Formal control and trust inmonitoring
financial accounting outsourcing
in hybrid organizations – a multiple
case study of municipally
owned corporations
Arja Flinkman
University of Eastern Finland – Kuopio Campus, Kuopio, Finland
Benita Gullkvist
School of Accounting and Finance, University of Vaasa, Vaasa, Finland, and
Henri Teittinen
University of Eastern Finland – Kuopio Campus, Kuopio, Finland
Abstract
Purpose – This study explores the role of control archetypes and trust in the monitoring of established financial
accounting outsourcing (FAO) in municipally owned corporations (MOCs).
Design/methodology/approach – Drawing on Spekl�e’s control archetypes, designed to manage inter-
organizational relationships in outsourcing, and the concepts of trust, we analyzed conducted interviews,
contracts and other archival material in three MOCs.
Findings – MOCs employ both hybrid and non-hybrid control archetypes in controlling FAO. Detailed
contracts played a key role in themonitoring of FAO, but only at the strategicmanagement level. AllMOCs used
hybrid exploratory control such as joint development groups, which increased the role of trust at the operational
management level. The hybrid organizational form related to ownership seems to complement trust, either
directly or via the owner-city. Direct ownership of SP was, however, not required for trust to substitute formal
control.
Research limitations/implications – Our study builds on the perceptions and experiences of accounting
professionals regarding the use of control mechanisms and prevailing trust. To mitigate potential subjectivity in
our analysis, we used both data and researcher triangulation.
Practical implications – Both strategic- and operational-level managers are needed to balance formal and
informal control in the monitoring of FAO.
Originality/value – We enhance the understanding of the control practices employed by MOCs in managing
their FAO in hybrid organizational forms.
KeywordsMonitoring, Trust, Hybrid control, Hybrid organizations, Financial accounting outsourcing, MOC
Paper type Research paper
1. Introduction
Municipally owned corporations (MOCs) are independent legal enterprises with a
considerable degree of managerial autonomy. However, due to their multiple interests,
values, and logics, they are considered hybrid organizations (Grossi et al., 2022; Krause and
Swiatczak, 2020; Voorn et al., 2017). Hybrid organizations can be conceptualized through the
dimensions of hybridity, which refers to distinct modes of ownership structures, competing
International
Journal of Public
Sector
Management
© Arja Flinkman, Benita Gullkvist and Henri Teittinen. Published by Emerald Publishing Limited. This
article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may
reproduce, distribute, translate and create derivative works of this article (for both commercial and non-
commercial purposes), subject to full attribution to the original publication and authors. The full terms of
this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Data availability: The data that support the findings of this study are available on request from the
corresponding author.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0951-3558.htm
Received 1 March 2024
Revised 7 August 2024
27 January 2025
10 April 2025
Accepted 20 May 2025
International Journal of Public Sector
Management
Emerald Publishing Limited
e-ISSN: 1758-6666
p-ISSN: 0951-3558
DOI 10.1108/IJPSM-03-2024-0062
institutional logics and diverse sources of funding and various forms of social and institutional
control (Vakkuri et al., 2021, p. 246) or through their approach to value creation (Grossi
et al., 2022).
We aim to enhance the understanding of the control practices employed by MOCs in
managing their financial accounting outsourcing (FAO) service provider (SP) in hybrid
organizational forms, where municipalities own the SP and MOCs, which may be either
owners or non-owner customers of the FAO SP. In this study, both the MOCs and the SP are
hybrid, non-profit organizations tasked with fulfilling societal duties while also meeting
efficiency requirements.
Hybrid organizations form complex inter-organizational relationships (IORs). Therefore,
monitoring in a multi-ownership setting can be problematic, as the goals of different owners
are not always aligned (Voorn and Van Genugten, 2021; Ditillo et al., 2015; Cristofoli et al.,
2010). However, insufficient monitoring is likely to cause inefficiencies (Voorn et al., 2019).
Previous inter-organizational control (IOC) literature on MOCs (e.g. Krause and Swiatczak,
2020; Van Veen-Dirks and Giliam, 2020; Krause and Van Thiel, 2019; Voorn et al., 2017;
Argento and Peda, 2015; Ditillo et al., 2015) maintains that control mechanisms extend
beyond written agreements, and are combined with informal control, like trust (Argento and
Peda, 2015; Dekker, 2004).While exaggerated control may decrease the role of trust (Argento
and Peda, 2015; Vosselman andVan derMeer-Kooistra, 2009), trust may be complemented by
control through information sharing (Dekker, 2004) and monitoring (V�elez et al., 2008). The
environmental and behavior uncertainties in hybrid organizations require hybrid and non-
hybrid control archetypes [1] (Bracci et al., 2024; Spekl�e, 2001).
Literature on organizational hybridity primarily focuses on organizational forms and value
creation (Ferry et al., 2024; Grossi et al., 2022), related to accountability ethics (Baudot et al.,
2022), and the content of sustainability disclosures (Argento et al., 2019). Prior literature largely
neglects the hybrid practices, processes and expertise, which enable horizontal information
sharing and coordination across the boundaries of organizations and among groups of experts or
professionals (see however Agarwal et al., 2024). Further, different ownership structures
influence the control mechanisms employed (Ditillo et al., 2015). The ownership relationship
enhances partner knowledge, which allows cities to rely on an extensive history of relationships
grounded in bureaucratic culture and mechanisms, while also benefitting from informal trust
relationships to manage and control the behavior of their owned enterprises (Cristofoli et al.,
2010). Ownership together with interaction frequency and contract formalization affects the
interaction between trust and formal control (Argento and Peda, 2015).
We anchor this study on the concepts of hybrid organizations (Vakkuri et al., 2021; Krause
and Swiatczak, 2020; Battilana and Lee, 2014), control archetypes (Greenwood et al., 2017;
Spekl�e, 2001) and trust (Bracci et al., 2024; Langfield-Smith, 2008) to understand how
different control mechanisms and trust interplay in monitoring IORs in hybrid organizational
forms. Especially, we focus on established IORs between MOCs and their FAO SP, as
collaborative performance critically depends on actual practices, given that coordination
challenges in already established [2] IORs cannot be fully anticipated or mitigated ex ante
(Dekker et al., 2013). Further, conflicting control situations may arise, for example, when 1)
themunicipality supervises theMOC, 2) themunicipality or theMOCsupervises the SP (in the
role of owner or development group), and 3) the MOC is a customer of the SP, thereby
overseeing the SP in the execution of financial accounting (FA) processes. Thus, we aim to
understand howvarious controlmechanisms are employed and balanced [3] inmanaging these
IORs related to FAO. We pose two questions:
(1) How are different formal control mechanisms and trust used in monitoring an
established FAO relationship in hybrid organizations?
(2) What is the role of formal control and trust at different organizational levels in hybrid
organizations?
IJPSM
Previous literature approaches hybridity at various levels, including societal, organizational,
and individual levels (Grossi et al., 2024). In this study, we examine how strategic and
operational level management combines formal and informal control mechanisms to manage
appropriation concerns and coordination costs in IORs.
