Research paper for master thesis Management Accounting & Control
The impact of extraversion and
conscientiousness on management control
systems perception
Abstract
In this study the relationship between personality traits extraversion and conscientiousness in association to perception of the management control system (MCS) is examined. This perception is
ranging from coercive to enabling, using Adler & Borys’ (1996) framework. The first hypothesis predicts that extraversion is negatively associated to the degree to which the MCS is perceived as enabling. The second hypothesis predicts that conscientiousness is positively associated to the degree
to which the MCS is perceived as enabling. To examine this, a questionnaire is conducted at a large Dutch health insurance company at the customer service department to collect primary data. The results show both extraversion and conscientiousness have no significant impact on the perception of
coerciveness of their respective MCS. Therefore, this study is unable to prove a noteworthy relationship between both personality traits and the perception of the MCS, however by using robust
statistics reasons for future research are found.
By Sebastiaan Kort S2558165 Floresplein 11 9715 HH Groningen Sebastiaan_kort@hotmail.com University of Groningen Faculty of Economics and Business Supervisor: dr. L. Bellora-Bienengräber
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Abstract
In this study the relationship between personality traits extraversion and conscientiousness in association to perception of the management control system (MCS) is examined. This perception is ranging from coercive to enabling, using Adler & Borys’ (1996) framework. The first hypothesis predicts that extraversion is negatively associated to the degree to which the MCS is perceived as enabling. The second hypothesis predicts that conscientiousness is positively associated to the degree to which the MCS is perceived as enabling. To examine this, a questionnaire is conducted at a large Dutch health insurance company at the customer service department to collect primary data. The results show both extraversion and conscientiousness have no significant impact on the perception of coerciveness of their respective MCS. Therefore, this study is unable to prove a noteworthy
relationship between both personality traits and the perception of the MCS, however by using robust statistics reasons for future research are found.
Title
The impact of extraversion and conscientiousness on management control systems perception
1. Introduction
Management control systems can be used in many beneficial ways for managers. It is therefore no surprise management control systems (MCSs) are mostly researched by examining their effects from the perspective of the specific intentions that managers chase with use of MCSs
(Bellora-Bienengräber, Derfuss, & Endrikat, 2019). MCSs consist of all formal and informal systems, rules and procedures that align employee behavior with specific company goals (Malmi & Brown, 2008; Merchant & Van der Stede, 2017). These systems are a ‘type of communicating language throughout the organization, which create a unifying way of thinking and helps the organization in several ways to manage potential interdependencies that may arise in between several parts of the organization’ (Andreas, 2015, p.1797). They are proven to play a major role in strategy implementation (Henri, 2006): ‘the managerial activity by which the chosen strategy is being translated into actions’ (Johnson & Scholes, 1989, cited in Langfield-Smith, 1997, p.210). MCSs are therefore mostly seen as a
managerial tool and are consequently researched from a managerial organizational perspective. Tessier & Otley (2012) however find that employees may have a different MCS perception as opposed to their managers who designed the system. Consequently, they state that managerial intention may differ from employee perception. Ultimately, this may lead to inconsistencies in using the MCS for its desired goal: aligning employee behavior with specific company goals. This underlines one of the major focusses in MCS theory about how to design MCSs in order to gain the desired (managerial) outcomes (Malmi & Brown, 2008), namely alignment of employee behavior and company-specific goals. In addition to this, Chenhall (2003) suggests individual personality may affect the response of an individual towards different aspects of MCSs.
Furthermore, Tillema & van Veen-Dirks (2018) investigated personality traits in relation to
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Finally, the organizational relevance of employee participation in performance measurement1 is shown
by Groen, Wouters and Wilderom (2015). They prove that employee participation in the development of performance metrics has beneficial effects on the metrics quality and may also effect job
performance of the employee. Combining the theories of Tessier & Otley (2012) and Groen, Wouters and Wilderom (2015), it is interesting to investigate the perception of employees in order to create a better alignment between managerial intentions and employee perception and ultimately, in further research, enhance their job performance.
Although researchers (Chenhall, 2003; Tillema & van Veen-Dirks, 2018) hint personality (traits) may affect the perception of MCSs, research of how MCSs are perceived by the employees that are targeted by the system is hardly represented in literature. Therefore, the question arises whether personality traits are associated with the perception of MCS and if so, to what extent. A better understanding of the interaction between personality traits and different experiences of the MCSs, may lead to important implications in the design of MCSs as well as a more aligned recruitment process since certain personality trait levels might suit certain MCSs better. The purpose of this study is to answer the following research question: what are the impacts of different degrees of personality traits on the degree to which employees perceive MCSs as enabling?
The most commonly used personality traits include extraversion, openness to experience,
conscientiousness, agreeableness and neuroticism (John & Srivastava, 1999; Rammstedt & John, 2007). These respective traits are also known as the Big Five dimensions, or the five-factor model (FFM) (John & Srivastava, 1992). The Big Five classification is able to ‘commonalize most existing systems of personality traits at a broad level of abstraction’ (John & Srivastava, 1999, p.122), making it most suitable for a first, broad approach in employee perspective MCS research. In this study the personality traits extraversion and conscientiousness will be examined. Therefore, two out of five Big Five personality traits are included in this research. The study is executed in cooperation with
colleague-student Jeroen de Vries. He examines the relationship between MCS perception, openness to new experiences and neuroticism. Due to limited resources, we were unable to capture all five personality traits. Therefore, the subquestions in this study are:
Subquestion 1: How does the degree of extraversion relate to the degree to which employees perceive MCSs as enabling?
Subquestion 2: How does the degree of conscientiousness relate to the degree to which employees perceive MCSs as enabling?
In this research employee perception is conceptualized by the distinction of enabling and coercive types of formalization. Adler & Borys (1996) show the importance of formalization in organizations -the extent of written rules, procedures and instructions- by showing that enabling procedures help committed employees to do their jobs more effectively and reinforce their commitment. Therefore having the correct junction between formalization and employee preference, may increase the overall job performance as Jackson & Schuler (1985) state that indirectly formalization increases work satisfaction and reduces feelings of alienation and stress.
