personalities of the respondent of the survey. The five-factor model is the dominant approach of representing an individuals’ personality trait structure today (Roccas et al., 2002). This model incorporates traits that repeatedly appear across gender and different cultures. The traits that are included in this model are: Openness, conscientiousness, extraversion, agreeableness and neuroticism. These five traits emerged from decades of research and have been acknowledged for their ability to simplify an otherwise overwhelming amount of traits (McCrae & Costa, 1987; John, 1990; Hofstee, 1994), and the fact that they are applicable to all different cultures (McCrae & Costa, 1997).

Openness

According to prior research, openness is most compatible with the values that emphasize

intellectual and emotional autonomy, acceptance and cultivation of diversity, and pursuit of

novelty and change. Accordingly, openness is antithetical to values that emphasize

maintaining the status quo, structure, and stability. Moreover, they found incompatibility

between openness and striving for control through dominating people and resources. In the

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effort to dominate, people who emphasize power may reject unfamiliar ideas and experiences that might threaten their ability to control (Roccas et al., 2002). Previous finding is important for our hypothesis development because it clearly indicates that there is an incompatibility between openness and striving for control through dominating people and resources. This would suggest that there also exists an incompatibility between openness and MCS’s by the latest behaviour-oriented description of MCS’s. If openness and the willingness to control do not go together, what does this mean for employees scoring high on openness and what does it mean for the perception of these employees. According to Roccas et al., openness seems to be related to intellectual and emotional autonomy. The repair dimension within the Adler and Borys’ framework also relates to autonomous decision making. The higher controls within a MCS are scoring on the repair dimension in aforementioned framework, the higher the degree to which the MCS is perceived as enabling. With the condition that openness is highly compatible with values emphasizing intellectual and emotional autonomy and granted that autonomy within an organisational setting is important in determining the score on the repair dimension within the framework introduced by Adler and Borys, one could assume that a high level of openness would increase the degree to which employees perceive the MCS in which they operate as enabling. The first hypothesis that I would like to suggest is the following:

H1: Individuals scoring high on openness are positively associated with the degree to which they perceive the MCS in which they operate as enabling.

Neuroticism

Neuroticism is the second trait that I am going to consider when assessing the degree to which employees perceive the MCS in which they operate as enabling. Individuals scoring high on neuroticism are more likely to be moody, anxious, angry, jealous, depressed and lonely for example (Thompson, 2008). People scoring low on neuroticism often have a balanced self- control, are very well able to manage and cope with psychological stress and do not complain a lot (Ormel et al., 2012). Through these characteristics of non-neurotic individuals, one could assume that a firm would not benefit from hiring neurotic individuals and one could also see that hiring neurotic individuals would not be best suited for a positive work environment.

However, there exists a curvilinear relationship between neuroticism and job performance, meaning that there is an optimal threshold of neuroticism for maximum job performance (Uppal, 2017), thus, neuroticism is not negatively influencing job performance completely.

But based on the characteristics of neurotic individuals imposed by Thompson in 2008 and

Ormel et al. in 2012, I predict that neuroticism is negatively associated with the repair design

principle and the flexibility design principle introduced in the work of Adler and Borys from

1996. A balanced self-control and the ability to manage and cope with psychological stress

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are important factors when the amount of freedom within a work environment increases, which is essentially what the flexibility principle entails. One could assume that the absence of both these characteristics within neurotic individuals could also be negatively related to the repair principle, emphasizing autonomous decision making. If neuroticism is negatively associated with both the repair principle and the flexibility principle in the Adler and Borys framework for organizational control, I assume that neuroticism is also negatively related to the degree to which employees perceive the MCS in which they operate as enabling.

Moreover, neuroticism might also affect the perceived degree of happiness within an individual if we take a closer look at the described characteristics of individuals scoring high on neuroticism imposed by Thompson. These characteristics imply that individuals scoring high on neuroticism are more negatively minded. Negatively-minded individuals are more likely to have a more negative perception toward the MCS in which they operate, which might also lead to a negative relationship with the degree to which employees perceive the MCS in which they operate as enabling. Adding both hypothesized relationships together, I would like to impose my second hypothesis:

H2: Individuals scoring high on neuroticism are negatively associated with the degree to which they perceive the MCS in which they operate as enabling.

