The ripple effect: How managers’ affective reactions to manager-level controls have a contagious impact on subordinates

Abstract

We provide evidence on the interrelatedness of management controls at different levels of the organizational hierarchy. Specifically, we investigate whether managers’ affective perceptions (managers’ positive and negative feelings) pertaining to the manager-level management control system impact their subordinates’ control outcomes. We argue that subordinates are influenced by their managers’ affective perception when manager-subordinate contagion is high. Further, we predict that manager-subordinate contagion is negatively related to employees’ independent understanding about the operational-level management control system and negatively related to the organization’s use of culture controls. We test our hypotheses using field data. Results support our predictions. Our study contributes to the MCS literature by highlighting the important role of managers as information conduits within management control systems and illustrate the rippling effect of managers’ reactions to manager-level controls on the effectiveness of operational-level controls.