1 Bitici et al. (2012) carried out an extensive literature review to conclude PM and MCS can be seen as
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The purpose of this study is to explore the relationship between personality traits and MCS perception to give a better understanding of which employee personality traits support coercive or enabling formal systems to be succesful. In this thesis, I intend to make the following contributions. First, by investigating the relationship between extraversion, conscientiousness and the perception of the degree to which the MCS is perceived as enabling, a literature gap is filled. Second, the research also provides a managerial contribution, since it may give managers a better understanding of which employee to recruit or select the right person for either an enabling or a coercive formal system. This may eventually lead to strategic managerial advantages, due to employees being more effective in their work.
The remainder of this paper is organized as follows. Section two is about the theory and hypothesis development. Section three will be about the research methods used. In section four I will show the results from the questionnaire. Finally, in section five and six the discussion and the conclusion respectively will be presented, as well as directions for future research will be discusssed.
2. Literature review & hypothesis development
Management control systems
In order to conceptualize the perception of the MCS, it is important first to understand what is meant by MCSs. The definition of MCSs has developed over the years from being a ‘formal and financially quantifiable information instrument, towards a tool capable of assisting managers in their decision making and covering a much broader scope of information’ (Chenhall, 2006, p.165). Therefore MCSs are used by managers as passive tools to provide them with information (Chenhall, 2006). According to Johnson and Kaplan (1987), in many organizations MCSs are considered to be comprehensible and useful only to those who initiate them.
Otley (2003) discusses the evolution of management control as well and illustrates some examples of management control slowly shifting towards a performance management approach. Five reasons are stated by Otley to explicate this transition. First, there is less emphasis on hierarchical control since there is less hierarchy. Second, throughout the years financial controls have been accompanied by a variety of non-financial performance measurements (for example the balanced scorecard by Kaplan & Norton (1996). Third, corporate governance and external control of organizations have become more popular since they mainly support in reducing agency problems: managers should work in interest of the shareholders and deliver value to them instead of exhibiting self-interested decision making. Fourth, budgets have been fundamental principles in accounting, however contemporary management accounting deals with more uncertainty and unpredictability in many business environments causing budgets to become less valuable.
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In addition to this, Simons classifies two supplementary systems to gain more clarity in ordering the broad variety of workable controls in management accounting. First, he identifies belief systems as a control tool in which the control is settled by creating vision and shared values amongst the
employees, for example by stating core values in a mission or vision statement. Second, he identifies boundary systems as a control tool which aid in restricting managerial authority and discretion. A code of conduct to guide actions and behavior is an example of a boundary systems tool.
This framework guides in understanding management control tools in general and how to classify them from a managerial perspective. The framework of Simons will return in the questionnaire used for this study.
Management control system perception: coercive and enabling design principles
In order to conceptualize the dependent variable in this study, the degree to which the MCS is perceived as enabling, the framework of Adler and Borys (1996) is used. They suggest that
bureaucratic systems, can be perceived along a range from coercive to enabling. These bureaucracy types, referred to as formal systems, are intended to control employees in completing their work tasks in order to better manage the overall process (Ahrens & Chapman, 2004). In a coercive formal system, the system used is fool-proof so that employees do not have to make many decisions themselves (Ahrens & Chapman, 2004). Coercive formal systems rely on predesigned tools and strategies to enable both systems and employees with a limited amount of actions to deal with common
contingencies that may occur (Ahrens & Chapman, 2004). Ahrens and Chapman (2004, p. 297) mark that especially MCS can be prone to coercive uses since they are seen as ‘strongly and complexly bound up with issue of hierarchy and performance evaluation’. In an enabling formal system, the system guides committed employees and helps them to deal with contingencies that they may face in their job (Ahrens & Chapman, 2004). In contrast to the coercive counterpart, enabling formal systems are therefore not designed to be fool-proof. They rely on user intelligence and enable users to deal with a broad variety of contingencies (Ahrens & Chapman, 2004).
Although the framework of coercive and enabling design principles itself is provided by Adler and Borys (1996), Ahrens and Chapman (2004) contribute to this framework combining it with the practice of management controls, linking the coercive and enabling formalization types to relevance for MCSs. In their field study they show the framework can be used ‘as a basis of contingency
research instrument to classify the MCs use of individual organizations in ways that go beyond current research’ (Ahrens & Chapman, 2004, p.297).
Following this future research direction, MCSs can be specified and divided on a range from a coercive perception to an enabling perception since the MCSs can be considered a formal system. To characterize a formal system and thus the MCSs, four features as measurement tools are described by Adler & Borys (1996): repair, internal transparency, global transparency and flexibility. These will be explained in the following section.
Repair
6 Internal transparency
Internal transparency occurs when employees develop a better understanding of their local processes (Ahrens and Chapman, 2004). Local processes are defined by Chapman and Kihn (2009) as a business unit, product type or a preparation method. Furthermore, this understanding does not necessarily need to be restricted towards the local process in which the development is made, but it may be expanded to other local processes within the organization as well (Ahrens and Chapman, 2004). Therefore, in an enabling environment to formalization, the key components of processes are explained and employees can compare their performances to the standards given by the firm. Coercive formalization however, only supplies information when processes do not function as planned (Ekström, 2018).
Global transparency
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’ (Ekström, 2018, p.77). 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). Therefore, global transparency is related to understanding the ‘bigger picture of the firm’. In a more coercive environment, ‘employees are not provided with information to encourage them in understanding the wider perspective and moving beyond their immediate field for
suggestions’ (Ekström, 2018, p.77). Global transparency can be achieved using Simons’ (1994) belief systems in MCSs to create shared values and vision in a broad matter among the employees.