We build on semi-structured interviews, complemented with archival material. To increase
the power of our findings, we choose a multiple case study among customers of the same FAO
SP. FAO differs from other outsourced municipal services, like water services or waste
management, because it is measurable and quite standardized (Nicholson et al., 2006). FA
processes (e.g. payroll, accounts receivable, general ledger) are essential parts of the
accounting information system and their outsourcing can significantly affect the
organization’s management control systems and financial reporting processes (Christ et al.,
2015; Hirsch et al., 2015).
Our study contributes to the IOC literature by examining the interplay between hybrid and
non-hybrid control archetypes, goodwill and competence trust and organizational hybridity.
More specifically, this study adds to the debate on IORs by examining the control of FAO SPs
in contexts where the MOCs, as the service users control the SP either as shareholders or
clients.
The remaining structure is as follows. Chapter 2 introduces the theoretical framework,
followed by a description of the research design in Chapter 3. Chapter 4 includes the findings,
which are further analyzed and discussed in Chapter 5. Chapter 6 provides concluding remarks
and suggestions for further research.
2. Theoretical framework
To achieve the set objectives, successful outsourcing relies on effective IOCs (Dekker, 2004).
IOCs include formal and relational (informal) control mechanisms (Dekker et al., 2019). We
draw on Spekl�e’s (2001) control archetypes and trust (Langfield-Smith, 2008), designed to
manage IORs in outsourcing. Greenwood and Hinings (2017) demonstrated that using
archetypes is valuable for studying and understanding hybrid organizations. As the MOC
context is characterized as hybrid (Vakkuri et al., 2021), the competing systems of beliefs,
values, and practices (institutional logics) in the MOC context leads to tensions between the
collaborating parties (Grossi et al., 2024), for example regarding how and when they rely on
formal control and trust (Bracci et al., 2024).
2.1 Control archetypes
Spekl�e (2001, p. 427) defines a control archetype as “a characteristic, discrete configuration of
control devices that is descriptively and theoretically representative of a significant group of
observable management control structures and practices”. Spekl�e (2001) categorizes five
control archetypes (market control, arm’s length control, machine control, exploratory control
and boundary control), which encompass hybrid and non-hybrid (hierarchical ormarket-based
variations of control. Hybrid control archetypes are either arm’s length control or exploratory
control [4], emphasizing the importance of contracts as formal control mechanisms
(Anguelov, 2020). Detailed contracts ensure compliance with contractual provisions aiming
to guarantee continuous monitoring (action-oriented machine control), performance
measurement, and evaluation (hierarchical exploratory control) (Argento and Peda, 2015;
Langfield-Smith and Smith, 2003). Detailed contracts are not required if competition can be
activated easily (hybrid exploratory control) (Nicholson et al., 2006; Van de Meer-Kooistra
and Vosselman, 2000).
As non-hybrid control archetypes, arm’s length, exploratory and boundary controls have
also hierarchical variations. In the hierarchical arm’s length control, the service provider has
significant autonomy and market-based performance benchmarks are used (Nicholson et al.,
2006). In hierarchical exploratory control, information sharing is deeply embedded in the
International
Journal of Public
Sector
Management
organizational structure and process design and rewards are paid through advancement, based
on sustained performance (Spekl�e, 2001). Hierarchical boundary control is based on
prescriptive codes of conduct and budget includes authorization of maximum expenditure.
Other forms of control archetypes include market-control, machine control and market-based
boundary control.Market control is based on competition in an openmarket and partly suitable
for FAO, as programmability enables ex-ante definition of the expected outcomes (Nicholson
et al., 2006). Machine control is based on standardization of behavior or predefined and
codified performance targets (Spekl�e, 2001).
Previous studies on IOC in the hybrid context show that a bureaucratic-based control is
dominant, with the contract as the main reference for service quality and performance
measurement (Krause and Swiatczak, 2020). The high level of contractual trust among parties
significantly influences the relationship management and ensures compliance with the
contractual obligations (Bracci et al., 2024).
2.2 Trust
Alongside formal IOC, trust plays a significant role in the monitoring of MOCs (Krause and
Van Thiel, 2019). There must be a minimum level of trust to monitor IORs, but monitoring
every detail is impossible (Das and Teng, 1998). Trust can exist at both organizational and
individual levels between the parties in the outsourcing alliance (Dekker et al., 2019).
Competence trust refers to the partner’s ability to perform according to the contract, while
goodwill trust is defined as the perception of a partner’s intention to honor the agreement, the
ethical obligations, and the non-exploitative conduct during unforeseen situations (Langfield-
Smith, 2008). Competence trust is based on a partner’s technical, economic, and managerial
abilities, encompassing skills, expertise, credibility, and dependability (V�elez et al., 2008).
Proactive gathering of information and the size of the collaborating organization contribute to
competence trust (Langfield-Smith, 2008; V�elez et al., 2008). Common values and standards,
regular communication and the reputation of the partner can influence the level of goodwill
trust (V�elez et al., 2008). Trust develops through learning and adaptation processes, which
strengthen the relationships between collaborating parties, enhance durability, and promote
knowledge sharing (Van der Meer-Kooistra and Vosselman, 2000).
Trust-based controls rely on trust as a mechanism of control (Dekker, 2004). Trust links
control with behavior during collaboration, and trust is commonly explored through
interacting individuals (Dekker et al., 2019; Argento and Peda, 2015). The SP’s good
performance increases the goodwill and competence trust among the SP’s owners, but failure
to follow the owner’s strategic goals decreases goodwill trust in the SP (C€aker and Siverbo,
2011). A higher degree of trust results in deeper collaboration and improved information
sharing (Dekker, 2004). However, excessive trust can create unhealthy situations by fostering
blind trust in one another (Argento and Peda, 2015). Purely bureaucratic or trust-based control
mechanisms are, however, rarely found in the real-life context (Argento and Peda, 2015;
Cristofoli et al., 2010).
2.3 Interplay between control archetypes and trust
The interplay between formal control and trust in IOC depends on the ability of the individuals
involved and their organizations to maintain aligned interests in the services in question
(Argento and Peda, 2015). To understand the interplay between trust and formal control
configurations, we must consider trust as a consequence of the interactions within the IOR
(Dekker et al., 2019; Argento and Peda, 2015). For example, a lack of belief in the partner’s
goodwill or competence trust has been found to increase the dominance of formal control
configurations (Das and Teng, 1998; Krause and Swiatczak, 2020). However, trust can also
reduce the necessity for formal controls, especially when individuals’ actions are adequate to
handle the complexity of the relationship (Dekker et al., 2019). Organizations may establish
IJPSM
routines based on past experiences to facilitate smooth collaboration and enhance trust
between the collaborating parties (Dekker et al., 2019).