Methodology

Research design

The study follows a quantitative approach to gather and to analyse data. In order to measure different levels of openness and neuroticism and the degree to which employees perceive the MCS in which they operate as enabling, I will distribute an online survey amongst a number of employees within one organization which contains a personality test (in order to test for level of openness and neuroticism) combined with questions regarding the degree to which employees perceive the MCS in which they operate as enabling. Further will I include several questions with which I can obtain data for my control variables: age, gender and experience.

I will elaborate further on these control variables later in the methodology section. After I have accumulated enough data, I will start with the data analysis. Firstly, I will check the data for common method bias and non-response bias.

Next, I will determine the correlations between the variables through descriptive statistics and

correlation analysis. After this procedure, the hypotheses will be tested through linear

regression analysis in SPSS.

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The respondents filling in the survey are currently employed at one of the largest health insurance companies in the Netherlands. The survey is conducted at the customer support division, situated in Apeldoorn, the Netherlands. A total of 27 participants, all performing the same job activities and are subordinate to the same team executive. More importantly, all participants fall under the same MCS-regime, which is essential in my research. I chose to include only one organisation in my research to make sure all employees operate in the same MCS.

The MCS within the organisation I investigated consists of three main concepts: core values, a code of conduct and key performance indicators. In the following section these concepts are explained in more detail.

Core values are the fundamental beliefs within an organization, they are guiding principles that dictate behaviour and can help people understand the difference between what is right and what is wrong. The key core values within the organisation I am interested in are empathize, renew and fulfil.

‘Empathize’ means that employees operating in the MCS should empathize with each other and with customers, should listen to other people without prejudice, should treat others honestly and respectable, as they would want to be treated themselves and they should talk about others as if they were physically present.

‘Renew’ means that employees operating in the MCS should show courage and ownership, should think in possibilities and opportunities, should develop themselves and others around them and should take time and space for change and renewal.

‘Fulfil’ means that employees operating in the MCS should prioritise the interest of the customer in their actions, should take responsibility for the joint results within the organisation and should honour agreements and try to exceed expectations.

The code of conduct is a collection of rules and regulations that include what is and what is not acceptable or expected behaviour. A relevant example in this case is for example that an employee operating in the MCS within this organisation should not give relatives an advantage when delivering services.

Key performance indicators are used to quantify and measure (effective) activity within an

organisation. The MCS in this organisation focuses on three important KPI’s. The first KPI

that is important is ‘customer satisfaction’, the second KPI is ‘quality’ and the third KPI that

is actively measured within the organisation is ‘speed and effectiveness’.

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Combining these characteristics of the MCS within the organisation with the principles introduced in the framework of Adler and Borys in 1996 resulted in a survey to collect primary data in order to find evidence to prove the hypothesised relationships between openness, neuroticism and the degree to which employees perceive the MCS in which they operate as enabling.

The organisation in question wishes to remain anonymous and therefore I cannot go into further detail about the organisation.

Data collection

I distributed a detailed questionnaire amongst employees of the health insurance company to gather primary data. This survey consists of three parts: the first part contains four general questions with which I can obtain data for my control variables. The second part of the survey consists of questions measuring the degree to which employees perceive the MCS in which they operate as enabling. To conclude, the survey includes a personality test with which I can measure the respondents’ levels of openness and neuroticism, along with the three other personality traits tested (agreeableness, extraversion and conscientiousness) within the individuals. Due to the Covid-19 outbreak in the spring of 2020, the survey has been conducted online in a structured manner. To increase the overall validity of my survey I consulted earlier research from Dillman (2007) about mail and internet surveys. Dillman provides clear directions on how to construct a valid and reliable survey. Following these directions, I created a respondent-friendly design considering both the logic of how computers/smartphones operate and the logic of how people expect questionnaires to operate.