Flexibility
The final principle, flexibility, occurs when users are allowed to leave from work related procedures if the given situation requires it (Jorgensen & Messner, 2009). It also gives organizational members discretion how to use the related procedures (Ahrens & Chapman, 2004). Flexibility can be
fundamental for changing processes: ‘deviations from procedures are not just seen as risks but are also perceived as learning opportunities when flexibility is allowed’ (Ekström, 2018, p. 73). In
management control terms it may be hard to distinguish flexibility from the previously explained repair principle. Both require the employee to derive from their prescribed rules. Flexibility however, in contrast to repair, is concerned with learning and exploring (Ekström, 2018). In other words:
flexibility in MCSs allows the employees to explore deviations rather than only viewing them as errors and flaws. MCSs using the boundary systems from Simons’ (1994) framework in an enabling way will empower employees to learn from their errors.
Independent variable: the Big Five personality traits
The five-factor model is the dominant approach for representing the human trait structure (Roccas et al., 2002). This descriptive model asserts that five basic personality factors describe most personality traits. These traits are: neuroticism, openness (to experience), extraversion, agreeableness and conscientiousness (Roccas et al., 2002). The title ‘Big Five’, invented by psychologist Lewis
Goldberg, was chosen to emphasize that each personality factor reflects an extremely broad dimension (John & Srivastiva, 1999). Personality traits are considered ‘dimensions of individual differences in tendencies to show consistent patterns of thoughts, feelings and actions’ (McCrae & Costa, 1990, p.23). In this study the focus will be on two personality traits as dependent variables: extraversion and conscientiousness. Extraversion is studied since, according to Watson & Clark (1997), extraversion has been included in every major construct for personality during the past 50 years. Conscientiousness is seen as the most robust predictor of the whole Big Five personality trait construct (Mount &
7 Extraversion
Extraversion is a key factor in personality psychology, as it is used in most personality measures (Judge et al., 1999). Extraversion is often thought to be related to sociability. Extraversion is in contrast a much broader build than sociability that includes many others factors, for example being more active and impulsive, less self-reflective, less dysphoric and self-preoccupied than introverts (Watson & Clark, 1997). ‘Extraverts tend to be socially oriented, but are also surgent (dominant and ambitious) and active (adventuresome and assertive)’ (Judge et al., 1999, p.624). In addition to this, Watson & Clark (1997) argue extraversion to be related to the experience of positive emotions.
Extraverts are likely to take on leadership roles and are related to reaching power and status (Barrick et al., 2013). Extraversion is compatible with pursuing excitement, novelty and challenges too (Roccas et al., 2016). Bipp and Demerouti (2015), even argue that people scoring high on extraversion are more sensitive to rewards.. Finally, extravert persons are proven to be more effective in teamwork, be more efficient learners, be more active in training situations and are likely to ask more questions than introverts (Barrick et al., 2001).
In these reviewed studies, the extravert personality is scetched as tendencies to be adventuresome, outgoing, eager to learn and take on challenges more than introverts. Barrick & Mount (1993) find autonomy to be a mediating factor for extraversion and performance. In autonomous environments, extravert managers perform better than introverts (Barrick & Mount, 1993). Following this reasoning, employees scoring high on extraversion may prefer autonomous (more enabling) environments over tighter, less autonomous environments since it may allow them to perform better. The repair
dimension of Adler & Borys (1996) is highly related to autonomy. Extraverts may have a natural tendency to feel at ease in more enabling environments of the repair dimension, since they tend to engage in information seeking more than introverts (Tidwell and Sias, 2005). In addition, the
flexibility dimension is closely related to repair but is more concerned with learning and being able to explore while making errors. Extraverts tend to be less less anxious than introverts (Kotov et al., 2010), which may lead to them engaging in exploratory behaviour more than introverts.
Subsequently, MCSs are used to align employee actions and behavior with company-specific goals and therefore, generally spoken, will reduce the employee’s autonomy and therefore limit extraverts more than introverts.
Based on the previously named characteristics such as pursuing novelty, challenges and being
ambitious and dominant, it seems likely that individuals with higher degrees of extraversion are likely to feel suppressed in their extravert, more adventerous behavior by MCSs earlier than their more introvert colleagues. Consequently, these more extravert individuals may perceive the MCS to be more coercive for them than their introvert colleagues. This leads to the following hypothesis: Hypothesis 1: Extraversion is a negatively related to the degree to which the MCS is perceived as enabling
Conscientiousness
Conscientiousness has been most consistently related to the performance across jobs and is ‘rooted in three related facets: achievement orientation (hardworking and persistent), dependability (responsible and careful) and orderliness (planful and organized)’ (Judge et al., 1999, p.624). McCrae and John (1992) have identified two distinct aspects of this trait: a proactive aspect (will to achieve) and an inhibitive aspect (holding impulsive behavior in check). ‘Conscientiousness is related to an individual’s degree of self-control and the need for achievement, order and persistence’ (Costa, McCrae & Dye, 1991: cited by Judge et al., 1999, p.632). Individuals with a low level of
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Therefore it is not surprising this trait has been the most consistent trait across performance in jobs (Barrick et al., 2001). Unlike other personality traits of the Big Five construct, conscientiousness is found to be positively related to individual performance across all job criteria and occupations studied (Mount & Barrick, 1998), making it the most interesting personality trait to study from a managerial- and business-perspective.
