In this paper, I present a theory of management control based on Transaction Cost Economics.
This theory seeks to integrate into a single framework a set of insights as to the nature
of the organization's activities, the control problems that are inherent in these activities,
and the unique problem solving potential of various archetypal control structures. The gist
of the argument is that activities predictably differ in the control problems to which they
give rise, whereas control archetypes differ in their problem-solving ability, and that
alignments between the two can be explained by delineating the efficiency properties of the
match. This is a contingent configuration approach. It is a configuration theory in that it
offers a set of ideal types, conceived of as internally consistent and discriminating clusters
of attributes from multiple dimensions that have a specific effect on control structure
effectiveness as the variable to be explained. But it is also a contingent approach in that it
specifies the conditions in which each of the archetypes is most effective