According to the rational concept of trust, trust-based control mechanisms may either
substitute or complement formal control configurations (Krause and Swiatczak, 2020;
Argento and Peda, 2015; Dekker, 2004). Arm’s length control exploratory control and partly
boundary control can be assumed to complement trust-based control, as minimal effort to
establish performance standards beforehand, information sharing embedded within the
organizational framework, and contracts that are generally vague in their overall direction
(Spekl�e, 2001). A complementary relationship between control archetypes and trust suggests
that trust and formal control configurations are additively related, meaning that a higher level
of either trust or formal control configurations results in a higher level of control (Poppo and
Zenger, 2002; Das and Teng, 1998). In a substitutive relationship, trust and formal control
configurations are inversely related. Thus, more trust decreases the use of formal control
configurations, and vice versa (Dekker, 2004).
2.4 Interplay between organizational hybridity, formal control and trust
Hybrid organizations need to combine social and political objectives with the ideals of profit
maximisation, in the context of complex social structures and diversified accountability
regimes (Grossi et al., 2022). This requires hybrid organizations to balance diverse goals and
complexities across sectors. Essentially, hybrid organizations leverage resources and control
forms from multiple sectors to fulfill divergent purposes and values, encompassing societal,
financial, and ethical considerations (Baudot et al., 2022; Rautiainen et al., 2022).
Figure 1 illustrates the interplay between hybrid and non-hybrid control archetypes,
goodwill and competence trust, and hybrid organizations. In hybrid organizations, conflicting
institutional logics operate at the organizational and individual levels (Skelcher and Smith,
2015). These institutional logics lead to different control forms (e.g. hybrid, hierarchical or
market-based control mechanisms). Trust can take different configurations depending on the
type of formal control used (Bracci et al., 2024). The use of formal control mechanisms may
either increase trust or indicate a lack of it (Dekker, 2004; Das and Teng, 1998). MOCs are
dependent (on their owner cities) and they must balance the conflicting objectives, such as
public value creation and profitability (Krause and Swiatczak, 2020). In FAOs, the client
(MOC) is dependent on the SP for (all) accounting services and the SP is dependent on the
revenue generated through the continuation of the client relationship (Nicholson et al., 2006).
Furthermore, the role of formal control (control archetypes) and trust at the strategic and
Figure 1. Interplay between hybrid and non-hybrid control archetypes, goodwill and competence trust and
organizational hybridity.
International
Journal of Public
Sector
Management
operational levels of collaborating organizations is highlighted, as the interplay between trust
and formal control may vary at different levels in the organizations (Bracci et al., 2024).
Figure 1 serves as a guide to the empirical study illustrating the interplay between hybrid and
non-hybrid control archetypes, trust and organizational hybridity.
3. Case setting and research methodology
The nature of the research problem and the aim of this study makes an interpretive multiple
case study suitable (Yin, 2002). This approach facilitated close interaction with the
interviewees of the case organizations to explore issues in depth and develop an in-depth
understanding of the contextual-related control issues. The aim is not only to describe what
kind of control structures are found in the cases, but also to interpret how these control
mechanisms are used in monitoring an established FAO relationship in the hybrid
organizational form.
3.1 The case setting
Wechose to conduct an interpretivemultiple case studywith a few customers of the same FAO
SP, as we aim at contextualized and thick descriptions (Eriksson and Kovalainen, 2016). First,
we contacted a major SP in the municipal sector, requesting its participation and access to
MOC clients who had recently outsourced their FA to the SP. The SPwas chosen, as it is one of
six FAO SPs for the public sector in the country. The SP is a limited company owned by
municipalities andMOCs (altogether 33 owners). It also serves several non-owner MOCs. SP
has to balance the interests of itsmany owners, pointing to a hybrid organizational form related
to ownership also from SP’s point of view. The focal SP offers FA and information and
communication technology (ICT) services to municipal organizations.
Thereafter, SP’s client organizations (MOCs) were emailed about potential participating in
this study, and three organizations agreed. These threeMOCs [5] provide societal services, that
is education, waste management and housing services. The three MOCs had outsourced their
FAO, including payroll, accounts receivable and invoicing, accounts payable and ledger,
invoice circulation and general ledger to gain access to enhanced knowledge and resources as
well as advanced technologies. After the outsourcing decision, the organizations’ accounting
specialists were transferred to SP, except for those who retired. We interviewed strategic and
operational level actors whose responsibilities included the monitoring of the FAO, among
other tasks. For MOC1, this is the second FAO, which began in 2019. MOC2 had previously
outsourced its FA to another service provider, which was merged into the focal SP in 2018,
when the focal SPwas established.MOC3 had outsourced its FA to the pre-organization of the
focal SP. Interviews at the strategic level unfolded that MOC2 was forced to follow its owner
city’s choice of the SP.
MOC1 owns 0.2% of the shares in the SP and is therefore a member of the SP’s steering
group. This group consists of SP’s owners, who are responsible for directing the use of its
resources and overseeing its overall financial and operational management, including risk
management. The major owner city of MOC1 owns 8.7% of the SP’s shares. MOC2 and
MOC3 do not own any shares in the SP but their owner-cities are members of the steering
group. Further, City3 owns 18.3% and City8 11.9% of the SP, respectively. City1 owns more
than 60% ofMOC1, while City2 similarly ownsmore than 60% ofMOC2. City8 ownsMOC3
entirely. Thus, all MOCs belong to the city group and must adhere to the group guidelines as
applicable. The SP organizes regular shareholder meetings, where strategic-level managers
from the customer organizations can address issues that might cause disagreements among the
owners. The hybrid organizational forms related to ownership and control mechanisms used
are illustrated in Figure 2.
The MOCs can own shares in the SP or they can use SP’s services through their owner-
municipalities. SP’s owners are all so called affiliated entities [6]. Further, all the owners of SP
IJPSM
have differing goals regarding outsourced FA services but one common goal is to produce their
services as efficiently as possible to theirmunicipal owners. The dependency on the owner city
is significant, which influences the collaboration between MOC2 and SP. MOC1 receives the
majority of its funding from the Ministry of Education and Culture as a state contribution.
MOC2’s financing is based on waste management fees, while MOC3 relies on rental income.
MOC1 does not pay dividends to its owner municipalities. However, MOC2 and MOC3 may
do so at the discretion of the owner municipalities.
3.2 Data collection and analysis strategy
In the data collection, we followed recommendations of case study analysis (Yin, 2002) and
combined semi-structured interviews at both strategic and operational management levels
with archival data. Amultiple case study is viewed as providing stronger and more persuasive
evidence compared to findings obtained from a single case. If the conclusions drawn from
several cases remain consistent despite variations in their contexts, those results are considered
more universally applicable than those derived from a single case (Yin, 2002).
The semi-structured interviews involved three participants from each of the three MOCs
and the SP, representing both strategic and operational levels. The interviewees were selected
based on their involvement in the monitoring of the FAO services [7]. In total, four strategic-
level directors and eight operating-level actors were interviewed betweenNovember 2020 and
January 2021, during a period when the FAOwith the SP was expected to operate “normally”
after potential implementation challenges. To confirm the results obtained and enhance the
reliability of the data, follow-up interviews [8] were conducted in 2025. From the previous
participants, three strategic-level and five operational-level participants were reached.