Conscientiousness’ desire to achieve and persistence to do so, makes it an interesting construct in relation to the perception of a MCS. Moon (2001) provides evidence that individuals scoring high levels of conscientiousness are driven by both duty (external) as well as achievement striving
(internal). Therefore conscientious individuals do not lack self-interest, however they will act in a less self-interested opportunistic matter in comparison to their less conscientious counterparts (Fong & Tosi, 2007). Following this line of reasoning, Fong & Tosi (2007, p.165) argue that conscientious managers) ‘should be less affected by incentive management and monitoring because they are already putting forth a high level of effort, whereas the effort of less conscientious agents should be more affected by agency controls’. Consequently, according to this theory conscientious individuals should be less affected by agency controls such as the MCS and are therefore likely to perceive it to be less demanding in their daily work. They require less monitoring and control since they are less
dependable and already putting in high levels of effort to their job. Less conscientious individuals will have higher need for control in order to perform better and are therefore likely to perceive the MCS to be more demanding than their conscientious counterparts. In addition, individuals scoring high in conscientiousness have the tendency to scan and decide on information faster than individuals scoring high in other personality traits do due to their ability to engage in mental reflection (Al-Sumarraie, Eldenfria and Dawoud, 2017). This may support them in global and internal transparency dimensions, since these are closely related to developing an understanding of local processes and overall
organizational context. In a coercive system individuals are discouraged to develop an understanding of their local processes, whereas enabling systems encourages an individual to do so. Conscientious employees are more likely to show voluntary behavior (Demerouti, 2006). These individuals show ‘personal resources such as flexibility, psychological resilience and creative thinking’ (Demerouti, 2006, p.270). Consequently, they may naturally find flexible, more resilient and faster ways of thinking to develop this understanding of local processes. They may therefore adapt themselves easier in both coercive and enabling environments for the internal and global transparency dimensions, however they may feel less suppressed by possible coercive controlling methods.
As conscientious people are characterized by punctuality, attendance and rule compliance (Ladd & Henry 2000), it makes sense to assume these individuals perceive less coercive pressure than their less conscientious counterparts. They therefore may have a lower need for autonomy and consequently perceive both the repair and flexibility dimension more enabling.
As a result, it seems reasonable to suggest that individuals with high levels of conscientiousness perceive the MCS to be less coercive than individuals scoring low on conscientiousness. This leads to the following hypothesis:
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3. Methodology
Research design
To provide a better understanding of the relationship between personality traits and MCS perception, Jeroen de Vries2 and I quantified these relationships following a deductive approach. In order to test
the hypotheses, we used a ‘quantitative research strategy which is commonly used for deductive studies and testing theories’ (Bryman & Bell, 2011, p.27). Since existing literature offers well-established frameworks to measure the variables mentioned in this study, we chose to use self-completion questionnaires for data collection. The questionnaire was designed via Qualtrics, a web-based survey tool to conduct (online) survey research and data collection. Self-completion
questionnaires offer the opportunity to broadly spread questionnaires via email. Especially due to the coronavirus outbreak in 2020, this was the most appropriate way to collect data considering the necessity of social distancing. In addition to this, using a web survey reduces the risk of error in the processing of data (Bryman & Bell, 2011, p. 663). This full questionnaire is attached in appendix A. Measured variables
In this section, the scales to measure each construct are explained. All questionnaire questions and their descriptive statistics are shown in Table 1. For this research all measures are drawn from existing instruments and their relevance for this study to enhance the internal validity. The used questionnaire consists of three parts: one to measure the degree to which people perceive the MCS to be enabling, one to measure personality traits extraversion and conscientiousness and one to measure control variables. All questionnaire questions and their descriptive statistics are shown in Table 1.
The dependent variable, the enabling perception of MCS, is measured using the questionnaire version of Bellora-Bienengräber, Radtke and Widener (2020). Their questionnaire is derived from Burney, Radtke and Widener (2017) and was used to measure the enabling use of control systems. It is mainly based on the framework of Adler and Borys (1996), who determine enabling systems by the
dimensions of repair, internal transparency, global transparency and flexibility. Furthermore, the questionnaire is based on the levers of control framework by Simons (1994). This framework consists of beliefs, boundaries and diagnostic control systems. In the questionnaire these levers are featured by using core values for beliefs, code of conduct for boundaries and finally key performance indicators (KPI) for diagnostic control systems. For each dimension of the Adler and Borys framework (repair, flexibility, internal transparency and global transparency), the impact of core values, code of conduct and key performance indicators is measured. A 7-point-Likert scale is used to measure the perception of the MCS in which 1 represents a coercive perception and 7 represents an enabling perception. The questionnaire used in the Bellora-Bienengräber, Radtke and Widener (2020) paper is designed for managers. Our questionnaire is in contrast designed towards the specific core values of Dutch health care insurance, the code of conduct of the firm and the key performance measures used by the firm. The questionnaire is designed for employees working at the health insurance customer service division, but the operationalization of measuring MCS perception remains the same. This means we adjusted the questionnaire. We integrated and briefly explained the specific code of conduct, the core values and the KPI’s used by their managers in the questionnaire, as a reminder for the employees filling in the questionnaire. In the following section some questionnaire example questions will be shown for the perception of MCS construct.
2 Since we designed and executed this questionnaire together, the remainder of this section will be written from
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How do you address in your work unit behaviors that deviate from those aligned with your firms’ core values? (Repair)
To what extent do your firm’s code of conduct increase your knowledge of your work unit’s operations? (Internal transparency)
In what ways does your firm’s monitoring of key performance measure guide your actions? (Flexibility)
The second existing instrument that is used is the 44-item Big Five Inventory (BFI) by German Socio-Economic Panel (GSOEP) researchers. This instrument consists of 44 items that measure 5 scales of personality traits: extraversion, agreeableness, conscientiousness, neuroticism and openness. Although there are many measurement instruments to choose from, we chose to use the 44-item BFI since this is a broadly used and well established instrument (Bui, 2017, Barrick et al., 2013). Since the BFI consists of only one part of the questionnaire, the instrument should not consume too much time of the
respondent. The 44-item BFI asks participants to express their agreement with each of the BFI items on a 5-point-Likert scale, varying from 1 representing strongly disagree to 5 representing strongly agree. The result of the BFI is a personality profile consisting of a score for each factor that is the average of individual item scores which belong to the respective factor (John & Srivastava, 1999). All personality traits were questioned and their data was collected as a result of the collaboration with colleague student Jeroen de Vries, who collected data for neuroticism and openness in very similar research. In the following section some questionnaire example questions will be shown for the BFI construct.
I see myself as someone who generates a lot of enthusiasm (Extraversion). I see myself as someone who is a reliable worker (Conscientiousness). I see myself as someone who has an assertive personality (Extraversion).
