Culture and Organization

European Accounting Review 2003, 12:2, 263-285

The effect of national culture on managementcontrol and incentive system design inmulti-business firms: evidence ofintracorporate isomorphism

Wim. A. Van der StedeUniversity of Southern California

Manuscript first received: August 2001. Manuscript accepted: April 2002

ABSTRACTThis paper examines whether variations in national culture at the business-unit level ofmulti-business firms that operate internationally trigger adjustments in the corporatemanagement control and incentive systems (MCISs) to fit local business-unit circum-stances. Although the results show that selected MCIS characteristics are attuned tobusiness-unit national culture, fiirther analysis of multi-level data reveal small business-unit effects relative to corporate effects. The presence of dominant corporate effectssuggests that MCISs tend to be uniformly implemented within firms, rather than toreflect local business-unit conditions.

1. INTRODUCTION

Corporate management should provide a conducive environment to improve thedecisions ofthe managers running the businesses (Campbell et al., 1995; Gooldet al., 1994). Installing adequate management control and incentive systems(MCISs) is an important part of creating such an environment. The overarchingquestion in this study is whether multi-business firms do adjust their internalMCISs to suit local business-unit circumstances, in general, and to local nationalcultures, in particular.

Contingency theory maintains that the optimal functioning of an MCISdepends on the particular elements of a firm's context (Otley, 1980). Thispaper considers one important characteristic that may vary across businessunits within multi-business firms that operate internationally: national culture.

Address for correspondenceUniversity of Southern California, Leventhal School of Accounting, Los Angeles,CA 90089-0441, USA. E-mail: [email protected]

Copyright © 2003 European Accounting AssociationISSN 0963-8180 print/1468-4497 online DOI: 10.1080/0963818022000009859Published by Routledge Journals, Taylor & Francis Ltd on behalf of the EAA

264 European Accounting Review

Contingency theory would predict that favourable managerial responses toMCISs are likely to accrue from careful tailoring of these systems to specificnational cultures on the basis of their cultural appropriateness.

Contingency thinking, which has become a prominent paradigm for researchon management control design (Fisher, 1995), has predominantly looked at cross-sectional variations across firms, business units, divisions or departments. Manycontrols are hierarchical, however, which implies that contingency factors at twoor more organizational levels should be taken into account for the designof effective MCISs. It also raises the question of which organizationallevel dominates. Hence, if most variation in MCIS design is attributable tocorporate-level effects, then not much adaptation of these systems to varyingcontingency factors at lower organizational levels should be expected.

Using data from 153 business units within 37 firms, this paper empiricallyinvestigates the importance of one type of business-unit contingency (nationalculture) relative to corporate firm-level effects (corporate parent effects) on MCISdesign (three budgetary control components and three incentive system compo-nents). As such, the data allow an examination of the variance in MCISs acrossbusiness units drawn from different firms as well as within firms. The 'acrossbusiness units' approach has dominated most of the research in managementcontrol. It addresses whether the MCISs observed in different geographicallocations are consistent with national culture predictions without regard tocorporate-level effects emanating fi'om the parent company the business unitsbelong to. The 'within firms' approach, on the other hand, addresses whether theMCISs observed in different business units of the same firm vary with geogra-phical location and, hence, are attuned to local national cultures, or rather, areimplemented uniformly throughout the corporation regardless of national culturedifferences at the business unit level. The latter approach, which is the approachtaken in this study, has been rare in the management control literature.

The results in this study indicate that selected components of the MCISsobserved at the business-unit level are affected by national culture variationsacross the business-unit sample, that is, ignoring corporate-level effects from theparent company the business units belong to. As such, this finding supports thetypical contingency effect of national culture on MCIS design. However, whencorporate-level effects are taken into account - which is the explicit feature ofthepresent study - the results suggest that the influence on business-unit MCISdesign from parent company effects is much greater than the influence fromnational culture at the local business-unit level. Thus, the presence of a dominantcorporate effect suggests that MCISs tend to be uniformly implemented withinfirms rather than to refiect local business-unit conditions. This finding isconsistent with recent propositions that management accounting and controlpractices are likely to converge across nations, especially in firms that operateinternationally (e.g., Granlund and Lukka, 1998; Shields, 1998).

The remainder of the paper is structured as follows. Section 2 summarizesprior literature and derives the research questions. Section 3 discusses the

Management control and incentive system design 265

survey data collection and the measures. The results are presented in Section 4.The final section provides the conclusions, limitations and directions for futureresearch.

2. LITERATURE AND RESEARCH QUESTIONS

The guiding research question in this study is whether multi-business firms adapttheir MCISs to suit local business-unit circumstances. To address this question,the relative importance of corporate versus local business-unit conditions isexamined. As aforementioned, a dominant corporate effect would suggest thatMCISs tend to be uniformly implemented within firms rather than to be adjustedto refiect local business-unit conditions. Prior research typically has not con-sidered this hierarchical dimension of the contingency argument.

National culture and MCIS design defined

The contingency factor studied here is national culture. Any firm that hassubsidiaries in more than one country is likely to encounter some challenges inmanaging cross-cultural relations. This study investigates whether Belgian firmsdeploy their internal MCISs to accommodate the national culture of their foreignsubsidiaries. An important factor that contributes to the effectiveness of MCISs iswhether the organizational members being controlled perceive them as culturallyappropriate, i.e., whether they suit the shared values maintained by the societyin which the business unit operates (Harrison, 1993; Kachelmeier andShehata, 1997). Or, more generally, MCISs affect human behaviour and inter-actions among people and are, therefore, likely to be affected by national culture(Otley, 1978; Daley et al, 1985).

The concept of national culture used in this paper is based on Hofstede, whodefines culture as 'the collective programming ofthe mind that distinguishes themembers of one human group from another' (1980: 25). In his study of thousandsof employees at IBM across the globe, Hofstede identified four basic dimensions ofculture that systematically differ among countries: (i) individualism/collectivism,(ii) masculinity/femininity, (iii) power distance and (iv) uncertainty avoidance.The adoption of Hofstede's framework to discuss the impact of national cultureon MCIS design is consistent with most prior studies in management control (fora review, see Harrison and McKinnon, 1999).

MCIS design in this study includes three budgetary control components andthree incentive system components tied into the budget. Budgetary control is animportant part of a firm's management control system (Merchant, 1998). Theways in which corporate managers seek out performance information, the typeand detail of the information they ask for and the arrangements they have fordiscussing the results with business-unit managers are all part of the budgetarycontrol process (Anthony and Govindarajan, 1998). This budgetary controlprocess is described in this paper in terms of the following three components:


(i) The degree of emphasis on meeting the budget - i.e., the extent to whichthe evaluation of managerial performance is primarily based upon thebusiness-unit managers' ability to continually meet the budget on a short-term basis (Anthony and Govindarajan, 1998; Hopwood, 1972).

