Analyzing Management Control Systems between Principal Owners of Facilities and Subsidiaries in the Chemical Industry

Abstract

The purpose of this study is to analyze how managers of sections that belong to the chemical industry make use of management control systems (MCS) in order to facilitate relationships between the labor force of the owner enterprise and employees of outsourced companies, through collaboration and daily bases of coworking. It intends to consider how they allocate their available resources to the contractor characteristics and how, together, they confront external factors. The research strategy is based on a case study in which the uses of MCS by the most relevant Spanish chemical contractor influence the relationship with subcontractors in terms of strategic goals, trust, risk management or performance evaluation. Findings derived from four semi-structured interviews conducted with the central contractor and three subcontractors belonging to each of the three separate activities’ categories suggest that using MCS as controlling or enabling, in this setting, can have lasting and deep effects in the alignment of subcontractors’ strategic orientation to match the contractor’s, in the unification of risk management mechanisms, in the enhanced trust and collaboration in the coworking space, as well as in the performance evaluation criteria applied.

1. Introduction

The chemical industry has been a key sector within the economies of the modern world due to its importance in meeting needs and improving the quality of life in societies, transforming raw materials into energy [1]. It drives contemporary economic growth in most countries and creates employment, being a focal point for the public, government officials and non-governmental organizations [2]. In Spain, more than 500,000 jobs are related to this industry. Additionally, seven years ago, this sector exported more than EUR 26 billion per year [3] and it generated an 11% of the manufacturing gross value added (GVA) and over 1% of the total Spanish GVA [4].

Management control systems (MCS) are a set of tools that lead employees towards the achievement of goals and previously defined objectives [5]. In this sense, it is considered that MCS are excellent tools when it comes to use of information for decision-making processes [6]. Therefore, managers can use different approaches to take advantage of MCS; diagnostic control and interactive control [7,8]. As a result, organizational control might be effectively accomplished to achieve high compliance without unforeseen obstacles [9]. Finally, coworking is the last vertex of our study. It might be defined as common workplaces utilized by different professionals [10]. Coworking techniques are being more and more implemented in the business world, because they enhance competitiveness and innovation [11].

The chemical industry is such a relevant force that it has wide-ranging connections, and we would like to focus on how Spanish companies set up their chemical facilities as they are not the only ones working on them. In chemical factories, the principal owner counts on the workforce from outsourced entities on a daily basis to complete the work. We think that this is a huge challenge that must be studied because these corporations subcontracted may even be international companies. In addition, MCS have not been studied in this kind of coworking network; thus, our subject is not cover by prior researchers. The main concepts considered by this study are business strategy, risk, trust, and the influence that these factors have on performance, including systems of evaluation.

This study descriptively analyzes how managers of a chemical plant use MCS to achieve organizational aims. Moreover, this work also aims to fill a gap in the literature by analyzing how MCS enable employees belonging to different employers to construct a proper environment of work, as this kind of coworking has not been considered in depth by researchers.

With the purposes of this study and the subject proposed, a case studied was developed. To do this, four interviews were conducted. Firstly, an exhaustive gathering of information was approached in order to obtain previous knowledge about the topic. At the end of this research, the four interviews were conducted. The first interview established the concepts under study and allowed us to design a node tree. In addition, it helped us to identify the proper questions for the subsequent interviews. The next interviews were used to contrast the information and obtain the findings. The first interviewee was the maintenance manager of contractor company, which is the department most frequently related to subcontractors. The other three interviewees were with the managers of a delegation of the subcontractor’s enterprises. All the services provided to the contractor through these relationships were covered with the chosen sample.

This study proceeds with a theoretical framework divided into five sections; two of them are related to the industry under study, whereas the rest are related to MCS, subcontractors and coworking spaces’ academic theory. Regarding MCS, we present the definition, the relationship with organizational control, and the concepts proposed. Then, the methodology used is described. Subsequently, an analysis of the findings is carried out, examining each concept. Finally, the study ends with the main findings obtained.

2. Theoretical Framework

2.1. Industry Overview

Worldwide, the chemical industry converts different kinds of raw materials (oil, petroleum and natural gas among others) in more than 70,000 products. Currently, the European chemical industry is expected to increase its economic importance from EUR 317 billion in 2010 to EUR 447 billion by 2030. European Union chemical manufacturers employ 1.19 million workers and account for, approximately, 19.6% of the global industry sales [2]. Economists argue that the competitiveness of the sector relies on technology investments as well as on the size of the country or region in which industrial facilities carry out their activity, including the capability to interact globally [1].

This is especially true in Spain, where the chemical industry is one of the strongest pillars of the economy; Spain is Europe’s fifth largest producer of chemicals [3]. Its development heavily depended on several key capital investments in technology, which did not come until the second half of the 20th century, with the Spanish industrialization of many sectors, i.e., the progressive replacement of coal by oil as the basis of the global chemical industry, being one of the key changes [3]. CEPSA, the biggest Spanish chemical company, was founded based on this replacement and continues to thrive up until this day. The chemical industry in Spain has been a sector that always keeps up despite major economic issues such as oil crises or the housing bubble [1].

Presently, the sector comprises over 3000 companies that achieve a turnover of more than EUR 3 billion, generating 13.4% of the gross industrial product and 660,000 direct, indirect, and induced jobs, as portrayed in the Snapshot of the Spanish Chemical Sector of 2018 by FEIQUE. Multiple studies have shown that the business cycle of the Spanish economy is positively influenced by this high-tech industry, also demonstrating competitive capacity in international markets [4]. Currently, competitors in the Middle East as well as the rising concerns about the impact of the industry on the environment pose new challenges on not only Spanish, but also European firms, which try to focus on specialty chemicals and services made up from efficient and environmentally friendly supply chains [2].

