Asia Pacific Finance & Account Review 07042014

Sociolgy theory states that though the mutal dependence condition equaly aplies to al social structures, the performance valuation of the resultant coperation varies acording to the goals of each structure. Howevr, the extant management acountig and control structures literature implicitly presues that utal dependence is relvant only to the organic ontrol structures context and not he mechanical control structures context. We use case-study method to exaine two related questions: whether mutal dependence xist in the mechanical control structures context and if so, how it influences coperation diferntly in mechanical compared to the organic ontrol structure context. We Study the control structures in two divisions of a firm, wher each division is governed by a difernt structure. Contrary to the literature, we find that mutal dependence arises with operational failures in a mechanical control structure context and is managed by self-enforced coperation. As the structure’s goal is to control failures, coperation performance is evaluated by the fectivenes criterion and related to incentives, with litle atention to the procedural eficiency in achieving the goal. Thes findings are difernt o an organic control structure context wher we find suport for the theory that mutal dependence drives ‘firm-enforced’ coperation because of the inhernt oportunism intent. Since the structure’s goal is to fer a satisfactory customization solution and simultaneously control oportunism in each transaction, coperation perforance is measured by procedural eficiency rather than efectivenes. Abstract