(ii) The amount of information detail required for budget reviews - i.e., theextent to which subordinates are required to submit reports that discussperformance-to-date, identify variances and propose detailed correctiveactions if it appears that the budget targets are not being met (Anthonyand Govindarajan, 1998; Merchant, 1981).

(iii) The intensity of budget-related communications - i.e., the extent to whichbudgets are used to facilitate information exchanges throughout theorganization, to force analysis and debate, and to assist corporatemanagers to personally involve themselves in the decision-making activi-ties of their business-unit managers (Simons, 1995).

In addition, three aspects of monetary incentives that are tied to budgetachievement are considered (Gupta and Govindarajan, 1986): (i) the extent towhich the business-unit manager's compensation is performance-dependent(bonus versus fixed salary); (ii) how the bonus is determined (calculated byusing a 'formula' tying the bonus to budget-based performance or by usingsubjectivity or 'discretion' in measuring performance or tying it to pay); and(iii) what the bonus is based on (business-unit performance versus corporateperformance).

Prior studies in management control have referred to these budgetary controland incentive system variables (although sometimes with varying wording andlabels) as being susceptible to national culture differences. (For a recent review,see Chow et al. (1999) and Harrison and McKinnon (1999).) Next is a briefdiscussion of how each of Hofstede's dimensions of national culture is expectedto affect these components of MCIS design.

The effects of national culture on MCIS design

First, uncertainty avoidance describes the extent to which people seek to avoid, orfeel threatened by, ambiguous or risky situations. Individuals in culturescharacterized by high uncertainty avoidance may generally prefer a budgetarycontrol and incentive system that adheres to clearly specified, quantitativeperformance targets and provides a strong, unambiguous link between effort,performance evaluation and incentive compensation (Harrison, 1993). As such,individuals in cultures characterized by high uncertainty avoidance may not reactfavourably to perfonnance-dependent compensation since it causes them to bearmore risk, especially when bonuses are highly discretionary, as opposed to beingformula-based.

Second, individualism/collectivism describes the tendency of people to seethemselves as individuals as opposed to members of a group. In individualistic


cultures, members tend to be concerned with personal achievement, individualrights and independence. In coilectivistic cultures, people tend to see them-selves first and foremost as part of a group, and are more concerned about thewelfare of the group, harmony and equality. Hence, organizational members inindividualistic cultures may, for example, favour individual performance-basedincentives (Chow et al., 1991). In contrast, individual performance measures andincentives are likely to run counter to the values of coilectivistic cultures becausethey accentuate interpersonal differences and introduce interpersonal rivalry(Merchant et al., 1995). Moreover, acceptance of rigid budgetary controls maybe lower in individualistic cultures, because they could be perceived mainly asconstraining individual behaviour (Chow et al., 1996). The prediction could alsogo in the opposite direction, however. Control is to a great extent embedded inindividual cultures where self-interest prevails in the absence of monitoring(Kachelmeier and Shehata, 1997). In coilectivistic cultures, on the other hand,hierarchical controls may be not as necessary/explicit because ofthe centrality ofharmony, shared values and goal congruence (Bimberg and Snodgrass, 1988).

Third, power distance captures the degree to which members accept inequalityin vertical social relations. The impact of power distance is particularly relevantfor performance evaluation and incentive determination. When power distance ishigh, lower-level managers are more likely to accept greater discretionary powerbeing exercised by their superiors in performance evaluation and incentivedetermination (Harrison, 1993; O'Connor, 1995; Merchant et al., 1995). Resent-ment to budgetary controls is also likely to be lower in high power distancecultures (Chow et al., 1996).

Finally, Hofstede refers to masculinity to represent a cultural preference forachievement, assertiveness and material success, and femininity to describe agreater importance placed on maintaining relationships, caring for members and ahigh quality of life. Although the literature lacks a clear theory that links thisdimension to MCIS design (Harrison, 1993), one could predict that organiza-tional members' desire for achievement and competition in masculine countriespermits a stronger focus on performance, meeting budget targets and relativeperformance evaluations. In feminine countries, on the other hand, emphasizingbottom-line performance without much consideration for the well-being ofmembers is likely to be less accepted or even counterproductive. Similarly, thelower value placed on monetary incentives by managers in low masculinitycountries may inhibit the motivational effect of strong performance-basedincentive pay altogether (Merchant et al., 1995).

Although intuitively appealing, the above relationships between nationalculture and various aspects of budgetary control and incentive systems havebeen supported with limited success only (Granlund and Lukka, 1998). Publishedstudies have reported many 'surprises' where either support for the impact ofnational culture was weak or inexistent (Chow et ai, 1994; Lau and Tan, 1998),or empirical evidence was opposite to theoretical expectations (e.g.. Merchantet al., 1995; Chow et al., 1996; Awasthi et al., 1998).


One reason for the mixed support for contingency-type national culture effectson MCIS design arises from the fact that the four cultural dimensions operatesimultaneously and may create reinforcing or opposing effects on an individual'spreferences for MCISs (Chow et al, 1994). For example, managers in culturescharacterized by high uncertainty avoidance may not react favourably to theambiguity associated with discretionary bonuses. The amount of dissatisfactionwith discretionary bonuses, however, will depend in part on the amount of trustand respect for the superior, which is an element of power distance. Hence,uncertainty avoidance and power distance may interact and cause mutuallyreinforcing or opposing efFects on the preference for MCISs. Furthermore,individuals with a high aversion for uncertainty may prefer group, as opposedto individual, performance-based incentives because they facilitate the sharing ofrisk (Merchant et al., 1995). The reaction to group-based incentives, however,also depends on the degree of individualism/collectivism. In short, multiplecultural dimensions may affect an individual's preferences for, and reaction to,MCISs in interactive ways (Chow et al., 1996).

Corporate forces towards intracorporate isomorphism

Another, and much less investigated, reason for weak contingency-type nationalculture effects on MCIS design in multi-business, multinational firms may stemfrom significant influences from the parent company on business-unit MCISsrendering them similar to others of the same corporation despite national culturedifferences in different geographical locations. Institutional forces towardsuniformity are also known as intracorporate isomorphism, and come in differentforms, often in combination: coercive, mimetic and normative isomorphism(DiMaggio and Powell, 1983). First, business-unit managers may be coercedinto having similar MCISs by corporate edicts calling for uniform formalizedprocedures. Second, business-unit managers may mimic MCIS designs of asuccessful or prominent business unit within the same firm. Finally, business-unitmanagers may find a particular 'template' of MCIS design already present in thecorporation. In essence, the forces towards intracorporate isomorphism versusthe forces towards business-unit idiosyncrasy are a different way of looking at theforces of organizational (parent company) culture (convergence) versus national(local) culture (divergence).'