Therefore, the Spanish government developed the Renewable Energy Plan 2010–2020. The plan’s overall purpose was to achieve a 20% reduction in primary energy use and greenhouse gas emissions, and a 20% increase in renewable energy consumption by 2020 [3]. Effects were reported to the European Union’s energy agencies. In this same line, the European Commission has also developed a route to be followed for 2050, identifying the non-use of carbon as a raw material within this industry as the main objective [1]. Consequently, between Spanish chemical manufacturers, the number of companies that carry out improvements related to energy efficiency increases and environmental management is striking, although there are still many who try to resist these changes.

2.2. Management Control Systems

2.2.1. Objectives and Use

MCS allow managers to handle information needs and to have effective control of the organization components, avoiding the lack of control [12]. Therefore, they are systems, rules, practices, values and other activities designed for directing employee behavior [13], achieving objectives [5], and, consequently, affecting human endeavor within a specific organization [14]. MCS become especially important in the context of uncertainty due to internationalization, the globalization of risks, lower trade barriers, access to many sources and kinds of information, and rapid technological advances, all of which force companies to employ tools so as to organize and control operations to adapt quickly to various changes [6].

The main objective of MCS is to ensure that employees and managers use information in an effective manner to organize the activities carried out by the organization [6]. Additionally, MCS provide information about risks, threats and opportunities when decisions need to be made, so internal and external choices are better informed and quicker to make. MCS have another main role, which is to enable employees to look for opportunities and to develop problem-solving abilities [7]. However, MCS are difficult to operate and require constant effort, and once they are established within a company structure, they might be difficult to change [12].

When studying managerial intentions, and the different choices managers can make regarding control systems [13], two dimensions can be distinguished, according to the levers of control (LOC) perspective [7]. On the one hand, the diagnostic control dimension is related to formal information systems that managers employ in supervising organizational outputs and correcting deviations from pre-established goals. On the other hand, the interactive control dimension accounts for formal information systems that help managers engage in the continuous decision-making processes experienced by their employees [7], promoting discussion and learning [13].

Consequently, diagnostic uses of MCS are frequently employed with the purpose of assessing the outcomes of an organization and considering the deviations produced from the previously established paths and predictable goals. Alternatively, interactive uses are put into practice in order to involve managers personally in managing strategic uncertainties and identifying opportunities [6,13]. Therefore, when MCS are employed diagnostically, they compare actual achievements against pre-established goals. When used interactively, managers try to determine organizational priorities and to encourage the emergence of new strategies [7].

Commonly, diagnostic uses of MCS are considered negative forces because they tend to focus on mistakes and negative deviations, whereas interactive uses are linked to positive strengths due to the emphasis on communication between top positions and workers [8]. Nevertheless, for realizing the full potential of the LOC, both views should be adopted simultaneously [13], facilitating the implementation and attainment of an organization’s strategic objectives as well as supporting the emergence of communication necessities and the need of adjustment to organizational factors. Additionally, in line with the interactive and diagnostic use of MCS, other ways in which managerial intentions can be exercised in using control are enabling, which enhance organizational capabilities and performance through the extension of attributes such as trust, autonomy, relationships between the workforce and professionalism, and constraining or controlling, which ensure predictability [12,13,14]. The controlling use of MCS is related to efficiency, formality, predictability and the relevance of achieving short-term goals [14]. In addition, the controlling role of MCS is not only related to correctness, but also to the importance of spontaneity and adaptability; at the same time, it mitigates information asymmetry [7]. MCS also incorporate values and beliefs in order to ensure that the goals settled are achieved and to inspire employees in their search after solutions [7].

It is because of the opposing understandings of uses in a diagnostic and interactive, or enabling and controlling way, that dynamic tensions arise in companies. When it comes to organizations that operate in stable environments, such as the chemical industry in this analysis, it is believed that enabling uses could be adverse tools because companies’ processes are well established and they require efficient ways of managing them, with not so much creativity and new ways of solving arising challenges [15]. However, as introduced before, when organizations fail in balancing these forces, fewer goals will be accomplished, decision-making will be slower, and the wastage of resources may occur [8]. In this sense, controlling would mitigate the problems that arise from information asymmetry, while enabling would bring about improved adaptability, also linked to the dissimilarity between decision-influencing and decision-facilitating [7]. As a result, the present study analyzes MCS to investigate the follow research question:

How do managers attempt to balance constraining and enabling uses of MCS regarding companies’ subcontractors?

2.2.2. Organizational Control

Different authors over the years, such as [9], [5] or [16], among others in

Table 1. Control definitions.

Author	Control Definition
[15]	“Measurements or organizational actions designed to enable its members to achieve high compliance with the minimum unintended consequences.”
[5]	“A set of mechanisms that are useful to increase the probability that employees would behave in a way that the objectives of the organization can be achieved.”
[16]	“Control is sum of the influence on interpersonal relationships.”

Source: Authors.

, have defined control in organizations differently.

Therefore, we could argue that the best definition regarding organizational control, including the previous approximations, should be the following:

Organizational control is the process, based on the influence exerted over people (via mechanisms and actions), of ensuring the quality and quantity of performance of a given organization, applying corrective measures if needed [17]. Prior research has classified control mechanisms as external or internal, defining external aspects as those which give survival values to the organizations, and internal tools as those that aim to make work relationships possible. Experts have also studied the objects of control, which could be employees, the work realized, the financial department, or those in charge of the budget. Furthermore, we may also take into consideration the means used in order to exercise the control, we may distinguish between physicals tools, materials or symbols. The degree of formalization could also be selected, because they could be formal or informal controls [17].

2.2.3. Other Theoretical Dimensions

From the study of MCS literature in the chemical industry, as well as in other industries, several theoretical dimensions other than organizational control can be considered to understand how balance may be achieved. The author of [7] has studied how MCS manage business strategy for over two decades; he argued that to harmonize foreseen objectives and innovation, four levers of control (LOC) are needed. These four LOC are belief systems, boundary systems, feedback systems and measurement systems. The way in which the MCS will be used will respond to the managerial intentions that have already been explained, interactive–diagnostic and controlling–enabling, which is the aim of this research. In choosing the control mechanisms and how they are employed, business strategies can be implemented and controlled [8,14]. Business strategy can be understood as the knowledge about an industry structure and dynamics, which determines the organization’s relative position in that industry’s structure, to improve organizational results [17]. It involves the choice of the company’s objectives, the adoption of courses of action, and the allocation of resources necessary for carrying out the goals [7].