According to Dillman, a welcome screen that is motivational, emphasizes the ease of responding and instructs respondents on the needed action for proceeding to the next page greatly enhances response rates. The survey is conducted in Dutch, to increase the respondent- friendliness, but there is a translated version of the survey in the appendix (figure 3), where it becomes clear that I’ve taken all these procedures and principles introduced by Dillman in order to maximize response rates. I conducted the survey with a fellow student who researches the effect of conscientiousness and extraversion on the degree to which employees perceive the MCS in which they operate as enabling. Through e-mail addresses I was able to target only the employees suitable for my research.

Non response bias

To avoid non response bias, I have sent multiple reminders to respond in time, I have very

carefully explained the key terms in the survey and added extra explanation on how to answer

questions. I also ensured all respondents that all information will be treated confidentially and

anonymously.

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To check if my data is free from common method bias, I conducted Harman’s single factor test. I performed an exploratory factor analysis for including all variables and I examined the unrotated factor solution to determine the number of factors that are necessary to account for the variance in the variables. If the total variance for a single factor is less than 50%, the test suggests that common method bias does not affect your data, hence the results. Note that, Harman's approach is to test for common method bias, but not to control for common method bias (Tehseen et al, 2017). Test results indicated that the maximum total variance for a single factor in my data is only 29%, meaning that my data does not suffer from common method bias. Because common method bias does not affect my data, I do not have to follow through on common method bias and therefore do not have to control for common method bias. In the appendix I included the graph with the total variance explained for the extracted factors after conducting factor analysis (figure 3).

Measurements

The degree to which employees perceive the MCS in which they operate as enabling

The first part of the survey contains a questionnaire where I try to unveil the degree to which employees perceive the MCS in which they operate as enabling. I used the measure for enabling use of a performance measurement system (Burney; Radtke and Widener, 2016) to measure this degree. This measure will be complemented with additional, further developed questions based on the latter questionnaire and on the levers of control framework logic (Bellora-Bienengräber; Radtke & Widener, 2020). The ultimate questionnaire about the degree to which employees perceive the MCS in which they operate as enabling consists of a set of questions with 7-point Likert scales for each question. The four principles; repair, internal transparency, global transparency and flexibility are measured with 3 questions per principle. These questions evaluate the effects of core values, code of conduct and key performance indicators of the organisation on employee behaviour and perception toward the firm. In total there are 12 question, three questions per principle. The average of these three questions yield a score for a principle and the average of the scores of the four principles yield an average score for the degree to which an individual employee perceives the MCS in which he or she operates as enabling, the dependent variable in our research.

Openness and neuroticism

The second part of the survey carried out to the employees consists of the Big Five Inventory-

44 (BFI-44; John & Srivastava, 1999), a 44-item inventory yielding scores for five dimensions

of neuroticism, agreeableness, extraversion, openness and conscientiousness. To ensure the

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validity of the BFI test, all 5 personality traits are being assessed and the full test is conducted.

This may help a colleague-student his research because he studies the influence of conscientiousness and extraversion. John and Srivastava (1999) found support for the internal consistency of the five subscales (α ranging from 0.75 to 0.90) and test-retest reliability (α = 0.80, α = 0.85, to α = 0.90)

Control variables

The general questions in the survey are there to gather data for the control variables. I controlled for age, gender and two variables with which I assessed respondents experience on the job: the amount of years active within the organisation and the amount of years active in their current position. Control variables are fundamental for linear regressions. Control variables refer to variables or contributing factors that are eliminated or fixed to clearly identify the relationship between the independent variable and the dependent variable.

According to previous research, age is correlated with personality traits (Soto et al., 2011).

Therefore, I need to control my data for age when performing a regression. The same applies for experience on the job and perception toward a MCS, therefore I need to control my data for experience when performing a regression. Gender is significantly correlated with personality traits, leading to different personality test outcomes for different genders (Lin et al., 2012), therefore I need to control my data for gender when performing a regression.

Statistical model

To test if there is a relationship between personality and the degree to which employees perceive the MCS in which they operate as enabling, I will use the following statistical model.

