Noncontrollable factors in the performance evaluation of profit center managers under divisionalized organization environment : research on the determinants of interorganizational differences in controllability principle implementation

국문 초록 (Abstract)

이 논문은 사업부제조직의 Manager에 대한 업적평가 및 보수책정에 있어서 실무상, 규범론적인 통제원칙(Controllability Principle)에 반하여 통제불가 능한 요소가 고려되고 있는 현상을 분석하고 있다. 규범론적인 통제원칙에 의하면 Manager의 권한 밖의 어떤 요소도 Manager의 업적평가 및 보수 결정에 고려되어서는 안된다. 경험론자들에 의하면 실무상 통제원칙은 매우 다양한 형태로 적용되고 있다 . 즉, 구체적인 적용에 있어서 조직간 혹은 조직내에 다양한 차이가 존재하 고 있다. 그러나 이러한 차이점을 설명할 수 있는 요인에 대한 연구는 현재 극히 제한적이다. 경험론자들에 의하면 몇몇 외생적인 조직상의 요인들이 이 러한 차이를 결정한다. 그러나 그들의 주장은 자료에 의한 통계적 뒷받침이 결여되어 있다. 이 논문에서는 Information Economics 및 Agency 이론에 근거하여, 사업부 의 자주성(Autonomy)이 검토되고 있다. 즉, 외생적인 조직변수중의 하나인 사업부의 자주성이 통제원칙의 조직간의 차이를 규명하는 요인인가가 검토되 고 있다. 경험론자들의 주장이 옳다면 이 변수는 당연히 통제원칙 적용상 중 요한 결정변수이다. 이 논문은 경험론자들에 의하여 주장되어온 외생적인 조직변수가 조직의 통 제원칙 적용의 차이점을 설명할 수 없다는 것을 보여주고 있다. 반면에 내생 변수, 다시말해서 Principal과 Agent의 위험에 대한 태도, Moral Hazard, 혹 은 Signal들간의 상관관계 등이 통제원칙 실행의 차이점을 규명한다. 따라서 조직내에서 Manager에 대한 업적평가 및 보수 책정에 있어서 최적 수준의 통 제불가능요소의 고려정도는 내생적인 변수들의 강도에 의하여 결정된다.

다국어 초록 (Multilingual Abstract)

This dissertation analyzes practices of large divisionalized organizations which consider noncontrollable factors when they evaluate and compensate for performance of profit center managers, contrary to controllability principle. According to the controllability principle, no account should be taken of matters outside the profit center manage r �s control in appraising and compensating for the performance of divisional management.
Empirical studies find a wide variation in the implementation of controllability principle in practice. There are interorganizational (across organizations) and intraorganizational (within an organization) differences of the controllability principle implementation. However, research regarding factors which explain these differences in practice is limited. Empirical researchers suggest several organizational factors as determinants of these differences. But they are unable to show a strong statistical relationship between practice and those organizational factors.
In this study, the autonomy of a division, an exogenous organizational factor, is tested. The objective of this study is to see whether exogenous organizational structure variables, particularly divisional autonomy , are determinants of the difference in firms implementation of the controllability principle (interorganizational difference). . In addition, different degrees of consideration of noncontrollable factors within an organization depending on various noncontrollable cost items (signals) are studied (intraorganizational
difference). The second objective i s to identify the properties of the optimal controllability . principle implementation under particular assumptions about characteristics of a principal and an agent, density functions of revenue and cost, and organizational characteristics.
The results of this study show that organizational factors which ar e claimed by a number of empiricists as determinants of controllability principle implementation do not seem to influence the implementation of the controllability principle directly. Rather, endogenous variables such as risk attitude, moral hazard, and correlation of signals seem to be determinants of varying degree of controllability principle implementation. In terms of optimal allocation of noncontrollable costs among organizations, the strength of risk aversion, moral hazard, and correlation between revenues and costs are factors that differentiate the controllability principle in practice vis-a-vis theoretic propositions. Factors which may affect these endogenous variables provide an opportunity to suggest several
hypotheses.
As an extension of this dissertation, hypotheses suggested here (about interorganizational and intraorganizational differences) can be tested based on survey data regarding direct endogenous factors. But data collection about the risk attitude of a principal and an agent, moral hazard of a principal and an agent, and correlation needs extended research. In addition, other than the autonomy variable that is tested here, other exogenous environmental organizational variables can be included into this model as test variables.
Lastly, the research on the relationship between exogenous and endogenous factors will also clear the inability of exogenous variables to explain interorganizational difference of the controllability principle implementation.