Risk must also be understood as a key concept, so that this theory [7] might be applied to implement strategies successfully [18]. Risk may be understood as a “measure of the probability of adverse effects to occur, like unwanted negative consequences that arise from an event or activity” [19]. Furthermore, when risk events happen, they challenge the structure and viability of the firm, and they usually have a negative impact on firms’ projects. Moreover, there are two types of risk related to processes to which firms may be exposed: technological risk (exclusivity of a product, process or technology) and strategy risk (dependence on suppliers or subcontractors) [20].

Specifically, when dealing with suppliers or subcontractors, trust might be key in order to effectively control and achieve strategic goals. Trust has to be understood in terms of expectations; the belief that an external factor is capable of achieving what is demanded or expected. This concept has also been defined as a form of attitude or willingness, which incorporates expectations toward colleagues and coworkers and implies the willingness to take a risk [21]. The most important characteristics within this concept are ability, benevolence, integrity and trustworthiness. Additionally, beliefs and values, which are part of MCS, can enhance engagement respect to goals/objectives and motivate employees looking after opportunities and solutions [10]. Furthermore, it is believed that to obtain a proper alignment between employees and organizations’ goals, MCS must incorporate tools for enhancing trust, and thus the view of justice within the operation [21,22].

A key dimension for being able to assess the ability or trustworthiness of subcontractors, and to design and implement the MCS needed in each case, is performance. Performance encompasses factors that need to be accomplished for the business strategy to succeed [14]. For this research, the focus is on performance management, which consists of the application of behavioral principles for achieving better employee motivation. In addition, a performance measurement system (PMS) is usually considered to be one of the components of MCS [8]. Reference [23] defined PMS as “formal and informal mechanisms, processes, systems, and networks used by organizations” to achieve key objectives and for evaluating aspects such as strategic development processes, management control, and performance.

Finally, evaluation has been defined as a set of criteria, normally determined by researchers, that study the outcomes or qualifications of work performed. However, scholars often mention this term of measurement without explaining exactly what they mean by it, because it depends on the subject under consideration [7,16,23].

Based on this analysis of the previous literature, Figure 1 was constructed with the expected relationships derived from these concepts, in regard to the main purpose of our research.

As can be observed, MCS can play a key role in implementing business strategy. MCS need to be in line with aptitudes in order to be efficient and consistent with strategic options [8]. Strategy may be blocked or disturbed by potential risks. It is known that the more usual a risk situation is, or the more information we have about it, the easier it is to handle it [19]. In this sense, MCS provide information about the existence of risks and threats [7]. Trust relies on the belief that workers will obtain the desired outcomes despite risks, and that they will exhibit proper behavior. However, trust may not be understood as part of any strategy because it depends on people [6,23]. Therefore, it needs to be worked out independently, and trust in managers is a result of their interactive use of MCS [18]. The consideration of deserving trust is understood as trustworthiness, which leads to a relaxed work environment and strong worker performance [21]. Moreover, it is known that noticing trustworthiness when work is completed rebounds on more trust; therefore, this concept needs to be contemplated as a core element of trust [22]. Performance management (influenced by risks and trust) results in the motivation of employees, and thus on the achievement of outcomes [15,23]. Finally, evaluation mechanisms can be put into practice to assess outcomes and to change MCS, if needed.

2.3. Subcontractors’ Role

First, attending to Cambridge Dictionary, we may state that a subcontractor is a firm that does part of a job for which another company is responsible. The role that subcontractors play in supply systems and manufacturing chains is treated as a heavily important topic within managerial discipline, including strategic management. Moreover, subcontractors are also influenced by aforementioned factors such as globalization, innovation, and reducing barriers. As a result, subcontractors’ evolution is driven by two principal factors: subcontractors’ capability of enhancement against different or new activities; and the nature of the relationship in which they are engaged—client/contractor-supplier [17,20,22]. Currently, subcontractors are considered a major force when studying an industry, because if the quality of the relationship that they establish with contractors is high, problems may be addressed more easily [9]. Furthermore, this high-quality level can only be achieved if the flow of information between the main contractors and subcontractors in question is balanced, ending with a proper execution of the commissioned activities [14].

Usually, prior research has built on the definition of supplier segmentation based on the type of industry under subject or attending to the suppliers’ characteristics. In this regard, two dimensions could be appointed: supplier’s influence on buyer’s results and the supplier relationship’s degree of risk [19,20]. In this line, it is also recommended that contractors and subcontractors work out tools to simplify coordination and problem solving. In addition, the contractor or client must serve as an intermediary among subcontractors, when some of them are working for the same organization in order to obtain a final output [22].

There are a variety of instruments that we may consider in order to achieve this goal:

-

Frequently holding meetings to review progress;

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On-site inspections to verify quality;

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Establishment of a code of conduct;

-

Development of a common policy of safety and rules.

2.4. Coworking Spaces

Coworking techniques are gaining more power all over the world as a conjoint phenomenon in an economy where competitiveness relies on knowledge and continuous innovation [11]. Consequently, coworking spaces are defined by [10] as, “Shared workplaces utilized by different sorts of knowledge professionals, working in various degrees of specialization in the vast domain of the knowledge industry”. However, in relation to this study, the particular coworking space of interest has not been analyzed in depth. Most of the published scientific papers and articles focus on the concept of coworking space as rent office infrastructure where its members share costs and are professionally independent [10]. We understand that subcontractors from our case study also are engaged in a coworking space, but they are professionally related (through a contractor and subcontractor relationship). Thus, we studied how this kind of coworking space within the same industry complex enhances a better collaboration to obtain a common output and its effect in balancing the usage of MCS [11].