The model measures the effect of the independent variables on the dependent variable:

𝑌 = 𝑖

+ 𝛽

𝑁 + 𝛽

𝑂 + 𝛽

𝐶

+ ⋯ + 𝛽

𝐶

+ 𝜀

In this model, “Y” is equal to the degree to which employees perceive the MCS in which they operate as enabling, which is measured by the construct of Bellora-Bienengräber et al.

introduced earlier in the paper. 𝑖

Is the intersect of the regression. 𝛽

is the direct effect of

“N” (neuroticism) on Y, 𝛽

is the direct effect of “O” (openness) on Y. 𝛽

𝐶

+ ⋯ + 𝛽

𝐶

are

the direct effects of the control variables (age, gender, years active within the organisation,

years active in current position) C

to C

on the degree to which employees perceive the MCS

in which they operate as enabling.

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Summary statistics for the dataset are presented in table 1. Different statistics are presented

for all relevant variables from the statistical model. All questionnaire items that are part of

the degree to which employees perceive the MCS in which they operate as enabling

(dependent variable) are assessed along with the aggregated scores on both personality traits

(independent variables) from the BFI-44. The independent variables are checked for

multicollinearity and it appeared that there is no sign of multicollinearity within the

independent variables. All variance inflation factors between the independent variables are

lower than 2. Also, all control variables are included in the descriptive statistics. The

descriptive statistics presented in Table 1 for the constructs within the questionnaire reveal

that all questions regarding the degree to which employees perceive the MCS in which they

operate as enabling have a broad range with an empirical minimum of 1 and an empirical

maximum of 7 on a 7-point Likert scale. When all taken together, the four constructs of

repair, internal transparency, global transparency and flexibility all still have a minimum of

1 and a maximum of 7, meaning that there has been at least one respondent for every principle

within the Adler and Borys framework indicating that he or she perceives the MCS within

the organisation as extremely enabling. However, because there are maxima of 7 all around

the principles as well, this means that there has been at least one respondent for every

principle within the Adler and Borys framework indicating that he or she perceives the MCS

within the organisation as extremely coercive. We can conclude that the opinions regarding

the principles making up the perception variable are widespread. The minimum value for the

overall perception variable (the average of the four principles) is 2.50 and the maximum is

6.58. The variables neuroticism and openness are averages of the listed questions per variable

and show minimum values of 1.13 and 2.90 and maximum values of 3.75 and 4.50

respectively on a 5-point Likert scale. These values are the average values of all the questions

within a single personality trait construct, this is the reason for the small variance within this

construct. We can conclude that our respondents are quite equal in terms of neuroticism and

openness because of the small variance within the empirical minima and maxima for these

constructs. I included all questions regarding the personality traits constructs to be as

transparent as possible. The control variables reveal that the age of the respondents ranges

from 28 years old to 61 years old. Respondents are 1 to 31 years active within the organisation

and 0 to 20 years active within their current position. For gender respondents ticked 0 for

male, 1 for female. As you can infer from the mean number for gender, 89% of the

respondents are female.

