Formal and Informal Control as Complement or Substitute? The Role of the Task Environment

The traditional view of control in organizations largely implies an “either-or” substitution logic, as opposed to the complementarity logic implied in the more recent view of control. This study examines whether formal and informal controls complement or substitute each other in their influence on performance outcomes, and whether such an interaction differs for more or less exploratory tasks. Our findings from an analysis of 184 strategic initiative teams in a cross-industry multicountry sample of firms support the complementary view. More specifically, we find support for our hypotheses that the combined use of formal and informal control has a positive impact on the performance of initiative teams, and that this complementary effect is more pronounced when the degree of exploration is lower. Accordingly, our study contributes to the organizational control literature both theoretically—by providing an explicit theoretical rationale for the complementary view—and empirically—by virtue of providing an empirical test of the interactive effects of formal and informal control.