Coworking occurs when a community of entities is developed in a collaborative manner by working together within the same environment. In addition, the most successful coworking spaces are those which cultivate a sense of community among members through the creation of common values [24]. Moreover, we are not only quoting office or industrial space, but also the sharing of social spaces between those two. All of them foster social interactions; thus, knowledge and ideas are exchanged [25]. In the specific case of the chemical industry, individuals working in shared spaces often work on similar projects within the industry [24]. Subcontractors commonly work in the facilities of the main company or contractor. Different models and experts have assumed that, in these cases, the learning processes among coworking-users improve performance if they are willing to take advantage of the trust shared among them [25]. Therefore, the activities performed daily in the same physical space by different actors may be enhanced by the trust that results from coworking environments [11]. In this sense, different subcontractors that are working in the same space for the same client may have an advantage if they rely on their collaborative capability.

3. Research Method

This work was developed using a qualitative approach, which emphasizes qualities of entities and the processes and meanings that occur naturally [26]. In this sense, the study of the balance of MCS uses is carried out by considering the different dimensions that may help provide an answer to the research question in the specific context of contractor–subcontractor relationships in the chemical industry. This way, we may be able to explain how managers of sections that belong to the chemical industry make use of MCS in order to facilitate relationships between the labor force of the owner enterprise (contractor) and employees of outsourced (subcontractor) companies. Therefore, this research can be understood as explicative, because it aims to study weight of these concepts in this kind of relationship. It is known that when it comes to explicative research, the most adequate method to be applied is the case study. In this sense, the best illustration of case study methodology analysis has been presented by [27]. Moreover, its specifications have been adapted to the particularities of our research.

A case study is an empirical inquiry that investigates contemporary phenomena within a real-life context. In other words, a case study is a research method involving an up-close, in-depth, and detailed examination of a subject of study (the case), as well as its related contextual conditions. In addition, it takes benefits from the prior development of theory and analysis [27]. This means that case studies do not necessarily look for valid generalizations, but rather to take advantage of this deep understanding of a particular case to formulate propositions that can be later tested to generalize to a population and predict results [28]. In our case study, the “case” under examination are the actions that organize the relationships between contractors and subcontractors, within a specific time and place. Therefore, a single case study has been selected as a methodology to study how the contractor balances uses of MCS in order to manage relationships with subcontractors through different choices regarding control, strategy, risk, trust, performance and evaluation, derived from the literature review. These dimensions were employed in the design and conduction of semi-structured interviews of companies involved in the event studied, which is the research technique chosen for this project, so that a real and accurate understanding of the proposed concepts can be achieved within the natural environment, as can be observed in the sample questions included in

Table 2. Interview sample.

Structure of the Interview	Sample of Question Used
Personal and Company Data	Description of the company’s key factors.
Business Strategy	What is the strategy followed by the company?
Strategic Alignment	How the business’ objectives of your company and the ones of your subcontractors fit together?
Risk sources	What do you think are the main risks for your company internally? And externally?
Risk management systems	How your company manages the risks arising from an unexpected change or unforeseen situations?
Propensity to risk	Is it to cover any unforeseen circumstances in the relations with subcontractors or suppliers in a contractual manner?
Trust	What factors does your company consider important to obtain a desired outcome from subcontractors/suppliers?
Performance Evaluation	How does your company evaluate your subcontractors/suppliers’ performance?

Source: Authors.

.

The next step was to determine a pool of candidates for developing our qualitative study to whom we could apply our theoretical framework regarding management control systems. After studying the different possibilities, it was possible to determine that, probably, the best option relied on the industrial complex of San Roque. The reason for selecting this specific setting was because of the fact that it is the largest refinery in the Iberian Peninsula, with a daily crude oil processing capacity of 240,000 barrels per day. Thus, the main enterprise (contractor) has many subsidiaries and subcontractors within this chemical network, and its MCS are used, not only for coordinating the activity within San Roque facilities, but also across the world for its international operations. Usually, the enterprises represented in this complex also work and jointly collaborate in other chemical aggregations. Furthermore, there is another specific characteristic that makes it even more relevant for our case study: all these firms work within the same facilities that belong to the contractor. Therefore, the coworking dimension can be jointly analyzed together with the rest of the research.

Once selected, four semi-structured personal interviews were conducted. Firstly, an interview was conducted with the maintenance manager of the contractor company, in October 2018. The aim was to acquire enough knowledge about the influence of contracting firms on subcontractors, focusing on the shared values and methods of evaluation and supervision considered. Once this overview was obtained, another three interviews were carried out with the subcontracted firms; those three firms maintained a closer and collaborative relationship with the principal, taking place from December 2018 to January 2019. The objective of these interviews was to gain a deeper understanding of the MCS applied by the leading corporation in order to improve the supply chain and services provided.

Concerning the subcontractors selected for analysis, their choices responded to the variety of activities included in this sector:

One subcontractor was occupied with operations classified as “day-to-day” activities;

Another oversaw maintenance operations;

The last responded to the inversion profile (new constructions of facilities and actualizations).

It could be highlighted that this is quite important, because the wider the variety of the sample we use, the greater the amount of evidence, and a better understanding of the situation is developed [27].

In our study, the principal company will be named the Contractor to protect their anonymity. Similarly, the other three participants, which are subcontractors, will be denoted as Subcontractor A, B and C. All the representatives of the enterprises interviewed were managers; the first was in charge of maintenance at the Contractor firm, whereas the others were heads of delegations of the subcontractors’ organizations. They were all male and of different ages. In our case study, we have considered that the analysis of these data will not have any specific outcome, so it has not been taken into consideration.