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Descriptive Statistics

Dependent variable

Empirical minimum

Empirical

maximum Mean Std. Deviation

Perceived coerciveness 2.50 6.58 4.836 1.009

Repair 1.0 7.0 5.111 1.870

Reaction to behaviour deviations through core values

1.0 7.0 5.667 1.709

Reaction to behaviour deviations through code of conduct

1.0 7.0 4.778 2.391

Reaction to behaviour deviations through KPI's 1.0 7.0 4.889 2.207

Internal transparency 1.0 7.0 5.037 1.516

Knowledge increases through core values 1.0 7.0 5.296 1.660

Knowledge increases through code of conduct 1.0 7.0 5.148 1.703

Knowledge increases through KPI's 1.0 7.0 4.667 2.075

Global transparency 1.0 7.0 5.259 1.362

Better understanding of the firm through core values

1.0 7.0 5.556 1.528

Better understanding of the firm through code of conduct

1.0 7.0 5.148 1.512

Better understanding of the firm through KPI's 1.0 7.0 5.074 1.752

Flexibility 1.0 7.0 3.938 1.471

Flexibility of job-related actions through core values

1.0 7.0 4.407 1.886

Flexibility of job-related actions through code of conduct

1.0 7.0 3.815 1.819

Flexibility of job-related actions through KPI's 1.0 7.0 3.593 1.886

Independent variables

Neuroticism (I see myself as someone who…) 1.13 3.75 2.528 0.611

Is depressed, blue 1.0 3.0 1.481 0.687

Is relaxed, handles stress well (reversed score) 1.0 4.0 2.704 0.974

Can be tense 1.0 5.0 3.074 1.052

Worries a lot 1.0 5.0 2.741 1.003

Is emotionally stable (reversed score) 1.0 5.0 2.593 1.063

Can be moody 1.0 4.0 2.741 0.927

Remains calm in tense situations (reversed score) 1.0 4.0 2.185 0.862

Gets nervous easily 1.0 4.0 2.704 0.974

Openness (I see myself as someone who…) 2.90 4.50 3.710 0.388

Is original, comes up with new ideas 3.0 5.0 3.889 0.786

Is curious about many different things 3.0 5.0 4.407 0.562

Is ingenious, a deep thinker 2.0 5.0 3.889 0.916

Has an active imagination 2.0 5.0 3.407 0.872

Is inventive 2.0 5.0 3.667 0.903

Values artistic, aesthetic experiences 1.0 5.0 3.593 1.225

Prefers work that is routine (reversed score) 2.0 5.0 3.308 0.821

Likes to reflect, play with ideas 3.0 5.0 4.074 0.604

Has few artistic interests (reversed score) 1.0 5.0 3.593 1.194

Is sophisticated in art, music or literature 1.0 5.0 3.259 1.142

Control variables

Age 28.0 61.0 42.308 10.347

Years active within the organisation 1.0 31.0 11.640 8.426

Years active in current position 0.0 20.0 6.519 5.522

Gender 0.00 1.00 0.889 0.320

Table 1 summary statistics for all variables

17

Consequently, I performed reliability analysis for all questionnaire items about openness and neuroticism and the items about the degree to which employees perceive the MCS in which they operate as enabling. Reliability analysis led to a Cronbach’s alpha of 0,793 for the construct with which the degree to which employees perceive the MCS in which they operate as enabling is measured. The analysis leads to a Cronbach’s alpha of 0,797 for the construct with which the level of neuroticism is measured and to a Cronbach’s alpha of 0,486 for the construct with which the level of openness is measured. I included the reliability statistics table in the appendix as figure 1. According to the rules of thumb suggested by George and Mallery (2003), a Cronbach’s alpha higher than 0,6 is perceived as acceptable. In the discussion the low reliability value for the openness construct will be discussed more extensively. The correlation matrix is presented in table 2. It shows the correlations between the relevant variables coming from the statistical model and the control variables. There are no significant correlations between the perception of the MCS, neuroticism and openness.

This means that increases or decreases in one variable does not significantly relate to increases or decreases in one of the two remaining variables. There are significant correlations between age, the amount of years active within the organisation and the amount of years active in the current position.

Table 2 correlation matrix

Correlation matrix

Pearson correlations

Perception MCS as enabling

Neuroticism Openness Age Gender

Years active within organisation

Years active in current

position Perception

MCS as enabling

1 -0.020 0.011 0.111 0.011 0.333 0.183

Neuroticism -0.020 1 -0.096 -0.268 0.257 -0.320 0.015

Openness 0.011 -0.096 1 0.037 -0.203 -0.029 -0.011

Age 0.111 -0.268 0.037 1 0.207 ,562^** ,340^*

Gender 0.011 0.257 -0.203 0.207 1 0.014 -0.075

Years active within organisation

0.333 -0.320 -0.029 ,562^** 0.014 1 ,347^*

Years active in current position

0.183 0.015 -0.011 ,340^* -0.075 ,347^* 1

**Correlation is significant at the 0.01 level (1-tailed).

*Correlation is significant at the 0.05 level (1-tailed).