Source: Authors own work
City 1
City2
City 7
City 3
City 4
City 5
City 6
City 8
MOC1
MOC2
MOC3
S P, owned by Cities and MOC1
Oper.Man.
Oper.Man.
Oper.Man.
S trat.Man.
S trat.Man.
                 .Man.
Daily operations
Control of formal
contracts
Strat./Formal contracts
S hareholder meetings
= steering group
J oint development group
Ownership (0.2%)
Major shareholder
of MOC2
Member of development group
Member of development group
Major shareholder of MOC1
The ownership of SP by cities varies between 1.2% and 18.3%
Strat
Figure 2. The hybrid organizational forms related to ownership and control mechanisms used.
International
Journal of Public
Sector
Management
Altogether twenty interviews, lasting from 30 min to one hour each, were conducted using
the Microsoft Teams online application or phone. The interviews were recorded with the
permission of the interviewee, transcribed and coded through an iterative process, in which the
researchers read the transcripts and documents several times in search of passages related to
hybrid and non-hybrid control archetypes and the concepts of trust derived from the theoretical
framework. The full transcriptions ensured a reliable analysis, since everything said can be
analyzed (Gioia et al., 2013).
We coded all initial quotations as well as information from the archival material through
three-level coding. For example, in the initial quotation, we found readiness to tender again as
the first code. As the second code we identified easily activated competition to ensure
propositional performance, based on Spekl�e’s definitions of the different control archetypes.
This refers to hybrid exploratory control as final code. In our analysis, we used Langfield-
Smith’s (2008) definition of competence and goodwill trust as applied to strategic alliances.
We also identified the factors that were important for maintaining trust in the FAO. Examples
of the three-level coding are presented in Table 1.
The SP drafted all contracts. The service contracts provided information on various aspects,
such as ownership structures, service descriptions, responsibility allocations between MOCs
and SP, and service management procedures (e.g. steering and/or development groups and
designated contact persons). As noted, all three contracts between theMOCs and SP, aswell as
the group guidelines of each largest owning city and SP’s owner strategy, were coded using
definitions of archetypes and trust-enhancing factors. To avoid subjective interpretations,
interview transcripts and all archival material were used to triangulate data. Researcher
triangulation was also applied, i.e. researchers analyzed the data individually, then compared,
discussed and agreed on interpretations. Only minor changes were made. Consistent with
Table 1. Three-level coding of control archetypes used by MOCs
Initial quotation
Code 1
Summarizing a
quote
Code 2
Based on the characteristics of
control archetypes
Code 3
Control
archetype
“If there are issues with the current
service provider, we can simply
initiate a new bidding process.”
(Principal, MOC1)
Readiness to
tender again
Latent (but easily activated) or
endogenized competition to
ensure commensurate
competition
Hybrid
exploratory
control
“The contract is quite detailed and
includes many attachments.”
(Financial Manager, MOC1)
Detailed
contract
Detailed, reasonably completed
contract
Hybrid arm’s
length contract
Three-level coding of factors important to maintain trust in FAO relationships
Initial quotation
Code 1
Summarizing a quote
Code 2
Based on the definition of
factors to maintain trust
Code 3
Factor to
maintain trust
“And, of course, the mutual
trust that thingswill proceed as
agreed.” (Financial Secretary,
MOC2)
An effective expectations
management system helps
maintain trust
How to set realistic
expectations for clients to
help maintain trust
Managing
expectations
“If there are trusted people you
can talk to and collaborate
with effectively, everything
works smoothly.” (Financial
Manager, MOC3)
Effective communication
helps maintain trust
How effective
communication with
clients helps maintain
trust
Communication
Source(s): Authors’ own work
IJPSM
Gioia et al. (2013), we used concepts such as monitoring based on control archetypes and trust
in a matrix to synthesize the findings from the three MOCs.
4. Findings
4.1 Interplay between hybrid control archetypes and trust in hybrid organizations
The detailed contracts as hybrid arm’s length controls play a key role in themonitoring of SP in
MOC1 andMOC3. The relationshipwith themajor owner city [9] alongwith the size of the SP
as a guarantor of the SP’s overall service quality seemed to foster trust at the strategic
management level. Trust in this hybrid organizational form is based on the timely exchange of
accounting information among all parties involved.
The SP was already known, as our owner city uses the same SP. Being a sufficiently large operator,
[SP] is considered a reliable and trustworthy service provider. (Principal, MOC1)
I receive some guidance from the city . . . from the strategic director, from our own board and the
financial director of our main owner city. The guidance is not clear, but action must be taken. We rely
onmutual trust among all parties. There is trust in the owner-cities, and among the parties involved . . .
based on open and adequate communication. There has always been an effort to foster mutual trust.
(Administrative Director, MOC2)
According to the SP’s owner strategy, its main task is “to provide industry-independent ICTas
well as financial and human resource management services as an affiliated unit under
procurement law to its owner groups. The company can also provide industry-specific services
tomeet the needs ofmultiple clients.” The operational-levelmanagers seem to be skeptical and
lack trust in the joint ownership.
It seems we are receiving significantly worse service as a subsidiary owned by the city. When I meet
with city staff, they do not seem to face the same challenges as we do. Therefore, being a client of the
same service provider may not be as beneficial. (Financial Manager, MOC1)
At the operational level, monitoring is done through different communication channels and
trust is built gradually.
Different functions operate with various models at different levels. In practice, staff members
communicate as needed via phone, email, or Teams.Meetingswith staff are held approximately every
1–3months to address ongoingmatters, during which interim checks on current issues are conducted.
(Financial Manager. MOC1)
Trust is not built overnight, if you do not know each other. Also, SP’s staff turnover has been quite
significant. We gradually get to know each other’s ways of working. (Cashier, Accountant, MOC1)
While there was trust in the SP, it was also believed that the SP had insufficient resources.
SP’s resources are usually not enough. (Financial Manager, MOC1)
SP’s outdated accounting processes have been difficult to accept. Interviewees from MOC1
stated that the service level has deteriorated and efforts have beenmade to initiate negotiations
to improve the service quality related to the FA processes.
We used to operate differently . . . We have tried to negotiate changes to address aspects that do not
please us. They [SP] have, however, operated according to their standardized contracts for years, and
the contracts have not been changed. (Financial Manager, MOC1)
Further, the interviewees argued that the SP prioritized the needs of the owner cities and only
addressed the development of FA processes for the MOCs if time permitted.
I feel that SP has engaged in more personalized negotiations with the city compared to us.
