Aligning Multinational Control Systems Raman Muralidharan and Robert D. Hamilton III The Development of Control Concepts General Control Concepts Control has been described as the process that regu- lates organizational activities so that they are in accord with the organization's stated objectives 1 . Studies in organizational control have focused on several aspects of control, including power relation- ships, information problems, personal in¯uences, and cybernetic processes 2 . In a 1990 review of the international business literature, Ricks, Toyne and Martinez observed that studies of control within multinational corporations (MNCs) focus on two main aspects: types of control systems and extent of control 3 . This article combines both concepts. We take the position that the appropriate control system seleection will maximize the control, minimize dys- functional or inappropriate senior management assessment of subsidiaries and, in so doing, will control the subsidiary in the most economical man- ner. Control systems differ based on the means used to exercise control. The seminal work in this area was done by Ouchi in 1977 and 1979 4 . He identi®ed three types of control systems (output-based, beha- viour-based, and clan/input-based) that organiz- ations use in various combinations. The three types of control systems differ in how they seek to align organizational actions to stated objectives. Output- based systems focus on results, behaviour-based sys- tems focus on the process of work, and input-based systems focus on the antecedent conditions to per- formance, such as knowledge, skills, abilities, values and motives of employees 5 . Table 1 gives examples of the various elements encompassed in the three control system types. Ouchi argued that the choice of which of the three types of control systems a manager emphasizes Long Range Planning, Vol. 32, No. 3, pp. 352 to 361, 1999 # 1999 Published by Elsevier Science Ltd. All rights reserved Printed in Great Britain 0024±6301/99 $ - see front matter Pergamon PII: S0024-6301(99)00039-4 A superior strategy implemented ineffectively is much less likely to be successful. As a result, the control component of strategy represents one of the central activities of senior management. The added complexity inherent in managing a multinational corporation has meant that managers must define differential control systems for multiple foreign subsidiaries. Previous works have looked at factors such as strategy or environment that can alter the corporation control needs. However, prior theoretical, empirical and practitioner efforts have not assessed the linkage between different strategic controls ans contexts over time. This article identifies the different developmental and strategic stages of foreign subsidiaries, analyses how their control needs change over time, and recommends control systems appropriate for each stage. # 1999 Published by Elsevier Science Ltd. All rights reserved 352