18 Results

In table 3 the regression analysis is displayed. What I can infer from these results is that both for neuroticism and openness, the results are not statistically significant. There is not enough statistically significant evidence to accept or reject hypothesis 1 and hypothesis 2. There is an R-squared of 0,468 which means that almost 47% of the dependent variable is explained with these independent variables and controls. In the appendix I included a regression with all five personality traits and their effects on the degree to which employees perceive the MCS in which they operate as enabling, however these regression coefficients are also insignificant.

If we compare both regression outputs, I can conclude that with all five personality traits, all variable coefficients have the same effect (positive/negative) on the degree to which employees perceive the MCS in which they operate as enabling, except for gender. Being a female has a negative coefficient when all personality traits are in play but has a positive coefficient when only neuroticism and openness are considered. R-square increased marginally from 0.468 to 0.497 when all five personality traits are included in the regression.

In the regression with only neuroticism and openness I can conclude that the number of years active within the organisation has a slightly positive correlation which is statistically significant.

Table 3 regression analysis

Regression

Dependent variable: Perception MCS as enabling

Unstandardized

Coefficients

Beta

Std.

Error t

Significance (1-tailed)

(Constant) 2.475 2.074 1.193 0.250

Neuroticism 0.776 0.345 2.250 0.039

Openness 0.145 0.439 0.331 0.745

Years active within the organisation 0.088 0.028 3.155 0.006

Years active in current position 0.027 0.035 0.752 0.463

Age -0.029 0.023 -1.240 0.233

Gender 0.135 0.593 0.228 0.823

R

R Square

Std. Error of the Estimate

,684 0.468 0.84313

Discussion

The results of this study indicate that the first hypothesis predicting that individuals scoring

high on openness are positively associated with the degree to which employees perceive the

MCS in which they operate as enabling, cannot be accepted nor rejected due to statistical

insignificancy. In practice this means that openness cannot serve as a significant explanatory

variable for the degree to which employees perceive the MCS in which they operate as

19

enabling. Secondly, the results of this study indicate that the second hypothesis predicting that individuals scoring high on neuroticism are negatively associated with the degree to which employees perceive the MCS in which they operate as enabling, cannot be accepted nor rejected due to statistical insignificancy. In practice this means that neuroticism cannot serve as a significant explanatory variable for the degree to which employees perceive the MCS in which they operate as enabling. There are some limitations in my research. First I need to elaborate on the low reliability value concerning the construct with which I measure openness.

Openness is an unstable psychological construct, meaning that it is difficult to measure with a limited amount of questions. Cronbach’s alpha measures the relatedness of a set of items as a group. What this means for our variable is that the set of questions we are using to try and uncover a value for openness of the respondents, is as a group not very related. A related set of questions increases the internal consistency of my research. However, openness is a very widespread phenomenon to measure and it is therefore difficult to measure with a limited set of questions. Therefore, the questions are very different from each other to cover the full definition of openness and to be able to measure this trait effectively. Cronbach’s alpha is an underestimate of the reliability of a construct (Sijtsma, 2009). The finding that the construct measuring the degree of openness has a low reliability is therefore an accepted limitation.

Secondly, due to the COVID-19 outbreak, it was very difficult to find an organisation willing

to cooperate. This resulted in a limited number of respondents and a small sample size and

this might be the reason for my insignificant results. A small study might lead to a higher

standard error in study results, which in turn leads to an imprecise estimate of the effects and

an increased chance for insignificant results (Hackshaw; 2008). Due to smaller standard errors

and more accurate mean values a large sample size broadens the range of possible data and

forms a better picture for analysis (DePaulo, 2000). I can conclude that a larger sample size

could have increased the quality of my research. It might also be the case that the health

insurance sector, where I conducted my research, does not use very detailed MCS’s. This

might have made it difficult for the participants to interpret the questions leading to

insignificant regression coefficients. For further research, it would be wise to conduct the

research in different business-sectors with even more detailed questions to determine the

degree to which respondents perceive the MCS in which they operate as enabling. A variety

of business sectors offers different MCS’s to investigate and to test relationships with

personality. Furthermore, the perception of MCS’s is a very difficult variable to measure and

therefore one could argue that it is very challenging to take this variable as a dependent

variable in research. Therefore, I would recommend focusing on the personality-performance

link with perception of MCS’s as a moderating variable for further research in this area. I

think that the concept of perception of MCS’s being a moderating variable for personality-

performance relationships could be very promising. Lastly, I would recommend to conduct a

20

survey in person to unveil more detailed feelings of employees toward MCS’s, and ultimately switching from quantitative research to qualitative research to uncover deeper feelings and emotions from employees toward MCS’s to potentially find a relationship between personality traits and the degree to which employees perceive the MCS in which they operate as enabling.