A small number of prior management control studies have provided evidenceconsistent with intracorporate isomorphism, suggesting that the organizationalcultures of foreign business units converge with those of the parent company. Oneof the earliest studies found that the formal organizational structures and systems(e.g., with respect to centralization) of Japanese firms in the US converged withthose of the US (Lincoln et al, 1978). Similarly, Soeters and Schreuder (1988)found pronounced US national culture effects in US-oriented accounting firmsoperating in the Netherlands. In a similar study, Pratt et al. (1993) found that thecultural values of British accountants working in US-oriented accounting firms


operating in Britain refiect the cultural values of US accountants. However, thisfinding did not hold for Australian accountants working in US-oriented account-ing firms operating in Australia, fi-om which the authors inferred that intracorpo-rate isomorphism effects may not be robust across different countries. In line withthis conjecture. Chow et al. (1999) found that Japanese firms did not modify theirhome-country MCISs for their Taiwan business units as extensively as did USfirms in Taiwan. Finally, Firth (1996) found that Chinese firms in foreign jointventures tend to adopt the MCIS practices of the joint-venture partner, especiallywhen the partner is American, which again suggests that the rate of adoptiondepends on the domicile of the foreign partner, among other factors. Using datafrom a more recent period, O'Connor et al. (2002) found that joint-ventureexperience increases the adoption of Western management practices in Chinesestate-owned enterprises, which supports the findings of Firth (1996) from anearlier period.

Summary and research questions

In management accounting and control research, the discussion of the effects ofnational culture on MCIS design naturally focuses on divergence; that is, howidiosyncratic national cultures cause difFerences in the design or use of MCISsacross national borders. Yet national culture studies often find more similaritiesthan difFerences or that the difFerences are not the ones predicted. However, thephenomenon of convergence, such as forces towards homogenization of MCISsinfiuenced by intracorporate isomorphism, has received much less attention(Granlund and Lukka, 1998).

Owing to a lack of consistent evidence from the extant literature, and owing tothe inherently complex relationship between national culture and managementcontrol, the above discussion is summarized as research questions rather than as aset of directional hypotheses. The overarching question is:

RQa To what extent, if at all, do multi-business firms adapt their MCISsto suit local business-unit national cultures?

Evidence of adaptation requires, at the very minimum, that the data show thatsome or all of the MCIS variables are significantly difFerent for local (Belgian)versus foreign (non-Belgian) subsidiaries in the sample of all-Belgian parentfirms. This would be consistent with forces of national culture causing divergencein MCIS design. To be able to then address which national culture dimensionscause divergence in which MCIS variables, if any at all, the following question isalso considered:

RQi, Which of Hofstede's national culture dimensions exert an infiuence,if any at all, on the design of MCISs?

Evidence of forces of intracorporate isomorphism on MCIS design is harder toestablish. Even if there are no significant effects of national culture on any of the


MCIS variables as explored above, MCISs could still vary within firms due to, forexample, different business-unit strategies. Therefore, exploratory evidence ofconvergence in MCIS design, and thus of intracorporate isomorphism, isestablished in this study by examining both the existence and strength of firmeffects on MCIS design. Thus, if the MCIS variables appear to vary significantlyacross, rather than within, firms and if firm effects explain a large portion of theirvariation, then the data would be consistent with arguments of intracorporateisomorphism.

3. DATA, QUESTIONNAIRE AND MEASURES

Data were collected in 1996 as part of a larger study that investigates managementcontrol issues in large, diversified firms headquartered in Belgium. In total, datawere obtained from 37 firms and 153 business units within these firms.

The target sample of firms consisted of 83 Belgian, independent companieswith sales over 3 billion Belgian francs ( ^75 million euros) and at least threesubsidiaries in Europe. These firms were identified through a reconciliation ofseveral data sources.^ Independence at the corporate leveP is important in thisstudy because it implies that national culture at the corporate level can beassumed constant; that is, all firms are Belgian without any significant higher-level influence from firms located in another country.

For each firm, a list of business units could be established from NBB files(National Bank of Belgium) which was verified with the Corporate FinancialOfficer (CFO) in each firm through a tailor-made survey. The survey pre-listed allthe subsidiaries in which the company has a direct participation of more than50%. The CFO was asked to verify and update the list in case recent changesoccurred. Fifty-two surveys were returned (63% of 83), 46 of which were usable(55% of 83). * Three follow-ups were administered to maximize response. As atest for non-response bias, the group of respondents («] =46) was compared tonon-respondents («2 = 37) on the basis of publicly available data. The two-sample^test (not reported) revealed that consolidated assets, sales and employment arelarger for response firms compared to non-response firms. Retum on capital,however, is not significantly different. In sum, the sample contains the largerBelgian firms, but there is no evidence that these are significantly different fromsmaller firms in terms of corporate perfomiance.

At the business-unit level, a questionnaire was developed in line with the TotalDesign Method, the details of which are given in Dillman (1978). Prior to mailingit, the survey was submitted to the scrutiny of three faculty colleagues, eightbusiness-unit managers and three comptrollers for pre-testing. Two follow-upswere administered to non-respondents: two weeks (reminder only) and four weeks(replacement questionnaire) after the original mailing. In total, 341 surveys weremailed to business-unit managers. The response (rate) to the business-unit surveyis as follows: 190 managers replied (56% of 341), 37 of which were not valid,^resulting in a usable response of 153 observations (45% of 341).


As to geographical coverage of the business units in the target sample, 238business units are located in Belgium (70%); 95 in other European countries(28%); and eight in the rest ofthe world, mainly in the US and Canada (2%). Thegeographical distribution ofthe 153 usable replies is in line with the geographicalcoverage of the target business units: 115 in Belgium (75%); 36 in Europeexcluding Belgium (24%); and two in the rest ofthe world (1%). The responserate compared geographically is 48% in Belgium (115-e-238); 38% in Europeexcluding Belgium (36 -=- 95) and 25% in the rest of the world (2 - 8). The highEnglish literacy rate among the target managers enabled the survey to beconducted in English: 134 respondents (88%) indicated that they use Englishin business-related communication at least occasionally (91 managers or 60% useEnglish at least frequently). The use of English as the common language for theresearch overcomes interpretation problems associated with the translation ofquestionnaires into other languages.

In total, 12 countries are represented in the sample at the business-unit level:Belgium, Canada, Denmark, France, Germany, Great Britain, Greece, Luxem-bourg, Norway, Portugal, the Netherlands and the Czech Republic.

On average, respondents have been employed by their current firm for about 14years and have been head of their business unit for about 6 years. The businessunits represent a variety of industries that include both manufacturing andservice, have average sales of 4.8 billion Belgian francs (^120 million euros)and employ about 427 people on average. From these data, the followingmeasures were obtained:

Management control system measures. The present study focuses on thebudgetary control system, which is an integral part of the management controlsystem in most for-profit firms (Merchant, 1998). Specifically, the budgetarycontrol process is operationalized in terms of: (i) the importance of meeting thebudget for performance evaluation (budget emphasis); (ii) the amount ofinfonnation detail for budget reviews (budget detail); and (iii) the intensity ofbudget-related communications.