3.1. Contractor (Interview 1)

We studied one of the most important enterprises within the chemical, metallurgical and energetic industries at both national and international levels. It has been present in Campo de Gibraltar since the refinery was established. This organization employs over 6000 people in this specific region and distributes products all over the world (Spain, Gibraltar and other international destinations through Algeciras’ Port).

This main Contractor divides its activity into:

Daily maintenance (operations scheduled every day);

Extraordinary maintenance (non-everyday operations);

Inversions (new construction and actualizations).

Therefore, according to this classification, our Contractor divided its subcontractors in these three groups (group I, group II and group III, respectively). All the enterprises hired for these services had physical headquarters in the refinery plant, within the building property of our main Contractor. The other regular offices of the subcontractors were distributed across different locations of Campo de Gibraltar.

3.2. Subcontractor A (Interview 2)

This subcontractor had its largest delegation at Campo de Gibraltar not only because of the importance of this industrial facility, but also because of the port of Algeciras, which is necessary for shipping logistics. Nevertheless, it has facilities all over Spain: Jaen, Huelva, Cadiz, Malaga, Granada, Almeria, Murcia, Extremadura, and internationally, including in Brazil and Angola. Subcontractor A specialized in the transport and assembly of heavy materials and components through crane vehicles. Its sectors are divided according to the weight of the products being moved. The specific service that they provide is needed by the Contractor to benefit the operations of all outsourced subcontractors, in groups I to III.

3.3. Subcontractor B (Interview 3)

Our third subject was also an international organization, present in Spain, Mexico, Colombia and Peru. They provide a wide variety of strategically implemented services for the industrial, petrochemical, mining, energy, cement and food sectors. Furthermore, they have been operating for more than 30 years. They specialize in finding solutions for the challenges of their clients, providing management services in engineering, manufacture, assembly and maintenance in the industrial field through autonomous human teams. Within Spain, this enterprise is divided in different delegations, with the office headquarters of the southern division located in Campo de Gibraltar. Moreover, it this is the most important faction in Spain, because it is the only one fully operational in all their specializations. The Contractor hires this company for services classified in groups I and II.

3.4. Subcontractor C (Interview 4)

Finally, our last interview was with the representative of a company considered a global benchmark. They create and operate with industrial intelligence, providing services based on technological innovation and integration. This group operates in 60 countries. At Campo de Gibraltar, they provide specialized maintenance operations in chemical and metallurgical complexes. For this reason, the Contractor hires this company for services classified in group I.

As mentioned above, the interviews were semi-structured and designed to last half an hour. The four conversations were recorded through a phone recorder and then were transcribed in order to better process the information. Confidentiality, anonymity and aggregated analyses of information for academic purposes were ensured for all interviews conducted.

4. Findings

The interviews were codified and transcribed; then, a node tree was drafted to portray the most relevant observed trends. Data analysis was organized according to the five main dimensions considered as a result of the industry analysis and literature review: strategy, risk, trust, performance and evaluation. The aspects under consideration were identified in the theoretical framework, and the terms were conceptualized as per the codification (see Appendix A). In addition, two diagrams have been designed in relation to the second and third concepts to properly highlight the findings obtained.

4.1. Business Strategy

It can be highlighted that the Contractor’s strategy focuses on diversification at national and international levels. They do not just invest on chemical activities; they also work in the renewable energy sector. However, they were not focused on this kind of venture in the facility under study. A huge development project is planned for the complex for this upcoming year, which consists of the implementation of new technologies into the chemical factory. The overall strategy of this company relies on the outstanding quality of the products. If they are chemical derivatives, they have to pass rigorous security controls. Moreover, it was possible to quantify the main objective of our Contractor. Each year, they estimate an annual manufacturing plan, which predicts an approximate production of 14 million tons of crude oil. The main goal is determined by their experts located in Madrid, who study the national and international demand for the next period. Therefore, their strategy at local level is aligned with this final output.

In order to achieve this production goal, the Contractor divides its activity into three groups. The first oversees the operations categorized as “day to day”, including activities that need to be performed daily. These tasks, named “integral maintenance contracts”, have a minimum duration of three years. The subcontractor that wins one of these contracts is responsible for the maintenance of a specific section within the complex. At this point, the services provided by the subcontractors are not differentiated by disciplines, they just attend to the maintenance requirements. Apart from these types of activities, subcontractors also perform services which are classified as “extraordinary activities” and “activities of new constructions”.

The representative for the Contractor argued that even though the objectives of the subcontractors are established on the contracts, their ultimate objective is one defined by them, the hiring entity. They believe that if the Contractor does not accomplish the purposes defined, the subcontractor also will not. In this sense, the interviewee from the Contractor company said: “We have to say that the objectives are the same and that is the idea, because if we do not achieve our objectives the subcontractors will neither do it. What is more, if the subcontractor does not meet objectives, it would mean that my company also will not follow its strategy, spoiling our objectives and the relationship.” This portrays the key interdependencies created in the contractor–subcontractor relationship and the potential influence on the strategy and performance, when not controlled adequately.

In this sense, Subcontractor A stated that they also have a global strategy, which is modified monthly attending to external and internal factors. Additionally, even though they said that they do not have the same objectives as the Contractor, they make special efforts to attend their demands and the needs arising from this relationship because they are their biggest client in Spain. For example, they attend to the machinery needed for their services at Campo de Gibraltar, translating these findings into the general strategy so that they fulfill their present turnover. Therefore, we can consider the influence of the Contractor on this subcontractor as a parameter capable of affecting its growth and earning potential; in other words, the importance of the Contractor in terms of size or turnover is a force capable of modifying the subcontractors’ overall business strategy. Therefore, the scope of its strategic options depends on the Contractor.

Subcontractor B asserted that as this refinery is the most important in Spain and the Contractor is a giant within the sector. They focus on two main objectives on their business strategy: quality and speed, prioritizing the special requirements of the location under study. In addition, the interviewee also stated that “the new inversion of the Contractor has generated a lot of expectation in our company, so much so that our General Direction has placed its focus in Campo de Gibraltar, so, we can assure that Contractor’s strategy and objectives mark off us owns.” Strategy is the process of understanding the enterprise’s position in that specific industry; therefore, Subcontractor B has identified that its position relies on the Contractor.

