Paper Example on Cultural Control and Its Effect on Management Control System Within International Organizations

Introduction

Multinational organizations invest significant amounts of resources in research aimed at influencing and motivating their regional workforces to behave in their best interests (Harrison & McKinnon, 1999). The results of these researches are management control systems. To influence thought and behavior, multinational corporations operating in external markets resort to introducing their workforce to organizational cultures. Ljubica, Dulcic, and Aust (2016) confirm the existence of a direct correlation between cultural competence and the performance of multinational corporations in host nations. On the other hand, a body of research such as that by Shimoni (2011) has sprung up with the claim that multinational corporations need to rethink the cultural control concept as a means to realizing their internal organizational cultures.

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These studies base their arguments on the fact that cultural control, as it currently is defined, is reliant on the role of implicit cultures in influencing the behavior and thoughts of managers who are in charge of their establishments in host nations. Based on these sets of divided opinions, it is fair to conclude that cultural control holds the key to functional management control systems now and in the future.

According to Bedford, Malmi, and Sandelin (2016), management control exists in two forms. The first is a package which organizations replicate in each of their operating environments. The second is the resultant system. As a result of the success of cultural control in cementing management control systems, numerous management control systems concerns exist within the realm of cultural control. For instance, discussions on institutional pressures for sustainability and the position of management control systems are succeeding as a result of cultural control. Wijethilake, Munir, & Appuhami (2017) identify cultural controls as one among several elements of the control package through which sustainable development emanates for management control systems.

This paper is premised on the idea that cultural control and development in host nations where multinational corporations operate play essential roles in enabling the corporations to achieve their twin goal of profitability and social responsibility (Ljubica, Dulcic, and Aust 2016). The purpose of this paper is to define cultural control and highlight its effects on management control system within international organizations. The paper is structured into three sections- an introduction, a discussion segment, a reflection section, and a conclusion section. The opening section will define the subject and provide its scope. The discussion section will provide a literature review on the subject. The final section will reflect on the subject under discussion and how it fits into the discussion.

Topic Discussion

In the years leading to the new millennium and the rapid growth of the concept of globalization, there was extensive research on the nature of the new frontiers which multinational corporations were seeking to venture. Harrison and McKinnon (1999) sought to review the state of cross-cultural research in management control systems design. Similar studies aimed to determine the convergence point, if any existed, of the various approaches to culture control. More recently, researchers have focused on the effectiveness of management control systems. Wijethilake, Munir, and Appuhami (2017) conducted a study on the role of management control systems in helping multinationals to respond to institutional pressures for sustainability.

On his part, Shimoni (2011) explores the best approaches to cultural control in global corporations. His research explores the possibility of a shift from socialization to hybridization as a means of developing more effective management control systems. Ljubica, Dulcic, and Aust (2016) conducted an empirical analysis of the correlation between individual and organization control and their impact on the development of multicultural organizations. Most of the recent studies focus on the ways to improve management control systems. The study by Bedford, Malmi, and Sandelin (2016), for instance, is an empirical analysis of the packages and systems which combine to ensure the effectiveness of management control systems.

The study of efficiency has been an ongoing undertaking. Malmi and Brown (2008) introduced the challenges, research directions and opportunities around management control systems. Others have focused their studies on particular segments of the management control system. For instance, the study by Otley (2016) tapers towards management accounting and control. Noeverman (2007) explores the chemistry linking cultural control to management control systems. The more important subject of the correlation between national management control systems and culture is studied by the duo Wright and Lappas (2017). Andersen and Lueg (2016) examine the significance of culture in the success of management control systems.

Harrison and McKinnon (1999) distinguished four weaknesses in their study spanning 15 years before the new millennium on the subject of cultural control and its resultant impact on management control systems. First, they identified that the critical link between the totality of cultural domain and theoretical expositions were lacking. The second weakness exhibited by the tendency among the researchers to explicitly disregard the differential intensity which culture has on the values provided by multinational corporations across nations. Thirdly, they discovered that these studies simplistically treated culture. Fourthly, they determined that there the reliance on a narrowed concept of culture. These sentiments seem to have inspired subsequent researchers on the subject.