Prior studies have referred to these budgetary control aspects, although oftenwith varying wording and labels. Survey questions were based on a review of thisliterature (e.g., Anthony and Govindarajan, 1998; Hopwood, 1972; Merchant,1981; Simons, 1995). If no appropriate instruments could be located, questionswere designed irom scratch based on descriptions of the budgetary controlcharacteristics by the above-mentioned authors.

The survey solicited several questions for each budgetary control variable (seeTable 1) so that a factor analysis (validity) and internal consistency analysis(reliability) could be performed on the responses to each set of questions. Allitems were randomized in the questionnaire to avoid bias towards the pre-specified variables. Confirmatory factor analysis was performed for each variableto determine how well the survey items represent their expected underlying factor.Only items that load above 0.40 were retained and reported in Table 1. Cronbacha on the retained items exceeds 0.70 for each scale. A composite measure was


Table I Budgetary control system scale items"

Panel A. Emphasis on meeting the budget {EMPHASIS, 1 items, a = 0.83)''• Corporate superiors judge my performance predominantly on the basis of 0.810'

attaining budget goals• In the eyes of my corporate superiors, achieving the budget is an accurate 0.732

reflection of whether I am succeeding in my business• Not achieving my budget has a strong impact on how my performance is 0.701

rated by my corporate superiors• My promotion prospects depend heavily on my ability to meet the budget 0.686• In the eyes of my corporate superiors, not achieving the budget reflects 0.668

poor performance• I am constantly reminded by my corporate superiors of the need to meet 0.471

budget targets• The corporate parent achieves control over my business principally by 0.451

monitoring how well my budget is on target

Panel B. Budgeting detail {DETAIL, 3 items, a = 0.71)• My corporate superiors are interested not only in how well I achieve my 0.723

overall budget, they also evaluate how well I am on target on each of thebudget-line items

• I am required to submit control reports that explain in detail budget 0 679variances on a line-by-line basis

• From the comments made by my corporate superiors, I know that they 0.619investigate my budget in every detail

Panel C. Intensity of budget-related communication {INTENS, 6 items, a = 0.75)• Corporate superiors call me in to discuss budget deviations in face-to-face 0.742

meetings• My corporate superiors, myself and my own subordinates often form a 0.699

team to discuss and solve budgeting matters• Budget matters are discussed regularly with my corporate superior even if 0.656

there are no negative budget deviations to report• I consult with my corporate superior on how to achieve my budget 0.558• Indicate the typical frequency with which you communicated with the

corporate parent for budget-related issues 0.415{a) formal and (b) informal (R) 0.430

Notes:"N= 153. Output of three separate confirmatory factor analyses, i.e., one for each ofthe variables orconstructs (EMPHASIS, DETAIL, INTENS). Each model is built such that the scores on the scaleitems (observed) depend on their expected underlying common factor (unobserved) as well asmeasurement error (each item's unobserved unique factor). Model fit was reasonable as y^ divided bythe degrees of freedom was smaller than five for each model (Wheaton et al., 1977; Marsch andHoeevar, 1985). For each model, the conventional recommendation of five observations perparameter was easily met.

""Items were randomized in the survey and coded on seven-point Likert scales varying fi-om 'DefinitelyFalse' to 'Definitely True'. Reverse coding (indicated by 'R') was applied when necessary such thathigh scores correspond with greater emphasis on meeting the budget {EMPHASIS), more detailedbudgetary reviews {DETAIL) and more intensive budget-related communication {INTENS).

"Standardized factor loadings between the unobserved common factor and each of their observedscale items. Items with factor loadings below 0.40 were omitted and are not reported.

Management control and incentive system design

Table 2 Descriptive statistics"

N Range Minimum Maximum

EMPHASIS^DETAIL^INTENS"SAL-VAR'SAL-FOR"SAL-SBW

153153153153111111

7-49"3-21"6-42"0-100%0-100%0-100%

9.003.008.000.000.000.00

47.0021.0039.0050.00

100.00100.00

32.6612.3627.7412.4649.8271.44

7.894.236.61

11.5040.6829.75

Notes:"All variables are measured at the business-unit level {N=\5'i, unless otherwise indieated).''The range varies depending on the number of items in the seale (see Table 1). Variables are measuredon seven-point Likert scales (1 = Definitely False; 7 = Definitely True). The composite scale for eaehvariable was obtained by summing the scores on each of its items. High scores correspond withgreater emphasis on meeting the budget {EMPHASIS), more detailed budgetary reviews {DETAIL)and more intensive budget-related eommunication {INTENS).

"SAL-VAR is the percentage of compensation that is variable; SAL-SBU is the percentage variablesalary (bonus) that is based on corporate performance as opposed to business-unit performance; andSAL-FOR is the percentage of variable salary (bonus) that is formula-based as opposed todiscretionary.

then constructed for each variable by summing the retained item scores. Table 2reports the descriptive statistics for each budgetary control variable.

Incentive system measures. Three aspects of monetary incentives weremeasured: (i) the percentage of compensation that is perfonnance-dependent(bonus/salary); (ii) the percentage bonus that is formula-based versus discre-tionary; and (iii) the percentage bonus that depends on corporate performanceversus business-unit performance (Gupta and Govindarajan, 1986).

Table 2 shows that the average percentage of compensation that is variable is12.5% ((T= 11.5; n= 153). After omission of 42 respondents who reported thattheir compensation is totally fixed, the average percentage of compensation that isvariable is 17% (<T = 10.0; « = 111).^ The mean value for formula-based is 49.8(a = 40.7; « = 111), indicating that an average business-unit manager's bonus isabout 50% based on strict formulae and 50% based on superior's discretion. Themean value for business-unit performance-based is 71.4 (a = 29.75; «=111),indicating that an average business-unit manager's bonus is for about 71% (29%)based on business-unit (corporate) performance.^

National culture measures. The values for each of the national culturedimensions (power distance, uncertainty avoidance, individualism/collectivismand masculinity/femininity) were taken fi-om Hofstede (1980). These valuesare reported in Table 3. Hofstede's country rankings have been extensively,almost exclusively, adopted in management control studies in recent years(Harrison and McKinnon, 1999: 485). Moreover, most researchers donot formally measure the cultural dimensions on which they rely in theirsamples based on the assumption that a culture's effects are present in the


Table 3 Hofstede values

1. Belgium2. Canada3. Denmark4. France5. Great Britain6. Germany7. Greece8. Netherlands9. Norway

10. Portugal

Mean(Hofstede, 1980)"

Range(10 countries)'

for national

Powerdistance

65391868353560383163

52

18-68

culture dimensions"

Uncertaintyavoidance

944823863565

1125350

104

64

23-112

Individualism

75807471896735806927

50

27-89

Masculinity

54521643666657148

31

50

8-66

Notes:"Hofstede (1980: 315).''Mean as given for whole sample in Hofstede (1980: 315).' Range in the current paper for the ten countries included in this table.

location of the individual in the society manifesting that culture (Harrison andMcKinnon, 1999: 489). This assumption is maintained in the present study aswell. A discussion of the limitations of this approach is presented in thediscussion section.