Conclusion

What can be concluded from this research is that the personality traits openness and neuroticism are not significantly related with the degree to which employees perceive the MCS in which they operate as enabling and therefore have no connection with the relationship between management and employees. This train of thought, the link between MCS-perception and the relationship between management and employees based upon earlier research conducted by Taylor et al. in 2003 and Tansel & Gazîoğlu in 2014, is not combinable with the personality traits openness and neuroticism. This implies that an organisation does not have to evaluate the level of openness nor the level of neuroticism of their (potential) employees to construct a ‘employee-tailored’ MCS. Moreover, an organisation does not have to invest time and resources in evaluating the level of openness or neuroticism to strengthen the relationship between employees and management. Revisiting the statement that one could assume that the degree to which employees perceive the MCS in which they operate as enabling could be positively associated with profitability, built upon research from Taylor et al. in 2003 and Krekel in 2019, I have to conclude that the degree of openness and neuroticism within the personality of an individual has no significant relationship with profitability through MCS’s perception. The fact that the number of years active within the current organisation has a slightly positive coefficient relating to the degree to which employees perceive the MCS in which they operate as enabling leads me to conclude that ‘experience’

could positively affect the degree to which employees perceive the MCS in which they operate

as enabling and could lead to a better fit between employees and management. This seems to

be a logical occurrence because employees learn to adapt over time. To come back to the

initial research question, where I asked how certain personality traits, openness and

neuroticism, would affect the perception of employees toward the management system active

within their organisation, there is no significant effect. This research can not find significant

statistical evidence that these personality traits affect perception of employees. What we can

conclude from the answer to the research question is that organisations theoretically do not

have to take the personalities of the employees into account when constructing a management

control system and that the personality traits openness and neuroticism do not directly enhance

the management-employee relationship through the degree to which employees perceive the

MCS in which they operate as enabling.

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24 Appendix

Figure 1: reliability statistics with Cronbach’s alpha’s per construct

Figure 2: regression with all five personality traits

Reliability Statistics Perception construct

Cronbach's Alpha

Cronbach's Alpha Based on

Standardized

Items N of Items

0.793 0.796 12

Neuroticism construct

Cronbach's Alpha

Cronbach's Alpha Based on

Standardized

Items N of Items

0.797 0.802 8

Openness construct

Cronbach's Alpha

Cronbach's Alpha Based on

Standardized

Items N of Items

0.486 0.579 10

Regression

Dependent variable: perception MCS as enabling

Unstandardized

Coefficients

Beta

Std.

Error t

Significance (1-tailed)

(Constant) 1.599 3.587 0.446 0.663

Extraversion 0.034 0.417 0.082 0.936

Agreeableness 0.475 0.590 0.805 0.435

Conscientiousness -0.078 0.456 -0.171 0.867

Neuroticism 0.735 0.519 1.417 0.180

Openness 0.010 0.523 0.019 0.985

Years active within the organisation

0.072 0.036 2.018 0.065

Years active in current position 0.028 0.039 0.731 0.478

Age -0.029 0.027 -1.090 0.295

Gender -0.006 0.752 -0.008 0.994

R Square

Std. Error of the Estimate

25

Total Variance Explained

% of Variance Cumulative %

1 28.821 28.821

2 22.867 51.688

3 14.042 65.730

4 9.253 74.983

5 6.169 81.152

6 5.958 87.110

7 3.754 90.863

8 3.107 93.971

9 1.833 95.803

10 1.614 97.418

11 1.231 98.648

12 0.658 99.307

13 0.523 99.829

14 0.171 100.000

26

Figure 3: complete online survey translated in English

27

28

29