Linking formal controls to motor carrier performance: Curvilinear and interaction effects

• We conducted a national survey of motor carriers’ formal management controls.
• We found complex relationships between formal controls and carriers’ performance.
• Activity control exhibits a negative quadratic effect on market performance.
• Activity and output control exhibit a positive interaction on market performance.

We examine the relationships between formal management controls (FMCs)—activity controls and output controls—and motor carriers’ operational and market performance. Using nonlinear structural equation modeling, we identify curvilinear and interaction effects of FMCs on carrier performance. We contribute to theory by providing evidence that the relationships between FMCs and performance are more complex than previously theorized. Namely, excessive activity control will adversely affect market performance, especially when output control is low. However, when output control is high, increasing activity control improves market performance—up to a point. Accordingly, we provide managerial guidance on appropriate levels of FMC use.