Non-response analysis was performed to check potential bias in the sample. Itis generally accepted that the profile of non-respondents is likely to he similar tothat of late respondents (Fowler, 1993). A two-sample t-test (not reported) showsthat the means of all MCIS variables and national culture dimensions are notsignificantly different (p > 0.05) for early («, = 50; immediate reply) versus laterespondents (n2 = 47; reply after four weeks). Hence, there is no obviousevidence of response bias in the business-unit sample.

4. RESULTS

Table 4 reports the one-way ANOVA results across^rw^ (Panel A) and countries(Panel B). The data represent 153 observations, which can be broken down across37 firms and 12 countries (national cultures).

Panel A of Table 4 shows the variation within and between firms on each of theMCIS variables. Firms with fewer than four business units were omitted to ensuresufficient within-firm variation. This leaves 102 observations (n) across 14 firms(k). The ntimber of observations per firm varies fi om 4 to 26, with an average of 8business units per firm. The results show that the between-group mean square is

II

o

"c

3

o•a

"3^

I<u

O

i

000

00

0

o

oo

988

014

1

83

13

9624

9EM

PHAS

IS

B-G

roup

s 1

998

66

0(NVO

33

1503

1 9,

462

37

014

88

48

W-G

roup

s 4,

256

610

o

CNONo

CNON

272

1062

2

02

13

32D

ET

AIL

B

-Gro

ups

424

436

90

031

15

012

2,70

235

0

13

88

1426

3W

-Gro

ups

1

826

122

m

331 960

83

377

13

10

132

3IN

TE

NS

B-G

roup

s 1

095

23

ft43

40

151

001

6,52

789

0

58

88

3289

4W

-Gro

ups

2

293

o

00ON00CO

ooON

734

38

CN

in

36

13

234

049

SAL

-VA

R

B-G

roup

s 3

589

82

013

207

15

100

3 20

,055

81

096

88

85

550

W-G

roup

s 7

108

CO

CO

5,04

6

CO

835

5,04

6

vo

CN

71

13

5,59

978

9SA

L-F

OR

B

-Gro

ups

72

081

40

ft10

10

9 1,

623

000

176,

950

18

ft83

60

81

915

0W

-Gro

ups

49

402

CN

O

10

1 2,

099

211

2,09

9

in

95

13

2,13

778

2SA

L-S

BU

B

-Gro

ups

27

: "N

04

027

10

9 87

400

0 95

,270

51

0.83

60

50

745

0W

-Gro

ups

30

E II

.22 IIc c

a X

B'ab

IIo.•c

•o•ocat/j

tioi

1 le

s

• |

i/>

p

all

E

reic

.2

i


significantly larger than the within-group mean square {p < 0.05) for all MCISvariables.^ Hence, MCIS characteristics vary more across than within firms. Thevariance explained by corporate-level factors in each of the MCIS characteristicsvaries fi-om 23% to 60%,' which indicates that corporate-level factors have anotable impact on MCIS design.

Panel B of Table 4 shows the variation within and between countries (nationalcultures) on each of the MCIS variables. Since all firms at the corporate level arestrictly Belgian, the relevant question is whether they adjust their MCISs to fit thenational cultures of their non-Belgian business units; that is, the relevantcomparison is between local versus foreign business units. Hence, the data inPanel B (n= 153) was broken down into two categories {k — 2): local (Belgian)business units («i = 115) versus foreign business units located outside Belgium(«2 = 38). The results show that the national culture of the business units (localversus foreign) is not a statistically significant factor for the design of MCISs,except for (i) budget intensity and (ii) the way in which bonuses are determined(formula-based versus discretionary). Specifically, (i) budgeting matters seem tobe handled more intensively with local business units than with foreign, non-Belgian units, and (ii) bonuses of general managers in charge of foreign businessunits are more formula-based (61%) than those of general managers in charge ofBelgian units (45%) (all p < 0.10).

However, the variance explained by national culture at the business-unit levelin budget intensity and bonus determination is only 2% and 3%, respectively (seenote 9). This suggests that national culture at the business-unit level does not havea large impact on designing or adjusting MCISs.

To fiirther explore the explanatory power of corporate (firm) effects versusbusiness-unit (national culture) effects on the design of MCISs, Table 5 reportsthe variance components that show the relative importance of these two effects;that is, the importance of the business-unit (national culture) effect and thecorporate effect (within which the business-unit effect is nested and, thus,controlled for). The results in Table 5 reinforce the independent varianceestimates in Table 4 (where the business-unit and corporate eflfects were estimatedindependently in their respective one-way ANOVAs). Although quite somevariance remains unexplained (error variance in Table 5), corporate (firm) efFectsexplain about 6% to 46% of the total variance in the MCIS variables, whereasbusiness-unit (national culture) effects explain as little as zero (for four out of sixMCIS variables) to about 7%.

Finally, Table 6 reports the results of a multivariate analysis where the firmfactor (firms with at least four business units) and country factor (Belgian versusnon-Belgian) are considered simultaneously, thus controlling for any interrelatedeffects between them. The results in Table 6 are qualitatively identical to theunivariate results reported in Table 4, thus lending fiirther support to theinferences discussed above.

The empirical results in Tables 4 and 6 indicate that, although all firms are ofthe same country, their MCISs still appear to vary significantly, thus suggesting

Table 5 Variance

EMPHASIS

DETAIL

INTENS

SAL-VAR

SAL-FOR

SAL-SBU

Management control and

components by 1

VAR(Firmf

18.244

26.64%

1.195

6.64%

14.491

18.27%

33.311

24.52%

351.769

35.31%

727.149

46.25%

firm and country^

VAR(Countryf'

0.000

-

0.000

-

1.920

2.42%

0.000

-

73.707

7.40%

0.000

-

incentive system

VAR(Error)

50.241

73.36%

16.799

93.36%

62.898

79.31%

102.519

75.48%

570.664

57.29%

844.930

53.75%

design 111

Total

68.485

100%

17.994

100%

79.309

100%

135.830

100%

996.140

100%

1,572.079

100%

Notes:"See Tables 1 and 2 for variable construction, definitions and descriptive statistics."'7V=153. Thirty-seven firms; local versus foreign business units (i.e., located in Belgium versusabroad).

the presence of firm effects. But, when the infiuence of country differences isexamined, the MCISs do not vary significantly except for (i) budget intensity and(ii) the way in which bonuses are determined (formula-based versusdiscretionary). Hence, taken together, these results suggest that MCIS design isprimarily affected by firm effects, not country effects.'" To check the relativemagnitude of each effect. Table 5 corroborated that firm-level factors indeedexplain the greater part of the variation in MCISs implemented over businessunits in multi-business firms. In sum, although national culture has some impacton selected MCIS variables, it explains a tiny fi-action only of the total variation inMCIS design.