Subcontractor C established its objectives for a period of one year. Each year, they focus on growth. Anticipating the new inversion that will take place in the complex, their strategy for 2019 is to hire and train a new workforce. It is possible to say that Subcontractor C wants to gain a competitive advantage when it comes to facing the new demand that the Contractor will need as a side effect of the new inversion.

4.2. Risk

Some of the risks inherent to this sector are new politics enhancing green energies, which penalize activities related to substances such as petroleum. Additionally, the supply chains of these types of factories are also exposed to risks related to flammable products, explosions, and toxicity, among others. As a result, labor risks in the chemical industry are quite high and severe, because the compounds are very reactive and the pressure during the manufacturing process is extreme.

Several risk management mechanisms can be observed in dealing with the identified risks. In order to mitigate the consequences of the new green governmental regulations, the Contractor is diversifying its strategy all over the world. In Spain, they are involved in the construction of a wind farm. In relation to the risks arising from the supply chain, there are security measures aimed at avoiding or mitigating them. For example, every person that begins working in the refinery complex must complete an entry course to gain access. The main aim of these courses is to inform and prepare workers about all the security processes that need to be implemented.

In particular, the Contractor has a specific plan for emergencies and risks, which is divided into three levels pertaining to the characteristics of unexpected situations. This plan is the same for the subcontractors’ firms and they must follow the paths as they are designed. In a level one situation, the subcontractors’ workers must finish what they are doing in safe conditions and gather at the assembly point. If the level increases, subcontractors’ workers are under the instructions of managers from the Contractor entity. These instructions are mandatory. In addition, when some equipment such as fire extinguishers need to be used, workers from the various entities can use them if it is mandated. Furthermore, employees of the subcontracting firms are also contacted by radio. As a result, in the event of any incident, they contact managers from the Contractor and await instructions.

We confirmed this information when we conducted the interviews with the subcontracting organizations.

Interviewee from Subcontractor A: “The Contractor is the one in charge of preparing our employees for unforeseen events and situations of risk. Although internally we also give this train to our workers. When we do a work for the Contractor all the instructions come from them; what materials we must use, what validations are needed, what speed might be employed at that part of the refinery…”

Interviewee from Subcontractor B: “Security measures established by the Contractor are not negotiable, so we follow all their instructions. In this sense, quality is easily achieved if security measures are well defined. Additionally, we internally evaluate the risk for each workplace within each refinery section.”

Interviewee from Subcontractor C: “We face risks such as fires, management of tools… All the coordination that we receive in order to handle them comes from the Contractor. Besides, these indications are update each three months by them.”

Moreover, when the Contractor starts a new relationship with a subcontractor, the work demanded is usually classified as minor work. This kind of work involves less risk to the Contractor. Therefore, subcontractors’ capabilities are first tested with tasks that have fewer inherent risks. Once these are successfully overcome, other increasingly complicated activities might be demanded.

At this point, we have quoted the two types of risk explained in the theoretical framework: technological risk and strategy risk. We have also explained how the Contractor faces both risks. With the purpose of clarifying the information provided, see Figure 2.

4.3. Trust

Evidence from our study shows that both the Contractor and the subcontractors seek a relationship based on trust with the other party. In this sense, trust includes engagement, responsibility and integrity. These business relationships may be reliable, secure and effective. To be successful, these relationships are also expected to commit to sharing information daily.

The Contractor values stability and they offer subcontractors long-term relationships when trust is fostered. In addition, the Contractor is transparent when they share information with them. All the instructions given are contained in manual procedures and distributed with enough time for them to be implemented. Moreover, Contractor provides official written feedback to the subcontractors on a periodical basis (every three months). This feedback process is what leads to improvement and progress. In relation to this, when facing a problem with the work performed by a subcontractor, the Contractor offers them the opportunity to fix it. Moreover, subcontractors are always offered stable market prices and are backed up by this influential entity. In addition, when a contract is assigned to a specific subcontractor, bids are honest and clear, following the policy of procurement step by step. On the other hand, this trust of subcontractors is also boosted by the type of approval requirements, audits and controls that they complete in their relationship with the Contractor.

The interviewee from Subcontractor A affirmed that his company really cares about trust; specifically, trust that comes from the Contractor. This firm believes that trust is developed by providing the demanded service to the client when they need it, “We get involved in such a way that rarely, almost never, we have left the client without a technical solution to a need.” Therefore, they want to generate confidence based on their work and results. At this point, personal relationships are not a factor that influences trust, because this concept relies on real facts.

Subcontractor B argued that the levels of trust are key, with an objective for them also being to develop trust according to the Contractor’s perception of them. They do not take it for granted: “Trust is a continuous process; one mistake can destroy everything you have achieved over the years even if you assemble 300 pieces and just one is done poorly. At this point experience is important, because if you failed once in a blue moon the Contractor can understand that this is not typical.”

Our last subject, from Subcontractor C, also highlighted that there are two main ways of reaching a relevant level of trust: good results and experience. Additionally, they considered that trust is what encourages employees in the various sections of the refinery to work together for common outputs. The interviewee also considered that trust can solve problems arising from unexpected situations.

Ultimately, we can say that workers from the subcontractor’s entities significantly trust the Contractor managers. It can also be deduced that this is promoted by the coworking situation; all the interviewees agreed that if their employees could work for the Contractor, they would. This trust is created through a climate of confidence, communication and cooperation within the different sections of the refinery. Humility is also an important factor in this sense—the manager of the Contractor enterprise said that they do not care about the logo on the workers’ uniform; all of them receive equally ethical treatment. Finally, the Contractor supervises all the processes carried out on its facilities without exception, so that it is possible to identify issues with safety, quality and production standards, for example.