(Cashier, MOC1)
International
Journal of Public
Sector
Management
SP seems to prioritize the larger owner cities first, and only considers us if there is time. This certainly
does not help build trust. (Administrative Director, MOC2)
The affiliated unit -position ofMOC3 is based on the fact that its owner city is also the owner of
the focal SP. The IOC is rooted in the contractual documents and trust in the owner city’s
ownership of the SP.
This is naturally the case, as the group [owner city] owns this [SP], and its financial accounting has
been outsourced to the SP . . . Thus, there is trust in the SP’s expertise, and they [SP] have drafted the
contract. (CEO, MOC3)
All MOCs exercise control of the FAO based on mutual coordination at the operational
management level. This interaction between the collaborating parties strengthens trust,
particularly competence trust. InMOC2, the importance of daily monitoring at the operational
level seems to be emphasized. Further, daily monitoring foster competence trust in SP.
Communication is regular. We have joint meetings four times a year to discuss financial accounting
matters. All organizational levels are present, including our Financial Manager and CEO.
(CEO, MOC3)
Anything can happen when you do not see the transactions [customer billing] yourself. Therefore,
billing must be continuously monitored to ensure revenue. (Financial Secretary, MOC2)
At the operational level, regular meetings in the form of joint development groups take place
several times a year, throughwhich FA processes are developed. Joint development groups are
defined in the detailed contracts. While performance evaluation is based on broad, emergent
standards (hybrid exploratory control), these meetings form the basis for competence and
goodwill trust. Trust based on these joint development groups seems to substitute formal
control, even though MOC2 is not an owner of the SP. However, trust in joint development
groups is not always very strong.
Development meetings for each area (Finance, HR) are held in the spring and fall. (Financial
Manager. MOC1)
The SP has also started hosting a development group with us once or twice a year, in accordance with
our wish. (Administrative Director, MOC2)
If there are trusted people you can talk to and collaborate with effectively, everythingworks smoothly.
(Financial Manager, MOC3)
Even though the contract between MOC2 and the SP is only a checklist of the activities to be
carried out, the strategic management level continuously monitored the FAO processes. This
monitoring of the reporting system aims at evaluating the achievement of the quantitative and
qualitative performance standards of the service.
The MOCs are primarily forced to choose the same SP as their main owner-cities, which
highlights the dependency on the main municipal owner in IORmonitoring. It seems that trust
has developed based on the ownership structure, and influences the formal controls
implemented by the board of directors.
I found it [contract] hidden among other contracts.When you asked about it, I thought we did not even
have it. This outsourcing was mandated by our primary owner city. (Administrative Director, MOC2)
The content of the service package is determined by the company’s decision-making authority.
However, a broader disengagementmight, for example, require discussionswith the owners regarding
their guidelines. (Principal, MOC1)
4.2 Interplay between non-hybrid [10] control archetypes and trust in hybrid organizations
The IOR is also monitored through daily interactions (hierarchical arm’s length control) and
detailed responsibility clarifications (hierarchical exploratory control). The contracts of
IJPSM
MOC1 and MOC3 include detailed responsibility allocation tables, defining the
responsibilities of the customer and the SP.
The accounts receivable service does not include the processing of payment transactions or
accounting materials. However, the provider is fully responsible for the service if the client has also
entered into an agreement with the provider for accounting services and payment transaction services.
(Service contract, MOC1)
The service descriptions attached to the contract clearly outlined the responsibilities of both the
client and the SP by accounting processes. For example, regarding the general ledger process,
the following is described:
The on-line reporting is the responsibility of the SP, aswell as themaintenance of the reporting system.
(Service contract, MOC3)
The responsibility allocation tables seem to work at the operational level of MOC1, which
owns the SP. However, MOC3 faces challenges due to a lack of updates.
These responsibility tables for the different functional areas show howwe and the external actor work.
They are needed, as our job descriptions have changed. The tablesmake it easy to checkwho [MOCor
SP] is responsible for each task. (Cashier, Accountant, MOC1)
Sometimes there are ambiguities regarding the responsibilities, such as who is responsible for the
accuracy of the fixed asset entries. There is certainly a need to review them point by point (Financial
Manager, MOC3)
Trust is built through daily interactions and partner training.
The recently recruited accountant [of SP] has asked a lot of advice and we have familiarized her with
our operations (Administrative Director, MOC2)
All MOCs monitored the IOR through the SP’s appointed customer’s contact persons, seen as
action-oriented machine control. The appointed contact persons were approachable when
challenges arose, and their role was to ensure the smoothness of the accounting processes.
These persons played a key role in fostering both competence and goodwill trust through daily
interactions.
We have, for example, our own account manager, who ensures our accounting transactions are well-
managed. (Financial Manager, MOC1)
The contract betweenMOC2 and SP contains a short list of agreed services. The interviewee at
the strategic management level maintained that MOC2 does not use specific formal control
mechanisms besides the short list. Monitoring of IOR is employed through daily interactions
(action-oriented machine control) (Administrative Director, MOC2). MOC2 relies on the
indirect ownership, daily interactions and formal joint development groups, which foster both
competence and goodwill trust.
Monitoring SP’s services through monthly reports, and collaborating with the SP to further develop
these services, form the foundation of trust in our [IOR] relationship. (AdministrativeDirector,MOC2
Service production handles routine tasks well, but development and change efforts are lagging
because the pricing for the customer is often based on pass-through billing in change situations, which
does not motivate development. For example, costs for development consultants and similar expenses
are passed on to us and they [SP] are not willing to guarantee decrease in standardized prices in the
long run. (Financial Manager, MOC3)
At the operational level of MOC2, monitoring is completed through continuous collaboration
but trust does not appear very strong.
We learned over the summer not to make assumptions. Everything, such as sales invoices, must be
checked. (Financial Secretary, MOC2)
International
Journal of Public
Sector
Management
MOC1 and MOC3 have a systematic service level agreement (SLA) disorder management
process including pre-defined and codified performance targets. Transaction costs are
controlled through pricing mechanisms based on transaction volumes. These control
mechanisms refer to result-oriented machine control. The strategic-level managers believe
that the operational-level managers monitor the outsourced service and strategic-level
managers’ complaint, if needed (action-oriented machine control).
We [strategic level managers] give feedback and complain about processes that do not work, like
travel expense reimbursement. The HR and finance teams continuously monitor the SP.
(Principal, MOC1)
At the strategic management level, competence trust exists between the collaborating
organizations in all MOCs. This is based on the hybrid organizational form (SP owned by
municipalities), as MOCs trust that their owner cities have established a reliable company to
manage their FA functions. Further, transparent processes and previous references foster the
competence trust towards the SP.
We can trust this service provider, which has its own transparent risk management processes . . . We
can consult other referenced organizations. (Principal, MOC1)
The operational-level managers do, however, not trust the competence of the strategic-level
managers in monitoring through the joint development groups. Strategic management level
may be dependent on at least themain owner municipality, which increases the dependence on
the owner municipality. This may foster the trust in the SP at the strategic management level.
Sometimes, only the strategic-level directors participate in the joint development group meetings.