Next, RQb is addressed: i.e., which specific dimensions of national cultureexert an infiuence on which elements of the MCIS? The values for the nationalculture dimensions (individualism, uncertainty avoidance, power distance andmasculinity) were obtained fi-om Hofstede (1980) for each of the countriesrepresented (Belgium, Canada, Denmark, France, Germany, Great Britain,Greece, Norway, Portugal and the Netherlands)." Table 7 shows that thecorrelations of the MCIS variables with the national culture dimensions aregenerally weak. This may be attributable to the low variation in the national


Table 6 Multivariate ANOVA across firms and

Model

FIRMS''

COUNTRIES"

Error

Total

EMPHASISDETAILINTENSSAL-VARSAL-FORSAL-SBU


EMPHASISDETAILINTENSSAL-VARSAL-FORSAL-SBUEMPHASISDETAILINTENSSAL-VARSAL-FORSAL-SBU


Sum ofsquares

81,240.89111,808.64458,508.26720,866.523

535,134.128400,425.647

1,477.730445.001

1,105.2591,886.9913,729.168

27,879.615

31.34116.860

124.8845.757

284.962176.480

1,602.109920.356

1,944.7333,477.4773,565.872

30,274.353

83,843.00012,729.00060,453.00024,344.000

538,700.000430,700.000

countries

d.f.

151515151515

131313131313

111111

595959595959

747474747474

(national cultures)"

Meansquare

5,416.059787.243

3,900.5511,391.102

35,675.60926,695.043

113.67234.23185.020

145.153286.859

2,144.586

31.34116.860

124.8845.757

284.962176.48044.10415.59932.96258.94060.439

513.125

F

122.80350.467

118.33623.602

590.28052.024

2.5772.1942.5792.4634.7464.179

0.7111.0813.7890.0984.7150.344

P

0.0000.0000.0000.0000.0000.000

0.0070.0210.0070.0100.0000.000

0.4030.3030.0560.7560.0340.560

Notes:"Multivariate General Linear Model with the MCIS variables as the dependent variables and FIRMSand COUNTRIES as the independent factors. See Tables 1 and 2 for variable construetion,definitions and deseriptive statistics.

''Multivariate analysis across FIRMS {k= 14), i.e., after omission of all firms with fewer than fourbusiness units, and across COUNTRIES {k=2), i.e., local versus foreign business units (located inBelgium versus abroad).

culture dimensions given the presence of only ten countries. Nevertheless, thedata suggest the following,'^ First, business units in countries with highindividualism seem subject to less detailed (p = O.Ol) and less intense budgetingprocesses (p = 0.08). In other words, budgeting processes seem to be 'looser'over business units manned by presumably strong individualistic managers.


Table 7 Correlations among national culture variables and control and incentive systemvariables^

Individualism Masculinity Powerdistance

Uncertaintyavoidance

EMPHASIS

DETAIL

INTENS

SAL-VAR

SAL-FOR

SAL-SBU

-0.070-0.022

-0.215***-0.151*

-0.144*-0.164*

-0.103-0.095

-0.046-0.039

-0.078-0.029

-0.029-0.027

-0.155*-0.210***

0.0790.060

-0.040-0.126

-0.069-0.019

-0.142-0.095

0.0120.002

0.160**0.154*

0.193**0.136*

0.0230.063

-0.147-0.070

-0.082-0.075

0.0100.034

0.177**0.140*

0.192**0.191**

0.0150.024

-0.142-0.103

-0.077-0.043

Notes:"Pearson (parametric) correlations with Spearman (non-parametric) correlations shown in italics.N= 153; ***p < 0.01; **p < 0.05; *p < 0.10 (two-tail). See Tables 1 and 2 for variable construction,definitions and deseriptive statistics.

""Hofstede dimensions of national culture (Hofstede, 1980).

Second, business units in countries with high-power distance and a high degree ofuncertainty avoidance seem subject to more budgeting information detail andhighly intense budgeting processes (all p < 0,05). Hence, it seems that a higherdegree of information about, and interference in, business-unit affairs bycorporate management is either tolerated or honoured by the business-unitmanager out of respect for corporate management (high-power distance)and/or a desire to avoid uncertainty. This is consistent with power distancebeing associated with lesser use of formulae for bonus detennination (p = 0.12).Again, 'respect' for superiors (high-power distance) probably allows bonuses tobe more discretionary without triggering issues of bias or unfairness. Nointerpretation is readily available for the negative correlation between masculinityand budgeting information detail (p = 0.06).

5. DISCUSSION, EXTENSIONS AND LIMITATIONS

Overall, the findings show that corporate-level effects predominantly drivevariations in MCISs, which suggests that MCISs tend to be uniformly imple-mented within firms, rather than to reflect local business-unit conditions.


Selected characteristics of MCISs, however, seem to be attuned to business-unit level differences albeit with relatively little weight. As such, the findingssuggest that control over foreign business units is less intensive with respect to theamount of time and effort spent on discussing budgeting issues. Moreover, thebonuses of managers in charge of the foreign units depend more on strictformulae, as opposed to being discretionary. These results could be explained,in part, by geographical distance. However, the national culture dimensions revealthat business-unit managers in high-power distance or high uncertainty avoidancecultures condone (or seek) more interference by corporate management inbusiness-unit affairs. In contrast, budgeting processes appear to be more hands-ofF when dealing with managers in individualistic cultures. Finally, the resultssuggest that power distance also affects the amount of discretion that can be usedin bonus determination.

In sum, weak effects of national culture at the business-unit level andsignificant influences of the parent company on the MCISs observed in thebusiness units indicate that the management practices of foreign business unitsconverge with those ofthe parent company (Granlund and Lukka, 1998; Prattet al., 1993; Soeters and Schreuder, 1988; Lincoln et al., 1978), It is an openquestion, however, whether it is either too costly and/or ineffective to tailorMCISs to a variety of subtle cultural (and other) differences across business units.This leads into some limitations of this study.

First, this paper is a 'level 1' contingency study since it has not assessedwhether the link between national culture and the MCIS has any effect on firmperformance (Fisher, 1995). Rather the study has the systems as the dependentvariable assuming that the studied firms are successful and in equilibrium. Assuch, the study took place in the largest, supposedly well-managed, firms inBelgium, which probably means that the results fairly apply as 'good businesspractice'.

Second, the countries in this study are all part of the western hemisphere, witha majority in Western Europe. There were no business units in Asia, for example.Nonetheless, there is sufficient variation in the Hofstede values for the countriesincluded, as shown in Table 3. The difference between the lowest and highestvalue for the countries in this study is 50, 89, 62 and 58 points for power distance,uncertainty avoidance, individualism and masculinity, respectively. This is wellabove the 20-point difference that is considered by Hofstede (1991) as 'signifi-cant'. Moreover, Europe is generally considered as culturally diverse andinteresting to study national culture differences (Hofstede, 1993; Morden,1995). Also, the vast majority of MCIS research has been done in US firms,and this sample of Belgian firms is a useful extension.