The study by Wijethilake, Munir, and Appuhami (2017) took a different route to data collection. By interviewing sustainability managers, they sought to get the perspectives of the users of management control systems. They determined that management control systems play an integral role in meeting institutional pressures for sustainability requirements. The study by Ljubica, Dulcic, and Aust (2016) was set in Croatia and employed a targeted sample of expatriate managers. The focus industries for the study were tourism, Information technology, and banking. With a total of 560 questionnaires, the sample was sufficiently representative. Malmi and Sandelin (2016) used a cross-sectional survey as their data collection method. The study focused on organizations with 150 employees or less and approximately $20 million annual revenues. These were big enough to fall into the category of multinationals.

The study by Malmi and Brown (2008) introduces a new type of management control system which centers around the Cybernet, planning, compensation, and reward. This understanding to management control systems was perhaps ahead of its time. Otley's work uses the contingency theory to interrogate management accounting and control which are critical elements of the management control system. The empirical data for the study by Noeverman (2007) originated from a Dutch food-processing organization. Interviews are focused on the organization's leading managers. The paper aims to determine the correlation between employee behavior and the evaluative style supported by the management control system. Wright and Lappas (2017) recognized the flexibility of management control systems and their adaptability to operational environments.

Shimoni (2011) concludes that a hybrid cultural control perspective ought to come first when setting up management control systems within multinational corporations. He argues that local headquarters for multinational corporations can get transformed from their current internally cohesive and externally defined models to those where multiple cultures exist. This transformation, he believes is the best approach for management control systems, particularly for multinational corporations. On their part, Wijethilake, Munir, and Appuhami (2017) conclude that management control systems are designed to achieve sustainability. It is this element that they find to be useful for multinational corporations which have to respond to institutional pressures for sustainability.

The findings by Ljubica, Dulcic, and Aust (2016) determine a strong correlation between cultural control at the level of both the individual employee and the organization in general and the success of management control systems. They also determine success in management control systems which are responsive to local adaptations that define businesses. Multinational corporations that force global standards were found to have management control systems with high failure rates. Malmi and Sandelin (2016) find that the various components of management control systems must coexist for significant gains to arise. Specifically, the accounting systems are tied to other parts, presenting the management control system as a package.

As per the findings by Malmi and Brown (2008), management control systems are internally broad but externally subtle. This feature implies that they form the foundation for the success of multinational organizations within different cultures. As such, whereas it is possible to recruit from different cultures, a uniform organizational structure is still maintained. The research on contingency theory concludes that the social world is interpretively constructed rather than rule-governed. As such, while developing culture control mechanisms, multinational corporations must provide room for customizations within the different countries to achieve efficient management control systems (Otley, 2016).

Critical Reflections

These studies compare and differ significantly in their structures, mode of data collection and findings. All the data cover the performance of multinational corporations within the past two decades. As such, they all focus on a period when multinational corporations have grown in number, increased in operation, and transformed from a focus on products only to a focus on value. As such, the period studied involved much research on organizational efficiency, most of which is commissioned by the corporations. The scope of these articles is significantly relevant and applicable. The sample sizes are statistically efficiently representative of the populations under study.

The study by Harrison and McKinnon (1999) spans 15 years and analyzes journals written within this period. The secondary data derived from this study not only provides valuable data but also leads to informed conclusions about the subject. On its part, the study by Wijethilake, Munir, and Appuhami (2017) derives its authority and relevance from the practical implications it has to current multinational corporations that have to respond to institutional pressures for sustainability. The observations made by Ljubica, Dulcic, and Aust (2016) could define the future of management control systems. Their contribution confirms the importance of cultural control and management control systems for current multinational corporations and in defining their sustainability.

The context of this paper has a one-on-one relationship with Shimoni (2011). By exploring the state of cultural control and its relevance to multinational corporations, he raises sufficient curiosity to examine the underlying structures over which management control systems exist and operate. A similar approach is exhibited by Malmi and Brown (2008). Their interest in the right perspective from where to define the management con...