In Figure 3, the relationship between these features that comprise trust is portrayed.

Therefore, from the findings obtained, we may assure that a relationship among a contractor and a subcontractor is trustworthy when they act with engagement, responsibility and integrity. Integrity relationships that involve responsible aspects generate durable bonds (experience) as well as effectiveness. Actions which are engaged and responsible lead to security and quality. As a result, trustworthiness leads to positive interactions between these two agents, enhancing engagement and productive relationships. In addition, the consequence of this trust is an increased probability of growth, because it is a guarantee of work being performed efficiently. Finally, as has been mentioned in the theory and as might be deduced from the interviewees’ answers, when all related factions trust each other in a work environment, a business flourishes. Therefore, it is critical for the managers, and is also a source of motivation for employees.

4.4. Performance

As a primary result, the Contractor argued that when they make an offer asking for a service, subcontractors with a better ability to perform usually apply for the bid with lower costs. However, this is not the most powerful feature to take into consideration. Technical research is the first phase which the applicants need to overcome. In this sense, technological abilities are more important than overall performance, which includes final prices (as well as indirect costs).

Regarding performance management, according to the Contractor’s testimony, the behavioral principles are included in a specific manual: the Code of Ethic and Conduct. This formal document outlines the values of the organization. It establishes how the problems need to be approached and the standards that professionals need to uphold. At this point, performance reports exist to serve as indicators in order to change plans of action and behavior in real time. Therefore, contracts can be modified attending to arising circumstances. Even so, when the Contractor publishes a bid, it is usually offered to a specific group of subcontractors chosen based on previously proven performance capabilities and displayed behavior in accordance with the Contractor’s values. In addition, performance rewards are not employed because the Contractor considers that the achievement of goals is inherent to work performance.

In this sense, the interviewee from Subcontractor B said that, for them, as a manager, the most difficult task is to instill these values and rules of behavior on the workforce. This is crucial, because it is a factor that ensures excellent performance. In order to facilitate this duty, when a contract is assigned, a work plan is developed. Therefore, a team of managers for that specific contract is created, including employees from the contractor and the subcontractor entities. This team oversees delineating all the necessities and values that will guarantee the success of the project.

Furthermore, all the subcontractors interviewed agreed that at the very beginning, departments for each organization were very independent. However, this has evolved across time, being promoted by the coworking situation. The result has been that divisions between entities are not hermetic any longer. According to the interviewees, this is the most obvious sign of improved performance. The coordination and cooperation of the various employees from the different firms implied that this is needed in order to achieve established goals in secure conditions. As a side effect, this has also increased the Contractor loyalty from these business partners or subcontractors.

4.5. Evaluation

The Contractor evaluates work performance differently. When considering ordinary contracts, which usually have a duration of three years, the evaluation portfolio is completed twice per year. In these cases, the evaluation is not performed for a specific construction or routine; they are performed at a general level for the whole period. When they are extraordinary contracts or inversion contractions, these evaluations are made at the end of the service. These are sent to the entities concerned through email and they are not expected to submit feedback. The Contractor has also said that most of the evaluations are highly rated, because they have been working with the subcontractors for a long period. However, they estimate that, in respect to the new development that will take place this year in the refinery, they will achieve lower grades, because they do not seem to have the capability to cope with the new foreseen demand. When evaluations are made at the bid processes, the purchase department informs the subcontractors via telephone about their results if they are negative.

The interviewee from Subcontractor A said that to confront negative evaluations, teams are developed so technical decisions can be easily made to enhance the results.

From Subcontractor B, it was reported that separately from the evaluations made by the Contractor, they have designed evaluations for each specific job position that they cover at the refinery. As a result, they can compare their results and those from the Contractor to be as efficient and well-organized as possible in each position. Furthermore, they understand that the system of evaluation is also fair and reasonable because the Contractor does not evaluate each project from ordinary contracts separately. The interviewee said, “Therefore, we are not just judged by an isolated problem or breakdown, more general tools are considered for evaluations. Moreover, we understand evaluations as an opportunity for improvement, we make it clear to the employees that we must not be angry at the results.” As a result, having these feelings about evaluations are motivational.

Finally, Subcontractor C argued that in their relationship with the Contractor, evaluations are also crucial and serve as motivators. In their case, they also have their own internal evaluations on a monthly basis, which complement those received externally.

5. Discussion and Conclusions

The purpose of this study was to understand how managers of sections that belong to the chemical industry make use of MCS to facilitate relationships between the labor force of the owner enterprise (contractor) and employees of outsourced companies (subcontractors), in terms of collaboration and daily bases of coworking. To do so, the strategy of this investigation was based on the development of a case study aimed at determining how the role of managers and values of the contractor influence the corporate values of subcontract parties, given that they share the same workspace. The main dimensions considered in order to unravel the dynamics of this process were business strategy, trust, risk, performance and evaluation, obtained from the analysis of the industry and the literature review, under the lens of MCS. The findings were derived from four semi-structured focused interviews with a principal entity (the owner of chemical facilities within the biggest refinery in Spain, the Contractor) and with three subcontractors (selected as a representative sample covering all types of services that can be delegated by the principal entity).

The findings observed in this particular case study explored several insights previously researched in the MCS literature, applied in this particular context. In studying the balance in uses of MCS in the contractor–subcontractor relationship, revisiting Figure 1, several conclusions can be drawn. Firstly, strategic choices in this relationship are clearly shaped by the Contractor, who utilizes information derived from the MCS in order to prioritize actions towards achieving greater levels of diversification, quality and the setting of goals regarding activity levels based on predictions. In doing so, it divides operations into “day to day” or “integral maintenance contracts”, “extraordinary activities” and “activities of new constructions”. This means that MCS help frame strategies but also receive information to control different kinds of operations within the principal company and subcontractors [17,18]. Subcontractors acknowledge that despite, at first, not following the same strategic orientation and objectives as the Contractor, they have been making increased efforts aimed at aligning their goals according to Contractor’s demands and needs [5,6]. In our case, this seems to be due to the influence that the Contractor has in terms of relevance as a key player in the industry (size, turnover and other factors). The strength of the accommodation of subcontractors’ strategic goals to those shaped by the Contractor seems to also be dependent on the type of operations performed by the subcontractor. For example, Subcontractor A, belonging to group I, managing integral maintenance contracts, will share coworking spaces and receive controls from the Contractor’s MCS more intensively than Subcontractor C, belonging to group III, involved in activities of new constructions.