They may not know or understand the challenges that the operational-level managers and accounting
specialists face. (Financial Manager, MOC3)
Trust does not replace the control archetypes, but remains a collaboration tool and expresses
the mutual commitment between the parties. The formal control archetypes foster the
customer’s confidence in the SP.
When a client decides to proceed with outsourcing and begins to search for service providers, open
communication from the very beginning is crucial. (CEO, SP)
5. Discussion
The findings of our study indicate that MOCs utilize hybrid, hierarchical, and market-based
controls to monitor the FAO SP through joint development groups, tendering, detailed
contracts and daily monitoring to ensure the functionality and efficiency of the FAO
operations. In hybrid organizational forms, there are different logics in controlling FAO: the
municipality’s hierarchical ownership is used to monitor the SP, ensuring resources, and
obtaining expertise; the management of the SP by the MOCs emphasizing market orientation
and efficiency requirements and from municipalities point of view, organizing operations
through the MOCs. This finding is consistent with the prior findings of organizational
hybridity (hybrid organizational forms and competing institutional logics) (e.g. De Waele
et al., 2021). From the analysis of the three MOCs and the SP, hybrid organizations, control
archetypes and concepts of trust (Figure 1), the following reflections are made.
First, MOCs employed hybrid, hierarchical and market-based control archetypes. The
strategic level of MOC1 and MOC3 primarily relied on detailed contracts as hybrid arm’s
length control to foster trust between collaborating parties and ensure compliance with the
agreed-upon operating principles. This finding is consistent with Krause and Swiatczak
(2020). At the operational management level, detailed monitoring as machine control was
required to ensure compliance with the agreements and the understanding of the industry. The
adoption of market-based control in the form of competitive bidding did not replace the
IJPSM
hierarchical-based control (detailed contracts), which aligns with the findings of Ditillo et al.
(2015). Rather, the public sector’s re-tendering among SPs led to the use of more control
archetypes. Our finding that theMOCs employed numerous control archetypes contradicts the
findings of Spekl�e (2001), who recommends hybrid arm’s length control to manage
outsourcing relationships.
Second, the hybrid organizational form related to ownership, i.e. direct ownership of the SP
(MOC1) or ownership via an owner city (MOC3), complicated the balance between formal
control and trust, especially at the operational level, where trust was based on joint
development groups and daily interactions. Especially through daily interactions, the
operating level management conducted the monitoring of the FAO. Consistent with prior IOC
literature (Bracci et al., 2024; Dekker, 2004; Das and Teng, 1998), trust-based controls were
used either as substitutes for or complements to control archetypes. Competence trust existed
in the beginning of the IOR because of the municipal ownership of the SP. Reliance on SP’s
reputation (market-based boundary control) increased the role of competence trust in
complementing formal control, which supports the findings of Argento and Peda (2015).
Consistent with Anguelov (2016), the municipal ownership of the SP may suggest that
municipal managers sought to protect their organizations against SP’s opportunistic behavior
throughMOCs. SP also used control archetypes to foster the competence trust among its client
organizations. However, contrary to Argento and Peda (2015), we found that ownership was
not always necessary to substitute formal control with trust, as demonstrated by the case
of MOC2.
Finally, the findings also show how different control archetypes and trust interplay at
different organizational levels. At the strategic management level, the reaction to the main or
only owner city reinforced the significance of the detailed contract, which in turn strengthened
trust, as discussed by Bracci et al. (2024). At the organizational level, this led to the
coexistence of two control archetypes: the hybrid arm’s length control focusing on the detailed
contract and a trust-based control, where informal controls emerged as active communication
at both strategic and operational management levels in the joint development groups. The
combination of both formal control and trust at operational management level highlights that
trust-based control did not completely replace formal control. This result supports the
complementary role of trust and is consistent with findings of Dekker (2004). Further, all
MOCs employed hybrid exploratory control through joint development groups, which
enhanced the role of goodwill trust at the operational management level. Consistent with
Argento and Peda (2015), ownership facilitated competence trust between the collaborating
parties at the strategic management level, and ensured membership in SP’s steering group.
Moreover, neither the strategic- nor the operational-level managers on the customers’ side
were able to predict all appropriation and coordination concerns in monitoring the FAO
relationship in the hybrid organizational form. Therefore, consistent with Bracci et al. (2024),
we suggest that both strategic- and operational.level management are needed to balance the
interplay between formal control and trust in monitoring the SP in the municipal context.
6. Conclusions
Adding to previous research on MOCs as hybrid organizations (e.g. Krause and Swiatczak,
2020; Argento and Peda, 2015), this research investigated the interplay between control
archetypes and trust in the monitoring of established FAOs in the hybrid organizational form
covering dimensions of ownership and the use of different control mechanisms. This study
takes the understanding of hybrid organizational forms further by focusing on the IOR
between MOCs and their FAO SP, where the MOC can be either owner of SP or use the
services via the owner municipality. Our analysis revealed that MOCs employed both hybrid
and non-hybrid (hierarchical andmarket-based) control archetypes. The hybrid organizational
form related to ownership seems to be relevant regarding the interplay between formal control
and trust in the IORs between the MOCs and the SP, and seem to complement both goodwill
International
Journal of Public
Sector
Management
and competence trust, either directly or via the owner-city, however only at the strategic
management level. Further, trust appears to play a key role, not only in complementing or
substituting formal control configurations, but also in having an independent and
unpredictable influence on mobilizing key actors and shaping the IORs.
Our study contributes to the IOC literature as follows.We enhance the understanding of the
interplay between hybrid and non-hybrid control archetypes, goodwill and competence trust
and organizational hybridity. More specifically, this study adds to the debate on IORs by
examining the control of FAO, where MOCs may be either owners or non-owners of the SP.
This study showed that as hybrid public sector organizations MOCs can be understood to be
guided by several institutional logics simultaneously, and their control of FAO SP is a mixture
of hybrid and non-hybrid control archetypes and trust. Second, the hybrid organizational form
related to MOCs and their FAO SP seems to strengthen the importance of detailed contracts
and trust. However, even without direct ownership of the SP, trust may substitute formal
control in monitoring the IOR. Finally, our study indicates that the role of control archetypes
and trust at strategic and operational management levels vary in monitoring the FAO in the
MOC context. At the strategic management level, detailed contracts are critical, as MOCs
often seem obligated to choose the same SP as their main owner city. At the operational level,
trust is fostered through daily interactions and joint development groups. Both strategic- and
operational-level managers play essential roles in balancing formal and informal control
mechanisms to manage appropriation concerns and coordination costs in IORs.
Our study has some limitations. This study builds on the perceptions and experiences of
accounting practitioners regarding the use of control mechanisms in the monitoring of FAOs.
The interviewees’ perceptions may be inaccurate or the factors identified and interpreted as
important control mechanisms may vary between the interviewees. We have, however,
confidence in our data because we have interviewed practitioners working in different roles
who are directly involved in or responsible for the monitoring of the FAO relationship. We
have also relied on archival material.
