Administrative controls and innovation

Administrative control procedures and organizational innovation appear to be incompatible organizational processes. Administrative control procedures are used to maximize coordination and to ensure reliability and predictability of behavior in the organization. Innovations are used to facilitate adaptation to the environment and to improve achievement of organizational goals. Innovation may reduce the degree of reliability in the organization, and the use of administrative controls may reduce innovation. However, administrative controls assume two forms whose effects on innovation may differ. One form is activity control—the degree to which members of the organization use procedures or resources specified by their superiors. The other is visibility of consequences—the ability and willingness to measure the consequences of organizational programs in terms of organizational goals. The following general hypotheses are advanced: (1) innovation varies inversely with activity control because activity control reduces the search for new programs and abridges the individual's capacity and incentive to innovate; and (2) innovation varies directly with visibility of consequences, since visibility of consequences allows the owner of an organization to evaluate the innovation's effect on goal achievement and to reward and encourage successful innovators. The variables were measured in 24 short-term, voluntary, nonteaching hospitals in the Chicago area, ranging in size from 216 to 393 beds. Innovation was measured by the promptness and frequency of trial of new drugs. Activity control and visibility of consequences were measured by indices of hospital procedures affecting medical staff practices. The following operational hypotheses were advanced: (1) the greater the control over medical staff activities, the less prompt the trials of new drugs; (2) the greater the control over medical staff activities, the less frequent the trials of new drugs; (3) the higher the visibility over medical care, the more prompt the trials of new drugs; and (4) the higher the visibility over medical care, the more frequent the trials of new drugs. Multiple regression analyses of the data were made. Other factors likely to affect innovation were included in the regressions to control for their effects. Hypothesis 4 received support at the 0.05 level of significance and the others received support at the 0.10 level. The pattern of findings lends support to the general hypotheses. The findings assume added importance because hospital control over medical staff activities is minimal. The relationships may be more pronounced in more tightly controlled organizations.