Finally, age, gender and tenure were used as control variables in the analysis. Control variables were used to increase the accuracy of relationships among theoretical constructs (Spector & Brannick, 2011). They were used as variables to control relationships between two variables can be legitimately drawn. They reduce the risk of wrongly attributing explanatory value towards different kinds of independent variables. Soto et al. (2011) find that inconsistencies for the BFI exist per age, as well as gender. For example, they find a positive trend from childhood to adolescence into adulthood (Soto et al., 2011). Therefore both variables were used to control for the BFI results. Furthermore, we
11 Questionnaire design
To successfully conduct the questionnaire at the health care customer service division, the
questionnaire was translated from English to Dutch. Behling and Law (2000) argue translations of questions will not necessarily possess the same content. To control for possible flaws or errors in the translation, we translated every question by hand both forward and backwards to ensure no
discrepancies were found. More sophisticated methods such as pilot testing or use of independent translators were not used due to their time-consuming nature. Considering our resources and especially time constraints for this study, we chose not to utilize these more advanced techniques.
We further chose to cluster questions in separate parts related to their respective topic. Therefore we started the questionnaire by a short introduction in which we explained to the respondent the
questionnaire consists of three separate parts. Personality traits, MCS perception and control variables are separately questioned in specific questionnaire parts to prevent biased answers due to flaws in the question order. We further emphasized the progression by showing a progress bar while the
respondent was filling in the questionnaire, decreasing the likelihood of respondents quitting without finishing the questionnaire.
Firm-specific MCS
In this research we, based on the frameworks of Adler & Borys (1996) and Simons (1994), conceptualize MCS perception in our questionnaire to consist of three main concepts: core values, code of conduct and key performance indicators.
Core values are values which have ‘rooted in the value foundation of organizations and are beacons in the management of a corporate brand’ (Balmer, Greyser and Urde, 2009, p.617). They may also be used strategically, since Lencioni (2002) proves having values that are toothless of dishonest may even be destructive in corporate branding. Conversely, core values aid in ‘knowing what values a company stands for’ and ‘what values customers over time have come to appreciate us’ (Balmer, Greyser and Urde, 2009, p.616). They therefore provide identity for both customers and employees. Consequently managers are likely to share these values amongst their employees and monitor the degree to which they act corresponding to these values. Our researched firm provides three core values: empathize, renew and fulfill.
Empathize is related to treating others with honesty, integrity and without prejudices. Employees should try to place oneself in someone else’s shoes before making assumptions.
Renew is related to showing guts and ownership, thinking in possibilities, developing yourself and others and being willing to take time and space for changes.
Fulfill is related to the interest of the customer which should always be the main focus. Employees should take responsibility for collective result, not just individual. Finally employees should stick to their agreements and try to surpass expectations.
Codes of conducts are being drafted to achieve consensus on ethical practices (Rezaee, Elmore & Szendi, 2001). They further support individuals in ‘solving ethical dilemmas, provide legitimacy for a variety of actions an employee can take and demonstrate the commitment of a company towards their values’ (Rezaee, Elmore & Szendi, 2001, p.172). An example code of conduct statement is the prohibition of granting relatives a discount upon servicing them.
12 Sample selection
In this study we conducted the questionnaire at a large health care insurance company in the Apeldoorn, the Netherlands. We chose to collect data at one large-sized company to achieve consistency in the perception of the MCS. In this manner, we can ensure the measured perception is derived from the same MCS for all respondents. In addition to this, all respondents execute the same job activities, since they are all working at the same division in equal occupations and are subordinate to the same managers. Consequently, we can reduce the discrepancies in the content of the MCS itself to a minimum level. Furthermore, the questionnaire was tailor-made for the specific firm, since we explained firm-specific MCS components such as which KPI’s are used for diagnostic control in a discrete way to reduce potential biases. The participating company wished to remain anonymous, hence why their company name is not mentioned in this research.
Data analysis methods
The data obtained in this research was analyzed using Statistical Package for the Social Sciences. All questionnaire responses were exported from Qualtrics. Reverse questions in the 44-item BFI test were re-coded accordingly to the 5 point Likert-scale, meaning values of 5 became 1, values of 4 became 2 etcetera. Mean values for repair, flexibility, internal transparency and global transparency were calculated by summing up the scores per respective item construct and dividing this sum by the number of questions within that variable. A mean value of these four constructs was calculated as well to indicate the degree to which the MCS is perceived as enabling. The same was done for all
personality traits to create mean values for both extraversion and conscientiousness per individual. To explore the relationship between the dependent and independent variable, Pearson’s correlation was used. To test for interaction effects, bivariate regression was used.
Data reduction
13 Reliability
Reliability is defined as ‘the degree to which test scores are free from errors of measurement’ (Moss, 1994). To measure reliability, Cronbach’s alpha is often used. ‘Cronbach’s alpha is an index of reliability associated with the variation accounted for by the underlying construct’ (Santos, 1999, para. 7). The index’ coefficient ranges from a minimum of 0 to a maximum of 1. The higher the score, the more reliable the construct is (Santos, 1999). The questionnaire construct of MCS perception has a Cronbach’s alpha of 0.793. In addition, all four elements of the Borys & Adler (1996) framework show Cronbach’s alpha values varying between 0.727 as a minimum and .880 as a maximum. Furthermore, a Cronbach’s alpha of 0.854 for the extraversion construct and 0.863 for the
conscientiousness construct is found. These results provide evidence of high internal consistency for all variables, as overall spoken values of 0.7 and higher are seen as satisfactory (Bland & Altman, 1997; Santos, 1999).
Validity
To control for common method bias, procedural remedies were included in the questionnaire. Respondents were able to respond in full anonymity. Doing so, respondents are less likely to fill in socially desirable answers. In addition to this, the questionnaire instruction assures there are no wrong or right questions and respondents are asked to respond using their first thought.