However, the Contractor does not only influence strategic choices; the subcontractors’ risk management mechanisms, included in the MCS designed by the Contractor, seem to be determined by the Contractor’s understanding of risks in the industry and its chosen contingency plans. Possibly, due to the fact that the Contractor and subcontractors share the same coworking space and conduct operations in a relatively joint manner, the Contractor designs plans for facing unexpected situations regarding labor risks that the subcontractors have to follow [19,20]. The interdependencies observed when studying strategy and risk, and risk management, become even more noticeable when analyzing trust in the contractor–subcontractor relationship.

As has been mentioned, managers consider trust as a tool that leads to the accomplishment of organizations’ objectives; therefore, it is linked to strategy and MCS. Furthermore, trust is said to be promoted by managers through the interactive use of MCS. If a company has a high level of trust with its employees and subcontractors, managers will believe that these entities might achieve what they expect from them. Therefore, generally, competence in a specific domain is where trust resides; it defines trustworthiness depending on whether the other part is able or not to perform a required task [7,21]. In this specific case study, both the Contractor and subcontractors desire a relationship based on trust; where trust is fostered, stability and long-term relationships can be maintained. In fostering trust, subcontractors usually value the Contractor’s attitudes associated with enabling the uses of MCS, such as sharing up-to-date information, cooperating with subcontractors when contingencies occur, or giving subcontractors manual procedures and written feedback with enough time so that they have the opportunity to identify and address errors within the relationship. Conversely, the Contractor feels that subcontractors are trustworthy when they conform with controlling uses of MCS such as conveying approvals, requirements, audits and controls regarding their technical competence and ability to perform. When trustworthiness is perceived by both subcontractors and contractors, MCS, which include risk management mechanisms, run more smoothly due to the synergies created by trust between partners as well as sharing the same working space. Coworking is said to facilitate both uses of MCS and to foster teamwork and cooperation towards facing common struggles in the relationship.

Certainly, in our case study, trust is deeply influenced by integrity, responsibility and commitment. Moreover, experience and respect are gained over time, being determined by effectiveness. As has been pointed out, perceived trust in this setting is deeply connected to performance and performance evaluation, in order for the actors involved to be able to assess their partners’ competence and ability to perform. Therefore, we find that MCS and trust and performance evaluations are deeply connected dimensions. In managing performance, the Contractor, once again, tries to be as clear as possible about the expectations and provides behavioral principles that have to be followed by its own workers and by the subcontractors. This way, the subcontractors feel satisfied that the same principles are being applied in both companies. A perceived fairness is fostered. In this particular case, despite suggestions in the extant literature which states that MCS changes are difficult and costly to implement, we found that controls and performance reports can be used to change plans of actions and behavior in real time to provide answers to arising needs [12]. This might be due to the uses given to MCS, the trust fostered, and the resulting environment of communication and cooperation created in the coworking space, which makes it easier to employ interactive MCS and performance evaluations in a way that is not purely diagnostic, but rather responsive.

Information derived from performance evaluations are also used in prioritizing subcontractors that perform well when offering a new bid. Subcontractors acknowledge the importance of performance according to the Contractor’s expectations and devote internal resources to embrace both positive and negative feedback received and to design improvements accordingly. In this sense, the findings here support previous results, agreeing with the belief that MCS together with communication tools help in managing organizational factors [8]. Additionally, attributes such as trust, autonomy and professionalism increase work performance [14]. Additionally, when considering coworking studies, most of the authors argued that these shared spaces are rented offices where its members shared costs (such as supplies), although are not professionally related [10,11]. Conversely, we found that workers studied under in this case also developed a sense of community and social interaction, exchanging ideas [24,25]. Consequently, in-depth analysis could be conducted to study these relationships and their linkage with MCS.

From this case study, managers can learn about their crucial role in achieving strategic goals through the proper performance management of the workforce and associated parties. Managerial intentions towards making an interactive or diagnostic use of MCS, enabling or controlling these relationships, can have consequences on various dimensions ranging from risk management to trust. In this case, managers emphasize the need for properly utilizing MCS so as to motive and generate trust at the same time as providing feedback to its own workforce and associated parties. Furthermore, it is also recommended to create a sense of community and to share objectives, so that unanimity on work processes is accomplished at the same time as the prevention of risks is enhanced. The values and culture of the hiring firm must also be in line with those of the two subjects and among subcontractors, because honesty and the work atmosphere are the same for all.

Regarding the methodology employed, case studies have several limitations, especially regarding the generalization of results obtained. We would like to emphasize that we do not wish to make general statements that can be applied to every industry anywhere. Instead, we endeavored to delve deep into the case of an important network within the Spanish chemical sector, which can be representative of the industry due to the relevance and size, in order to understand how actors involved give subjective meaning to variables such as MCS and perceived trust. In fact, we found that embracing subjectivity made it easier for us to understand the links between dimensions, because it would be incredibly difficult to figure out something as complex as a perception or intention at the same time as looking for valid generalizations across settings. We understand that the results of the research are limited by the closed context of the case study, but we hope that the findings discussed can aid in the understanding of MCS uses in inter-firm relationships in which one party usually has more power over another, and the effects that these differences exert in variables such as trust or performance evaluation. In fact, recent studies suggest that the study of MCS should be performed by closely considering context as a variable determining the design and use of MCS in companies [29,30].