- Learning is improved.
- More personal growth occurs.
- A better chance for a positively innovative workplace.
Dennis Campbell, Marc J. Epstein, and F. Asis Martinez- Jerez, “The Learning Effects of Monitoring,” The Accounting Review, 86, no. 6, (2011): 1909-1934.
ABSTRACT: This study investigates the relationship between monitoring, decision making, and learning among lower-level employees.
We exploit a field-research setting in which business units vary in the “tightness” with which they monitor employee decisions. We find that tighter monitoring gives rise to implicit incentives in the form of sharp increases in employee termination linked to “excessive” use of decision-rights. Consistent with these implicit incentives, we find that employees in tightly monitored business units are less likely than their loosely monitored counterparts to:
(1) use decision-rights; and
(2) adjust for hard information, in the form of historical performance data, in their decisions. These decision-making patterns are associated with large and systematic differences in learning rates across business units. Learning is concentrated in business units with “loose monitoring” and entirely absent in those with “tight monitoring.” The results are consistent with an experimentation hypothesis in which tight monitoring of decisions leads to more control but less learning. Keywords: management control ; monitoring; learning; decentralization; incentives; decision-rights. Data Availability: The data used in this study cannot be made publicly available due to confidentiality agreements with the participating organization. I. INTRODUCTION It either encouragement is well poor understood decisions of effective that or employee management decision opportunism making control with choices (Baiman the mitigation in 1990; organizations Simons of risky 2000; need outcomes to Merchant balance due and the to encouragement of effective decision making with the mitigation of risky outcomes due to either poor decisions or employee opportunism (Baiman 1990; Simons 2000; Merchant and We thank Srikant Datar, Steven Kachelmeier, Ranjani Krishnan, Michal Matějka, Greg Miller, Krishna Palepu, Wim van der Stede, Joe Weber, two anonymous reviewers, and participants at the AAA Annual Meeting, Harvard Junior Faculty Conference, the Management Accounting Section Conference, Real Colegio Complutense at Harvard, Tilburg University Accounting Summer Camp, Universidad Complutense, University of Notre Dame, The University of Texas, and the Global Management Accounting Research Conference, for helpful comments. All errors remain our own. Editor’s note: Accepted by Steven Kachelmeier. Submitted: July 2009 Accepted: May 2011 Published Online: July 2011 1909This content downloaded from 129.114.222.12 on Wed, 27 Nov 2019 00:48:58 UTCAll use subject to https://about.jstor.org/terms
1910 Campbell, Epstein , and Martinez-Jerez Van der Stede 2007). However, an additional consideration literature is that management control choices that alter powerful influence on learning (Sprinkle 2000; Lee limited literature on this topic by investigating the decision-making patterns and learning rates of lower-Determining appropriate management controls
CONCLUSION
We view this study as among the first attempts to document the relationship learning and management control through monitoring.
We find strong learning effects setting, which are concentrated among employees in business units that are “loosely and almost entirely absent in those which are “tightly monitored.”
We also show a by which these learning effects occur. Employees in “tightly monitored” business implicit incentives to experiment less in their decisions, leaving them fewer opportunities learn.