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4. Results
Descriptive statistics
In table 1 the descriptive statistics of this study are presented. Out of a total number of 96 employees, 29 respondents filled in the questionnaire. This translates to a response rate of 30,2%. The answers of two respondents had to be removed from the analysis, since they were lacking responses to multiple questions. Therefore the final sample size consists of 27 respondents. The respondents were aged from 28 years old to 61 years old and the mean age was 42.3 years old. The questionnaire was mainly answered by females. 88,9% of the respondents were female, while only 11,1% were male. On average, respondents worked 11,6 years within the firm and 6,5 years within their current position. The mean of the degree to which the MCS is perceived as enabling is 4.836. This indicates the MCS is perceived to be more enabling than coercive among the respondents. Furthermore, the means for repair, internal transparency, global transparency and flexibility are respectively 5.111, 5.037, 5.259 and 3.938. The overall enabling perception is therefore mainly by virtue of repair, internal
transparency and global transparency, since they show high enabling scores. Flexibility is the weakest enabling construct out of the four, indicating respondents have mixed coercive and enabling guidance in their actions concerned with learning and exploring, which seems logical in a customer service department setting with mostly standardized solutions. It is further noteworthy that all empirical minima and maxima for the perception of MCS construct are found to range furthest in their 7 point Likert-scale, all varying from 1.0 to 7.0. The means of the personality traits are 3.722 and 3.849 for extraversion and conscientiousness respectively. This indicates the respondents were relatively extravert and conscientious, as this scale varies from 1 which indicates the minimum to 5 which indicates the maximum. Empirical minima and maxima are found in a closer range for the in-depth personality trait questions than for the MCS perception construct, indicating lower variability in data even though a 5 point Likert-scale was used instead of a 7 point Likert-scale.
Table 1: Descriptive statistics summary
Dependent variable Item
Mean Item Std. Deviation Item Minimum Item Maximum Cronbach’s alpha
Degree to which the MCS is perceived as enabling
4.836 1.009 2.5 6.58 .793
Repair 5.111 1.870 1.0 7.0 .880
How do you address in your work unit behaviors that deviate from those aligned with your firms’ core values?
5.667 1.709 1.0 7.0
How do you address in your work unit behaviors that deviate from those aligned with your firm's code of conduct?
4.778 2.391 1.0 7.0
How do you address in your work unit behaviors that deviate from those aligned with your firm’s key performance
measures?
4.889 2.207 1.0 7.0
Internal transparency 5.037 1.516 1.0 7.0 .804
To what extent do your firm's core values increase your knowledge of your work unit’s operations?
15 To what extent does your firm's code of
conduct increase your knowledge of your work unit’s operations?
5.148 1.703 1.0 7.0
To what extent does your firm’s monitoring of key performance measures increase your knowledge of your work unit’s operations?
4.667 2.075 1.0 7.0
Global transparency 5.259 1.362 1.0 7.0 .835
To what extent do your firm's core values help you understand your firm as a whole?
5.556 1.528 1.0 7.0
To what extent does your firm's code of conduct help you understand your firm as a whole?
5.148 1.512 1.0 7.0
To what extent does your firm’s monitoring of key performance measures help you understand your firm as a whole?
5.074 1.752 1.0 7.0
Flexibility 3.938 1.471 1.0 7.0 .727
In what ways does your firm's core values guide your actions?
4.407 1.886 1.0 7.0
In what ways does your firm's code of conduct guide your actions?
3.815 1.819 1.0 7.0
In what ways does your firm’s monitoring of key performance measures guide your actions?
3.593 1.886 1.0 7.0
Independent variables
Extraversion 3.722 .721 2.500 4.750 .854
I see myself as someone who…
is talkative 3.926 .958 2.0 5.0
is reserved 3.630 1.214 1.0 5.0
is full of energy 3.815 .736 3.0 5.0
generates a lot of enthusiasm 4.333 .784 3.0 5.0
tends to be quiet 3.481 1.189 1.0 5.0
has an assertive personality 3.593 1.118 1.0 5.0
is sometimes shy, inhibited 2.851 1.262 1.0 5.0
is outgoing, sociable 4.148 .770 2.0 5.0
Conscientiousness 3.849 .643 1.778 4.889 .863
I see myself as someone who…
does a thorough job 4.074 .958 1.0 5.0
can be somewhat careless 3.630 1.114 2.0 5.0
is a reliable worker 4.577 .703 2.0 5.0
tends to be disorganized 3.703 1.031 2.0 5.0
tends to be lazy 3.778 1.086 2.0 5.0
perseveres until the task is finished 4.370 .792 2.0 5.0
does things efficiently 4.074 .874 2.0 5.0
makes plans and follows through with them 3.444 1.013 1.0 5.0
16 Control variables
Age 42.680 10.347 28.0 61.0
Gender 1.889 .320 1.0 2.0
Active years within the firm 11.640 8.426 1.0 31.0
Active years in current position 6.520 5.522 0.0 20.0
Note: all minima and maxima shown are empirical Table 2: Pearson correlation coefficients
Variable 1 2 3 4 5 6 7 8 9 10 11
1. The degree to which the MCS is perceived as enabling 1 2. Extraversion .166 1 3. Conscientiousness .134 -.034 1 4. Repair .622*** -.197 -.073 1 5. Internal transparency .445** .299* .316* -.203 1 6. Global transparency .686*** .195 .032 .176 .207 1 7. Flexibility .859*** .218 .107 .481*** .257* .519** 1 8. Gender .011 .049 .144 -.105 .112 -.192 .225 1 9. Age .110 .092 .228 .013 -.162 .223 .237 .207 1 10. Active years within
the firm
.333* .054 .311* .426** -.133 .240 .266* .014 .562*** 1 11. Active years in
current position
.183 -.072 -.029 .265* -.096 .116 ..157 -.075 .340** .347** 1 Note: *** Correlation is significant at the 0.01 level (one-tailed)
** Correlation is significant at the 0.05 level (one-tailed) * Correlation is significant at the 0.1 level (one-tailed) N = 27
Correlation coefficients
Table 2 presents the correlation coefficients for all variables which are assessed in the questionnaire. No significant correlations were found between the dependent and independent variable. The personality traits are overall very weakly correlated to the degree to which the MCS is perceived as enabling. The correlation for extraversion is positive but is rather weak (r =.166, NS).