Our study highlights specific themes thatmay be of interest for further research. The hybrid
organizational form ofMOCs could be investigated from the owner-cities point of view to find
out the performance effectiveness of this form of organizational structure in FAO. Overall, the
use of hybrid control forms in the context of state-owned enterprises warrants further studies,
especially given the growing interest in outsourcing public services to external limited
organizations in this sector.
Notes
1. Previous IOC literature classifies control archetypes in slightly different ways (Bracci et al., 2024;
Langfield-Smith and Smith, 2003). In this study, we use Spekl�e,s (2001) classification into hybrid
and non-hybrid (hierarchical, and market-based) control archetypes.
2. Established means accepted or respected because of having existed for a long period of time (https://
dictionary.cambridge.org)
3. Certain actions between the collaborating partiesmust be controlled to find a balance between control
and trust. Trust and control reinforce each other, meaning that control depends on trust, but trust also
requires control (Van Veen-Dirks and Giliam, 2020).
4. Hybrid arm’s-length control relies on detailed pre-established contracts with compliance measures
for issue resolution, whereas hybrid exploratory control uses less specific contracts, focusing instead
on close interaction, shared responsibility, and effective information flows to foster cooperation and
align behaviors.
5. MOC1 is owned by two cities. MOC2 is a limited company owned by five municipalities. One
municipality in the district owns the majority of MOC2. MOC3 is a consortium of two limited
companies and MOC3 is owned by one city.
6. An affiliated entity is formally separate from the contracting entity and operates independently in its
decision-making. The contracting entity, either alone or jointly with other contracting entities,
IJPSM
controls the entity in the same way as it controls its own establishments. Additionally, the affiliated
entity must not conduct more than 5% of its business with entities other than the contracting entities
controlling it, up to a maximum of EUR 500,000. Furthermore, the affiliated entity may not hold
capital other than that provided by the contracting entities. (Act on Public Procurement and
Concessions, 1397/2016, x 15)
7. The MOCs retained some accounting staff in-house for monitoring purposes and customer service,
including roles such as cashiers and financial secretaries.
8. The follow-up interviews confirmed the previous results, allowing the findings to be described and
analyzed in an integrated manner.
9. MOC1 is part of a municipal group.
10. The non-hybrid control archetypes refer to hierarchical and market-based control archetypes
(Spekl�e, 2001).
References
Act on Public Procurement and Concession Contracts (1397/2016),
Agarwal, N., Krishnan, R. and Weiler, L. (2024), “Institutional theory and hybrid accounting and
control systems”, Journal of Management Accounting Research, Vol. 36 No. 1, pp. 1-26, doi:
10.2308/jmar-2023-024.
Anguelov, L.G. (2016), “Transaction costs explanations for proxy monitoring in municipal services
contracting”, Doctoral dissertation, The Florida State University.
Anguelov, L.G. (2020), “Monitoring arrangements for outsourced public services: the importance of
service characteristics for the distribution of oversight responsibilities”, International Public
Management Journal, Vol. 23 No. 2, pp. 252-275, doi: 10.1080/10967494.2019.1692114.
Argento, D. and Peda, P. (2015), “Interactions fostering trust and contract combinations in local public
services provision”, International Journal of Public Sector Management, Vol. 28 Nos 4/5,
pp. 335-351, doi: 10.1108/ijpsm-08-2015-0154.
Argento, D., Grossi, G., Persson, K. and Vingren, T. (2019), “Sustainability disclosures of hybrid
organizations: Swedish state-owned enterprises”,Meditari Accountancy Research, Vol. 27 No. 4,
pp. 505-533, doi: 10.1108/medar-07-2018-0362.
Battilana, J. and Lee, M. (2014), “Advancing research on hybrid organizing – insights from the study of
social enterprises”, The Academy of Management Annals, Vol. 8 No. 1, pp. 397-441, doi:
10.5465/19416520.2014.893615.
Baudot, L., Dillard, J. and Pencle, N. (2022), “Hybrid organizations and an ethic of accountability: the
role of accountability systems in constructing responsible hybridity”, Accounting, Auditing and
Accountability Journal, Vol. 35 No. 3, pp. 598-626, doi: 10.1108/aaaj-11-2019-4287.
Bracci, E., Tallaki, M. and Riso, V. (2024), “Trust and management control archetypes in public-private
partnerships”, Journal of Accounting and Organizational Change, Vol. 20 No. 6, pp. 178-199,
doi: 10.1108/JAOC-12-2023-0225.
C€aker, M. and Siverbo, S. (2011), “Management control in public sector joint ventures”, Management
Accounting Research, Vol. 22 No. 4, pp. 330-348, doi: 10.1016/j.mar.2011.08.002.
Christ, M.H., Mintchik, N., Chen, L. and Bierstaker, J.L. (2015), “Outsourcing the information system:
determinants, risks, and implications for management control systems”, Journal of Management
Accounting Research, Vol. 27 No. 2, pp. 77-120, doi: 10.2308/jmar-50847.
Cristofoli, D., Ditillo, A., Liguori, M., Sicilia, M. and Steccolini, I. (2010), “Do environmental and task
characteristics matter in the control of externalized local public services? Unveiling the
relevance of party characteristics and citizens’ offstage voice”, Accounting, Auditing and
Accountability Journal, Vol. 23 No. 3, pp. 350-372, doi: 10.1108/09513571011034334.
Das, T.K. and Teng, B.S. (1998), “Between trust and control: developing confidence in partner
cooperation in alliances”, Academy of Management Review, Vol. 23 No. 3, pp. 491-512, doi:
10.2307/259291.
International
Journal of Public
Sector
Management
Dekker, H.C. (2004), “Control of inter-organizational relationships: evidence on appropriation
concerns and coordination requirements”, Accounting, Organizations and Society, Vol. 29 No. 1,
pp. 27-49, doi: 10.1016/s0361-3682(02)00056-9.
Dekker, H.C., Sakaguchi, J. and Kawai, T. (2013), “Beyond the contract: managing risk in supply chain
relations”, Management Accounting Research, Vol. 24 No. 2, pp. 122-139, doi: 10.1016/
j.mar.2013.04.010.
Dekker, H.C., Donada, C., Mothe, C. and Nogatchewsky, G. (2019), “Boundary spanner relational
behavior and inter-organizational control in supply chain relationships”, Industrial Marketing
Management, Vol. 77, pp. 143-154, doi: 10.1016/j.indmarman.2018.11.010.
De Waele, L., Polzer, T., van Witteloostuijn, A. and Berghman, L. (2021), “‘A little bit of everything?’
Conceptualising performance measurement in hybrid public sector organisations through a
literature review”, Journal of Public Budgeting, Accounting and Financial Management, Vol. 33
No. 3, pp. 343-363, doi: 10.1108/jpbafm-05-2020-0075.
