An Eclectic Explanation of Shop Floor Control Using Efficiency and Power Theories

The paper identifies four control mechanisms on the shop floor and explains their determinants. By enriching contingency and transaction cost theories with power notions, several hypotheses are tested in a dataset composed of 329 Spanish firms in the food and electronic industries. Results show that shop floor control is shaped by efficiency concerns, power asymmetries and interdependences between control modes. In particular, control mechanisms depend on several structural traits of the firm and labour transaction attributes. However, managers’ opportunism also plays an important role through its effect on workers’ opportunism. This fact calls for the internalization of principals’ opportunistic behavior in efficiency-driven organizational theories. Furthermore, control mechanisms also show specific interdependences through their relations with certain labor transaction attributes and organizational traits. In fact, the level of human capital can at the same time be the outcome and the cause of certain control mechanisms. A relevant by-product is therefore that the level of human capital is not necessarily the main reason - as suggested by transaction cost economics - to internalize a labor transaction within the firm.