Performance measurement systems (PMSs) are used to diagnose and remediate problems, termed the “decision-facilitating” or feedback role of management control. We examine whether use of PMSs by individual decision makers is associated with better performance. Experimental studies have isolated individual-level effects of feedback on decision quality; however, it is difficult to extend these findings to natural settings. Archival and survey studies offer evidence on the association between the presence of PMSs and performance but have had limited success in measuring decision makers’ actual use of PMSs and addressing endogeneity of the decision to use PMSs. We use unobtrusively collected data on actual PMS use in 30 K–12 charter schools over three years to test whether teachers who make greater use of two PMSs are associated with greater growth in student learning. We find that teachers’ use of PMSs is associated with increased student learning, consistent with the premise that PMSs facilitate teacher interventions and improve student outcomes. The results are both statistically and materially significant, and they are better explained by PMS use than by selection effects of better teachers using PMSs. Consistent with the organization’s focus on “at-risk” students, the strongest effects of teachers’ use of one PMS are concentrated among the lowest-performing students. In sum, we find broad support for the thesis that the feedback role of PMSs is associated with meaningful performance improvement.

Transaction cost economics predicts that investments in management control will enable risky interfirm transactions. Risk is rarely eliminated, because firms trade off costs of management control and expected costs of control loss (together, the "cost of control"). The resultant solution typically comprises a mix of control investments with residual performance and residual relational risks. Transaction cost economics also predicts that the control-residual risk trade-off will vary with the cost of control. We use survey data on 287 risky information technology transactions to test whether the controlresidual risk trade-off varies predictably with two partnership-specific factors that proxy for variation in the cost of control: prior ties between exchange partners and the criticality of strategic resources to the transaction. The results support the hypotheses, providing novel evidence on trade-offs that managers make when investing in management controls while also prudently accepting some risks.

Trust is often posited to substitute for management control in interfirm transactions. However, this raises questions of how trust arises in new relationships, and whether trust that is not based on prior experience transacting together is sufficient to persuade managers to forgo investments in management controls. We use an experiment to test whether two features of the early stage of an interfirm relationship influence a buyer's initial trust in a supplier and have consequences for subsequent investments in management controls and in the collaboration. These two features are the autonomy of the buyer's manager to choose a supplier (i.e., delegation of decision-making authority) and the supplier's willingness to share information with the buyer. We find that the buyer manager's initial trust in the supplier is associated positively with both the autonomy to choose the supplier and the supplier's willingness to share information. Information content and supplier characteristics are held constant, so these results are novel and distinct from prior studies of the antecedents of trust. We find that higher initial trust is associated with reduced expenditures for management controls and increased investments in the collaboration. Thus, we conclude that delegation of decision-making authority and supplier information-sharing behavior in the early stages of a relationship influence the formation of initial trust, which has real consequences for investments in management control and in the collaboration.