Conscientiousness is also positively but weakly correlated to the degree to which the MCS is perceived as enabling (r =.134, NS). Furthermore, both extraversion and conscientiousness are positively correlated to internal transparency (r = .299, p <.1 and r = .316, p <.1).
17 Table 3: Regression analysis
Variable DV: Degree to which the MCS is perceived as enabling Beta (Std. Error) t Significance (one-tailed, 10% confidence interval) (Constant) 6.217(2.155) 2.884 .011 1. Extraversion -.248 (.325) -.248 (.347) -.763 .456 2. Conscientiousness -.716 .485 3. Age -.036(0.026) -.1.397 .181 4. Gender .620(.635) .975 .344 5. Active years within the firm
.078(.032) 2.453 .026 6. Active years in current position .026(.040) .657 .521 Note: N = 27 DV = Dependent Variable R = .579 R2 = .335
In table 3 the regression analysis is found. In the first hypothesis model a negative relationship between extraversion and the degree to which the MCS is perceived as enabling was predicted. The regression analysis shows that I am unable to either reject or accept this hypothesis, due to statistical insignificance. The regression analysis shows a negative relationship (b = -0.248, p = .456) between the degree of extraversion and the degree to which the MCS is perceived as enabling. This negative relationship is driven by chance and is therefore not interpretable as an explanatory variable. In the second hypothesis model a positive relationship between conscientiousness and the degree to which the MCS is perceived as enabling was predicted. The regression analysis shows that for this hypothesis as well, I am unable to either reject or accept this hypothesis, due to statistical
insignificance. The regression analysis shows a weak negative relationship (b = -.248, p = .485) between the degree of conscientiousness and the degree to which the MCS is perceived as enabling. This negative relationship is driven by chance as well and is therefore not interpretable as an explanatory variable. No significant regression values were found between the MCS perception dimensions repair, internal transparency, global transparency, flexibility and the personality traits and are therefore not shown in table 3.
Robustness of the results
Although I tested for outliers in this study conducting the Mahalanobis Distance test, the small sample size may cause traditional measures to fail in finding possible outliers as‘outliers are often tried to detect using diagnostics from a classical fitting method’ (Rousseeuw & Hubert, 2011, p.73). Therefore outliers may not allow the test to detect these possible deviating observations. This effect is called the ‘masking effect’ (Rousseeuw & Hubert, 2011). To avert this effect, robust statistics are used. ‘The goal of robust statistics is to find a fit that is close to the fit that would have been found without the outliers’ (Rousseeuw & Hubert, 2011, p.73).
18
These frequencies are shown in table 4 and are controlled conducting the IQR-method for robust statistics by Rousseeuw & Hubert. Conducting this analysis (table 5), two outliers were found for each displayed question, of which all are posted in the minimum range of the continuum, namely
completely disagree. These outliers appear to be originating from the same respondents. Therefore these respondents are removed from the further measurement in this section.
Note: score numbers indicate Likert-scale scores in which 1 indicates completely disagree and 7 indicates completely agree
Lower boundaries are calculated by Q1 – 1,5 times the IQR Upper boundaries are calculated by Q3 + 1,5 times the IQR
The upper boundary is capped to 7, since this is the largest end of the 7 point Likert-scale continuum N = 27
Table 4: Frequency table Y-axis: Question
X-axis: Likert-scale
How do you address behaviors in your work unit that deviate from those aligned with your firms’ core values?
To what extent do your firm’s core values help you understand the organization as a whole?
To what extent does your firm’s code of conduct help you understand the organization as a whole? (1) Completely disagree 2 2 2 (2) Disagree 0 0 0 (3) Disagree slightly 1 0 0 (4) Neutral 2 1 4 (5) Agree slightly 2 6 9 (6) Agree 10 12 8 (7) Completely agree 10 6 4 Total
Table 5: IQR outliers
27 27 27 Question Med -ian 1st quartile (Q1) 3rd quartile (Q3) Interquartile range (IQR) Lower boundary Upper bound ary Outliers found How do you address
behaviors in your work unit that deviate from those aligned with your firms’ core values?
6 5 7 2 2 7 2
To what extent do your firm’s core values help you understand the organization as a whole?
6 5 6 1 3,5 7 2
To what extent does your firm’s code of conduct help you understand the
organization as a whole?
19 Table 6: Robustness correlation matrix (Pearson)
Note: N = 25
* Correlation is significant at the 0.1 level (1-tailed) ** Correlation is significant at the 0.05 level (1-tailed) *** Correlation is significant at the 0.01 level (1-tailed)
In table 6 the correlations using robust statistics is found. Using the adjusted measurements, a greater number of significant correlations was found. First, a weak positive significant correlation was found between extraversion and MCS perception (r = .346, p <.05). This predicts the more extravert an individual is, the more likely they will be to perceive the MCS as enabling. Furthermore, in table 7 the regression analysis is found. The regression analysis underlines this relationship (B = .501, p < .1), however only at a weak significant level. Thus, hypothesis 1 would not be supported since it predicted a negative relationship.
Extraversion is further significantly and positively correlated to global transparency (r = .504, p <.01) and flexibility (r = .374, p <.05). Additionally, the regression coefficient for these constructs related to extraversion are positive (B = .808, P < .01 and B = .793, p <.05). For the repair and internal
transparency items no significant relationships were found to extraversion.
For conscientiousness two significant correlations were found. Although conscientiousness is
positively correlated to MCs perception (r = .269, p < .1) and internal transparency (r = .271, p < .1), due to the small sample size (n=25) a p-value of < .1 is rather unconvincing. Therefore weak support was found for hypothesis 2 using robust statistics.