Ditillo, A., Liguori, M., Sicilia, M. and Steccolini, I. (2015), “Control patterns in contracting-out
relationships: it matters what you do, not who you are”, Public Administration, Vol. 93 No. 1,
pp. 212-229, doi: 10.1111/padm.12126.
Eriksson, P. and Kovalainen, A. (2016), Qualitative Methods in Business Research, Sage, Los Angeles.
Ferry, L., Wegorowski, P. and Andrews, R. (2024), “Hybridity, institutional logics and value creation
mechanisms in the corporatisation of social care”, The British Accounting Review, Vol. 56 No. 1,
101244, doi: 10.1016/j.bar.2023.101244.
Gioia, D.A., Corley, K.G. and Hamilton, A.L. (2013), “Seeking qualitative rigor in inductive research:
notes on the Gioia methodology”, Organizational Research Methods, Vol. 16 No. 1, pp. 15-31,
doi: 10.1177/1094428112452151.
Greenwood, R., Hinings, C.R. and Prakash, R. (2017), “25 years of the professional partnership (P2)
form: time to foreground its social purpose and herald the P3?”, Journal of Professions and
Organization, Vol. 4 No. 2, pp. 112-122.
Grossi, G., Vakkuri, J. and Sargiacomo, M. (2022), “Accounting, performance and accountability
challenges in hybrid organisations: a value creation perspective”, Accounting, Auditing and
Accountability Journal, Vol. 35 No. 3, pp. 577-597, doi: 10.1108/aaaj-10-2021-5503.
Grossi, G., Laguecir, A., Ferry, L. and Tucker, B. (2024), “Accounting and accountability for managing
diversity tensions in hybrid organisations”, The British Accounting Review, Vol. 56 No. 5,
101470, doi: 10.1016/j.bar.2024.101470.
Hirsch, B., Nitzl, C. and Schauß, J. (2015), “The influence of management accounting departments
within German municipal administrations”, Financial Accountability and Management, Vol. 31
No. 2, pp. 192-218, doi: 10.1111/faam.12052.
Krause, T.A. and Swiatczak, M.D. (2020), “In control we trust!? Exploring formal control
configurations for municipally owned corporations”, Journal of Public Budgeting, Accounting
and Financial Management, Vol. 33 No. 3, pp. 314-342, doi: 10.1108/jpbafm-10-2019-0160.
Krause, T. and Van Thiel, S. (2019), “Perceived managerial autonomy in municipally owned
corporations: disentangling the impact of output control, process control, and policy-profession
conflict”, Public Management Review, Vol. 21 No. 2, pp. 187-211, doi: 10.1080/
14719037.2018.1473472.
Langfield-Smith, K. (2008), “The relations between transactional characteristics, trust and risk in the
start-up phase of a collaborative alliance”, Management Accounting Research, Vol. 19 No. 4,
pp. 344-364, doi: 10.1016/j.mar.2008.09.001.
Langfield-Smith, K. and Smith, D. (2003), “Management control systems and trust in outsourcing
relationships”, Management Accounting Research, Vol. 14 No. 3, pp. 281-307, doi: 10.1016/
s1044-5005(03)00046-5.
Nicholson, B., Jones, J. and Espenlaub, S. (2006), “Transaction costs and control of outsourced
accounting: case evidence from India”, Management Accounting Research, Vol. 17 No. 3,
pp. 238-258, doi: 10.1016/j.mar.2006.05.002.
IJPSM
Poppo, L. and Zenger, T. (2002), “Do formal contracts and relational governance function as substitutes
or complements?”, Strategic Management Journal, Vol. 23 No. 8, pp. 707-725, doi: 10.1002/
smj.249.
Rautiainen, A., M€att€o, T., Sippola, K. and Pellinen, J.O. (2022), “Accounting, microfoundations,
hybridisation and longitudinal conflicts in a Finnish healthcare organisation”, Accounting,
Auditing and Accountability Journal, Vol. 35 No. 3, pp. 863-886, doi: 10.1108/aaaj-12-
2019-4313.
Skelcher, C. and Smith, S.R. (2015), “Theorizing hybridity: institutional logics, complex organizations,
and actor identities: the case of nonprofits”, Public Administration, Vol. 93 No. 2, pp. 433-448,
doi: 10.1111/padm.12105.
Spekl�e, R.F. (2001), “Explaining management control structure variety: a transaction cost economics
perspective”, Accounting, Organizations and Society, Vol. 26 Nos 4-5, pp. 419-441, doi:
10.1016/s0361-3682(00)00041-6.
Vakkuri, J., Johanson, J.-E., Feng, N.C. and Giordano, F. (2021), “Governance and accountability in
hybrid organizations – past, present and future”, Journal of Public Budgeting, Accounting and
Financial Management, Vol. 33 No. 3, pp. 245-260, doi: 10.1108/jpbafm-02-2021-0033.
Van der Meer-Kooistra, J. and Vosselman, E.G.J. (2000), “Management control of interfirm
transactional relationships: the case of industrial renovation and maintenance”, Accounting,
Organizations and Society, Vol. 25 No. 1, pp. 51-77, doi: 10.1016/s0361-3682(99)00021-5.
Van Veen-Dirks, P. and Giliam, A. (2020), “Understanding the interactions between control, trust, and
perceived risk in public sector joint ventures”, Advances in Management Accounting, Vol. 32,
pp. 1-34, doi: 10.1108/s1474-787120200000032001.
V�elez, M.L., S�anchez, J.M. and �Alvarez-Dardet, C. (2008), “Management control systems as inter-
organizational trust builders in evolving relationships: evidence from a longitudinal case study”,
Accounting, Organizations and Society, Vol. 33 Nos 7-8, pp. 968-994, doi: 10.1016/
j.aos.2008.02.006.
Voorn, B. and van Genugten, M. (2021), “Dealing with multiple principals in at arm’s length
organizations: a qualitative study of Dutch municipally owned corporations”, Public
Administration, Vol. 100 No. 2, pp. 291-307, doi: 10.1111/padm.12746.
Voorn, B., Van Genugten, M. and Van Thiel, S. (2017), “The efficiency and effectiveness of
municipally owned corporations: a systematic review”, Local Government Studies, Vol. 43
No. 5, pp. 820-841, doi: 10.1080/03003930.2017.1319360.
Voorn, B., Van Genugten, M. and Van Thiel, S. (2019), “Multiple principals, multiple problems:
implications for effective governance and a research agenda for joint service delivery”, Public
Administration, Vol. 97 No. 3, pp. 671-685, doi: 10.1111/padm.12587.
Vosselman, E. and Van der Meer-Kooistra, J. (2009), “Accounting for control and trust building in
interfirm transactional relationships”, Accounting, Organizations and Society, Vol. 34 No. 2,
pp. 267-283, doi: 10.1016/j.aos.2008.04.002.
Yin, R.K. (2002), Case Study Research: Design and Methods, Sage Publications, London.
Corresponding author
Arja Flinkman can be contacted at: arja.flinkman@esedu.fi
For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com
International
Journal of Public
Sector
Management