Third, it should be cautioned that the Hofstede values provide a coarse-grainedmeasure of national culture at the macro-level at best. A further issue is theimplicit assumption that the individual business-unit managers who participatedin the study acquiesce neatly in their respective national culture characterizations(Merchant et al., 1995). And, beyond these critical notes, the common limitations


of the Hofstede measures apply (for a more thorough discussion, see Harrison,1993; Chow et al, 1994; Sondergaard, 1994; Gemon and Wallace, 1995;Harrison and McKinnon, 1999).

Fourth, the current study is limited by its focus on budgetary control systemsand associated incentives. Even though budgetary controls are an importantcontrol mechanism at managerial levels, they are only a subset of the overallcontrol system available to an organization (Merchant, 1998). As such, the effectsof national culture found in this study could be underestimated simply becausefirms may use other mechanisms to deal with differences in national culture(e.g., human resources policies).

Finally, quite some variance in the design of management control systemsremains unexplained after corporate effects and one business-unit effect (nationalculture) were taken into account. Superseding the firm level, there may besignificant industry effects due to different competitive conditions, levels ofrisk, rates of growth, etc. (Shields, 1998). At the other end, there may besignificant individual manager effects, such as tenure, education and leadershipstyle. There also may be other business-unit effects beyond national culture, suchas size, strategy, past performance and degree of functional integration (O'Connoret al, 2002). This study has just shown that one widely cited business-unit factor,national culture, seems by itself not vastly important for the adaptation of MCISs.However, there may be a myriad of not-so-important but still non-negligiblefactors. Future research could fruitfully look at clusters of multiple factorssimultaneously (Merchant et al, 1995), but as this study suggests, such analysisshould consider potentially important firm effects towards corporate isomorphism,rather than be examined cross-sectionally only.

ACKNOWLEDGEMENTS

I acknowledge the many helpful suggestions of two anonymous reviewers,Thomas Lin, Helene Loning, Stephen Zeff, and participants at the CIERA1999 International Accounting Conference, the Canadian Academic AccountingAssociation 2000 Annual Meeting, and the American Accounting Association2000 ABO Meeting, I also thank the Intercollegiate Center for ManagementScience (Belgium) and the USC Leventhal School of Accounting for financialsupport.

NOTES1 In the context of this paper, it is assumed that organizational cultures exert a unifying

force on the MCISs implemented throughout the business units of multi-business,multinational firms. However, there is a large literature on organizational cultures,which is outside the scope of this paper, that discusses different roles that organiza-tional cultures play, ranging from encouraging internal consistency and integration -which is the view taken in this paper - to allowing fragmentation, difference and


paradox. Martin (1992), for example, provides a broader perspective on these differentroles of organizational cultures.

2 These data sources include the official database of the National Bank of Belgium, thepan-European financial database AMADEUS from Bureau van Dijk, the WHO-OWNS-WHOM database o^ Dun & Bradstreet, and the Trends TOP 30,000 database.

3 Independence is defined as no non-Belgian (foreign) firm owning a stake in the firm of50% or more.

4 Of those 46 firms, nine discontinued their cooperation in the second stage of datacollection at the business-unit level (see below). This leaves 37 firms in the finalsample from which both corporate-level and business-unit-level data were obtained.The 37 firms that were part ofthe final analysis have average corporate consolidatedsales of 65.5 billion Belgian francs (^1.7 billion euros).

5 Of the 37 invalid replies, the majority consisted of surveys only being partlycompleted. Some other reasons for invalid replies were: addressee no longer withthe firm; firm in financial distress or re-organization; firm policy of non-participation insurveys.

6 The average percentage variable salary reported here (13%) is smaller than in Baimanet al (1995) and Bushman et al (1995) who reported about 20% and 40% variablesalary for division CEOs, respectively.

7 In the sample of Bushman et al. (1995), the average percentage of a division CEO'sbonus based on higher-level performance is 33.7%, which is similar to the percentagefound here (28.6%).

8 The results are qualitatively similar when the analysis is performed across all 37 firms.However, p-values obtained from the analysis across all 37 firms might be less reliablegiven that some firms have as few as one or two business units only. Given that bothpermutations yield similar results, the tests seem robust.

9 From Table 4: /t = •JOjenveen.gTOapj ~ (•J' Ae/wcen-graupi "I" '^^within-groups)'10 Combining the foreign business units into one group as in Tables 4 and 6 causes the

group of foreign business units to be non-homogeneous, which may inflate its nationalculture variance. Hence, significant differences in the MCIS variables between the localand foreign groups should be interpreted with caution because they may be spurious(caused by variance inflation) and difficult to interpret (because they apply to anaverage culture ofthe foreign group of business units). Nonetheless, at face value, thefinding that budgeting matters are handled more intensively with local business unitsthan with foreign business units certainly seems plausible. However, to check whetherthe results are spurious, the multivariate ANOVA as reported in Table 6 was alsoperformed with the independent variables being business units in their respectiveiocation (i.e., all countries instead of just local versus foreign) in all 37 firms (insteadof just those with at least four business units). The results of this analysis are againqualitatively identical to both the ANOVA results in Table 4 and MANOVA results inTable 6; that is, the firm factor is significant for each MCIS variable (all p<0.10)whereas the country factor is again significant for (i) budget intensity (p = 0.04) and(ii) the way in which bonuses are determined (formula-based versus discretionary)(p = 0.07). Hence, despite the dichotomization of national culture (local versusabroad) and the restriction to firms with at least four business units, the results inTables 4 and 6 seem not spurious.

11 One observation for Luxembourg and one for the Czech Republic were omittedbecause they are not included in Hofstede (1980).

12 Since there are many ties that may cause non-normality in the correlation data, non-parametric correlations (Spearman) may be more appropriate than parametric (Pearson)correlations. For completeness. Table 7 reports both Pearson and Spearman correla-tions, yet shows that the results are similar.


REFERENCES

Anthony, R. N. and Govindarajan, V (1998) Management Control Systems. New York:Irwin-McGraw-Hill.

Awasthi, V N., Chow, C. W. and Wu, A. (1998) 'Performance measure and resourceexpenditure choices in a teamwork environment: the effects of national culture'.Management Accounting Research, 9(2): 119-38.

Baiman, S., Larcker, D. F. and Rajan, M. V (1995) 'Organizational design for businessunits'. Journal of Accounting Research, 33 (2): 205-29.

Bimberg, J. G. and Snodgrass, C. (1988) 'Culture and control: a field study'. Accounting,Organizations and Society, 13(5): 447-64.

Bushman, R. M., Indjejikian, R. J. and Smith, A. (1995) 'Aggregate performance measuresin business-unit manager compensation: the role of intrafirm interdependencies'.Journal of Accounting Research, 33 (Supplement): 101-27.

