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On the Effectiveness of Incentive Pay: Exploring Complementarities and Substitution between Management Control System Elements in a Manufacturing Firm

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  • Ivar Friis
  • Allan Hansen
  • Tam�s V�mosi

Abstract

Extant research already emphasises that complementarities and substitution involving incentive pay and other elements of an organisation's management control system play an important role in terms of explaining the effectiveness of incentive systems. Despite this awareness calls continue for more research addressing the need to better understand how interdependencies arise among management control system elements and how they affect organisational effectiveness. Based on an in-depth case study on the implementation of a new incentive system in a manufacturing firm, we seek to provide more research and insight into how incentive pay features in complementary and substitutional relationships in an individual organisational setting. Greater insight can help illustrate how complementary and substitutional relationships unfold in even more complex ways than current research indicates, as well as how the effectiveness of the incentive system in the individual organisational setting is determined by these relationships.

Suggested Citation

  • Ivar Friis & Allan Hansen & Tam�s V�mosi, 2015. "On the Effectiveness of Incentive Pay: Exploring Complementarities and Substitution between Management Control System Elements in a Manufacturing Firm," European Accounting Review, Taylor & Francis Journals, vol. 24(2), pages 241-276, June.
    • Handle: RePEc:taf:euract:v:24:y:2015:i:2:p:241-276
    DOI: 10.1080/09638180.2014.976055
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    Citations

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    Cited by:

    1. Ashish Varma & Adnan Khan, 2023. "Simons levers of control disentangled: A quasi-experiment into the competitiveness of hybrid firms," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(2), pages 19-41.
    2. Thomas Borup Kristensen & Henrik Nielsen, 2020. "Configuring a profile-deviation-analysis to statistical test complementarity effects from balanced management control systems in a configurational fit approach," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(4), pages 439-475, February.
    3. Gerdin, Jonas & Johansson, Tobias & Wennblom, Gabriella, 2019. "The contingent nature of complementarity between results and value-based controls for managing company-level profitability: A situational strength perspective," Accounting, Organizations and Society, Elsevier, vol. 79(C).
    4. Berend Van der Kolk & Tom Schokker, 2016. "Strategy implementation through hierarchical couplings in a management control package: an explorative case study," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 27(2), pages 129-154, May.

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