Management Controls, Expectations, Common Knowledge and Culture

Control in organizations can be defined as expectational equilibrium, or correspondence between how the members of an organization behave, and how they are expected to behave by others. Using contract model of organizations as the base, we build a theory of control with the help of human expectations, common knowledge, and culture. Changes in factor and product market conditions tend to disrupt control in organizations. Strategic management consists of continual monitoring of the market conditions, and redesign of contracts, to restore and maintain the expectational equilibrium