The Unfolding of Control Mechanisms inside Organizations: Pathways of Customization and Transmutation

Organizational control is a fundamental function of all organizations. Drawing on ethnographic data from one hospital implementing a new behavioral control mechanism across multiple internal units, I explore how control mechanisms spread and unfold inside organizations. This study shows that control mechanisms are co-created through interactions between managers and employees as they engage in an iterative team learning process in two stages: (1) learning about the mandated control mechanism in order to assess its viability in their local context; and (2) learning how to (re)design the control mechanism so that it delivers its intended control outcomes. It also identifies two pathways through which control mechanisms unfold. Along the customization pathway, teams customize the mandated control mechanism so that it functions well in their context. Along the transmutation pathway, teams develop their own locally designed alternative control mechanism to achieve the intended control outcomes based on their own assessment of their unit’s problems. By showing how organizational control mechanisms are co-created by management and employees, this study provides a dynamic view of how control mechanisms spread and unfold within organizations.