Variable 1 2 3 4 5 6 7
1. Extraversion 1
2. Conscientiousness -.105 1
20 Table 7: Regression analysis for robust statistics Note: N = 25
* Significant at the 0.05 level (1-tailed) ** Significant at the 0.01 level (1-tailed)
5. Discussion
This study examined how personality traits extraversion and conscientiousness relate to the degree to which the MCS is perceived as enabling. For the first hypothesis: extraversion is positively associated with the degree to which the MCS is perceived as enabling, no statistical evidence was found using traditional statistics to either reject or accept it. Using robust statistics however, a weak positive significant relationship was found between extraversion and the degree to which the MCS is perceived as enabling. This indicates the more extravert an individual is, the more enabling he or she perceives the MCSs to be. Unexpectedly, this relationship was positive and therefore no support is found for the first hypothesis. Extraversion further show positive significant relationships to global transparency and flexibility using robust statistics. This may be explained by the fact this research was conducted at a large company with over 13.000 employees. The core values, code of conduct and KPI’s may
therefore be broadly used and shared by the firm to support employees in ‘seeing the bigger picture of the firm’. These results are in line with reasoning of Judge et al. (1999) who state extraverts tend to be socially oriented. Therefore they will have more contact with others in the organization. Extraverts may therefore internalize the MCSs values faster than for example conscientious people due to more contact with for example their supervisors or colleagues.
21
For the second hypothesis: conscientiousness is positively associated with the degree to which the MCS is perceived as enabling, no statistical evidence was found. Using robust statistics a significant correlation was found, although it was found at a relatively low significance level (p < 0.1). Due to the small sample size of this research, these findings should be interpret very carefully. Very weak support was found for this hypothesis using robust statistics. These results are therefore in line with claims of Ladd & Henry (2000) who claim conscientious people are characterized by punctuality, attendance and rule compliance. Based on the robust analysis, conscientious individuals seemed to perceive the MCSs to be slightly more enabling than coercive. The results of this study however reveal
conscientiousness does not show much significant effect to the perception of the MCSs. This may be due to conscientious people showing voluntary behavior such as flexibility, psychological resilience and creative thinking (Demerouti, 2006).
By using the traditional statistics, no significant evidence was found for both hypotheses.
Insignificance in the relationships does not mean the effect truly does not exists, but the test did not detect significance for a couple of reasons: (1) the sample size was too small to detect the effect (2) the variability in the data was too high or (3) the collected data consisted of a sample depending on chance too much. In this study presumably the sample size (N=27) was too small to detect a significant relationship. In addition to this, standard deviations in responses for the MCSs perception framework of Adler & Borys (1996) are rather high. Researchers explain this by stating the definitions of the framework of Simons, which is combined with Adler & Borys’ framework in the questionnaire, its concepts are ‘too vague and ambiguous’ (Ahrens & Chapman, 2004, Ferreira and Otley, 2009; cited by Tessier & Otley, 2012). Respondents may have therefore misunderstood some key concepts of the framework which may have led to inconsistencies in data. This, as well as the minima and maxima laying farthest apart possible (partly due to extreme responding) for all perception of MCS questions on the 7-point-Likert scale, may indicate the variability in the collected data was too high to find support for the hypotheses. Consequently this may be the main reason for not finding significant results.
In the literature it has been argued by Tillema & van Veen-Dirks (2018) that MCS perception is likely to be associated with individual character traits, as they are able to demonstrate that personality traits play a significant role in the use of MCS by managers. By conducting my research, I am able to confirm this statement and broaden the discussion of the degree to which personality traits are associated with perception of MCSs. Furthermore, I am able to enhance the argument of Tessier & Otley (2012), who find that employees may have different MCS perception compared to their
22 Limitations
The first limitation of this research is related to the research method. An online questionnaire was used to collect data from group of employees at a large Dutch health insurance company. Whilst I tried to carefully and adequately explain every part of the constructs asked for in the questionnaire, all data was gathered from one source. This was due to the fact all respondents are supposed to perceive exactly the same MCS. The second limitation of this research method relates to the complex structure of perception of the MCS, asked for in the questionnaire. This may have, despite controlling for it by explaining the constructs carefully, lead to much variance in the data, which is shown in table 1. Finally the outbreak of the COVID-19 virus played a major role in the data collection phase. Due to this outbreak and consequently the trouble to find an appropriate firm to collect data, the data collection phase had to be shortened. Many employers noted their employees were already feeling pressurized by the firm, since they were obliged to work from home and behave more flexible than ever before. Consequently they did not want to pressurize them more by sending out a questionnaire, hence why finding a cooperating firm was difficult. As a result, the sample size in this study is rather low. Future studies should consider using a larger sample size to improve overall generalizability. Directions for future research
Given the scarcity of research directly investigating personality traits in relation to perception of MCS, many opportunities lay ahead. Although no significant relationships were found in the traditional research model, the robust results show interesting results for extraversion in relation to MCS perception. Therefore, it may be interesting to examine this relationship more in-depth in future research. Future research could also include variables like job performance to their model, to see whether a more coercive or enabling perception of the MCS supports employees into better overall job performance. Consequently future research may strengthen a more personal perspective of MCSs design and use, which could assist managers in their function of MCS architect. In addition, future studies should consider using a larger sample size to improve overall generalizability.
Finally, these newer studies may focus on newer management control literature which tends to focus on newer control types which contain compositions of polyarchy, social proofs and more open organizations in order to make greater use of creative power of teams and individuals (Felin and Powell, 2016).
6. Conclusion
The objective of this research is to investigate the relationships between extraversion,
conscientiousness and the degree to which the MCS is perceived as enabling. The frameworks of Adler & Borys (1996), Simons (1994) and Burney, Radtke and Widener (2017) were used to conceptualize MCS perception. Despite the lack of significance in this study, this research has contributed to the discussion of the perception of MCS in relation to personality traits and the understanding of this topic. The main takeaway from this research is that both personality traits extraversion and conscientiousness do not show significant relations to the degree to which the MCS is perceived as enabling by conducting traditional statistics. The research question: what are the impacts of different degrees of personality traits on the degree to which employees perceive MCSs as enabling? is therefore answered for both investigated personality traits extraversion and
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