Using an interactive lab experiment, we investigate whether employees expect managers’ discretionary performance evaluations to be affected by the design of the management control system, and condition their effort levels on these expectations. We develop and test theory that employees' effort is affected by the frequency with which their performance is reported to managers and the reporting structure of the organization, i.e., the width of managers’ span of control. The results of the experiment do not support our hypotheses, as employee effort does not vary significantly across conditions. We discuss this result and its potential implications.
Ghita et al. (Thu,) studied this question.