Campbell, A., Goold, M. and Alexander, M. (1995) 'Corporate strategy: the quest forparenting advantage'. Harvard Business Review, 73(2): 120-32.

Chow, C. W., Kato, Y. and Merchant, K. A. (1996) 'The use of organizational controls andtheir effects on data manipulation and management myopia: Japan vs. U.S. comparison'.Accounting, Organizations and Society, 2\(2/3): 175-92.

Chow, C. W., Kato, Y. and Shields, M. D. (1994) 'National culture and the preference formanagement controls: an exploratory study of the firm-labor market interface'.Accounting, Organizations and Society, 19(4/5): 381-400.

Chow, C. W., Shields, M. D. and Chan, Y K. (1991) 'The effects of management controlsand national culture on manufacturing performance: an empirical investigation'.Accounting, Organizations and Society, 16(3): 209-26.

Chow, C. W., Shields, M. D. and Wu, A. (1999) 'The importance of national culture in thedesign of and preference for management controls for multi-national operations'.Accounting, Organizations and Society, 24(5/6): 441-61.

Daley, L., Jiambalvo, J., Sundem, G. L. and Kondo, Y. (1985) 'Attitudes towards financialcontrol systems in the United States and Japan', Journal of International BusinessStudies, V?AV. 91-110.

Dillman, D. A. (1978) Maii and Telephone Surveys: The Total Design Method. New York:John Wiley.

DiMaggio, P J. and Powell, W. W. (1983) 'The iron cage revisited: institutionalisomorphism and collective rationality in organizational fields', American SociologicalReview, 48: 147-60.

Firth, M. (1996) 'The diffusion of managerial accounting procedures in the People'sRepublic of China and the influence of foreign partnered joint ventures'. Accounting,Organizations and Society, 21(7/8): 629-54.

Fisher, J. G. (1995) 'Contingency-based research on management control systems:categorization by level of complexity'. Journal of Accounting Literature, 14: 24-53.

Fowler, F. J. (1993) Survey Research Methods. Newbury Park, CA: Sage.Gemon, H. and Wallace, R. (1995) 'Intemational accounting research: a review of its

ecology, contending theories, and methodologies'. Journal of Accounting Literature, 14:54-106.

Goold, M., Campbell, A. and Alexander, M. (1994) Corporate-level Strategy: CreatingValue in the Multi-business Company. New York: John Wiley.

Granlund, M. and Lukka, K. (1998) 'It's a small world of management accounting}pr?ict\css\ Journal of Management Accounting Research, 10: 153-79.

Gupta, A. K. and Govindarajan, V (1986) 'Resource sharing among SBUs: strategicantecedents and administrative implications'. Academy of Management Journal, 29(4):695-714.


Harrison, G. L. (1993) 'Reliance on accounting performance measures in superiorevaluative style: the influence of national culture and personality'. Accounting,Organizations and Society, 18(4): 319-39. ,

Harrison, G. L. and McKinnon, J. L. (1999) 'Cross-cultural research in managementcontrol systems design: a review of the current state'. Accounting, Organizations andSociety, 24(5/6): 483-506.

Hofstede, G. (1980) Culture's Consequences: International Differences in Work-relatedValues. Beverly Hills, CA: Sage.

Hofstede, G. (1991) Cultures and Organizations: Software of the Mind. Maidenhead:McGraw-Hill.

Hofstede, G. (1993) 'Cultural constraints in management theories'. Academy of Manage-ment Executive, 7(1): 81-94.

Hopwood, A. G. (1972) 'An empirical study ofthe role of accounting data in performanceevaluation'. Journal of Accounting Research, 10 (Supplement): 156-82.

Kachelmeier, S. J. and Shehata, M. (1997) 'Internal auditing and voluntary cooperation infirms: a cross-cultural experiment'. Accounting Review, 72(3): 407-31.

Lau, C. M. and Tan, J. J. (1998) 'The impact of budget emphasis, participation, and taskdifficulty on managerial performance: a cross-cultural study of the financial servicessector'. Management Accounting Research, 9(2): 163-83.

Lincoln, J., Olson, J. and Hanada, M. (1978) 'Cultural effects on organizationalstracture: the case of Japanese firms in the United States', American SociologicalReview, 829^7.

Marsch, H. W. and Hocevar, D. (1985) 'Application of confirmatory factor analysis to thestudy of self-concept: first and higher-order factor models and their invariance acrossgroups'. Psychological Bulletin, 97: 562-82.

Martin, J. (1992) Cultures in Organizations: Three Perspectives. Oxford: OxfordUniversity Press.

Merchant, K. A. (1981) 'The design ofthe corporate budgeting system: influences onmanagerial behavior and performance'. Accounting Review, 56(4): 813-29.

Merchant, K. A. (1998) Modem Management Control Systems. Upper Saddle River, NJ:Prentice-Hall.

Merchant, K. A., Chow, C. W. and Wu, A. (1995) 'Measurement, evaluation, and reward ofprofit center managers: a cross-cultural field study'. Accounting, Organizations andSociety, 20(7/8): 619-38.

Morden, T (1995) 'International culture and management'. Management Decision, 33(2):16-21.

O'Connor, N. G. (1995) 'The influence of organizational culture on the usefulness ofbudget participation by Singaporean-Chinese managers'. Accounting, Organizationsand Society, 20(5): 383-403.

O'Connor, N. G., Chow, C. W. and Wu, A. (2002) 'The diflusion of "Western" manage-ment accounting/controls among China's state-owned enterprises: an exploration oftheforces, barriers and facilitators'. Working Paper, City University of Hong Kong, SanDiego State University and National Chengchi University.

Otley, D. T. (1978) 'Budget use and managerial performance'. Journal of AccountingResearch, 16(1): 122^9.

Otley, D. T. (1980) 'A contingency theory of management accounting: achievement andprognosis'. Accounting, Organizations and Society, 5: 231—44.

Pratt, I , Mohrweis, L. C. and Beaulieu, P. (1993) 'The interaction between national andorganizational eulture in accounting firms: an extension'. Accounting, OrganizationsandSociety, 18(7/8): 621-8.

Shields, M. D. (1998) 'Management accounting practices in Europe: a perspective from theStates', Management Accounting Research, 9(4): 501-13.


Simotis, R. (1995) Levers of Control: How Managers Use Innovative Control Systems toDrive Strategic Renewal. Boston, MA: Harvard Business School Press.

Soeters, J. and Schreuder, H. (1988) 'The interaction between national and organizationalcultures in accounting firms'. Accounting, Organizations and Society, 13(1): 75-85.

Sondergaard, M. (1994) 'Hofstede's consequences: a study of reviews, citations andreplications'. Organization Studies, 15(3): 447-56.

Wheaton, B., Muthen, B., Alwin, D. F. and Summers, G. F. (1977) 'Assessing reliabilityand stability in panel models', in Heise, D. R. (ed.) Sociological Methodology. SanFrancisco: Jossey-Bass, pp. 84-136.

Documents

Culture and Organization