Paper Example on Cultural Control and Its Effects on Management Control Systems

Introduction

The rise in globalization spurred the need to address the issue of effective adaptability of organizations on an international level. The significance of the matter is emphasized due to the existing relations between culture and the firm's operations such as management control systems (MCS). The MCS is a vital component of business operations whose role is to quantify and evaluate the actions of an organization with the aim of providing future projections. On the other hand, cultural control is a management diversity factor crucial to the performance of an organization. Therefore, firms should consider culture and its control in the decision-making process to achieve success. To further exemplify, according to Otley (2016), different countries have a varied national culture that affects employee behavior resulting in the difference in the adaptability of an MCS.

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The transfer of MCS and the adaptability of the domestic systems on foreign land governed by new cultural imperatives is an essential factor in the geographical diversification of business organizations. As a result, the topic of cultural control and its effect on management control system was selected and will be discussed in detail in this paper. The major limitation encountered is the scarcity of research that has adopted a multi-country approach in its analysis of cultural control and management control systems. Therefore, limitations on the sample size negatively affect the representative capacity of the topic.

The paper seeks to gain insights into the aspect of cultural control on various dimensions and its effect on management control systems. A narrative research design aimed at assessing cultural control and its impact on MCS will be adopted. Firstly, the scientific relevance of the topic will be discussed followed by an analysis of the relation between the topic and the literature, and finally, the main message will be put across. The second part will comprise of a discussion on the strengths and weaknesses of the topic about the chosen literature. Additionally, reflection on the relationship between the topic concerning the literature, and strategy and management control will be examined. Thirdly, an analysis of my considerations will be made. The last part will entail the conclusion of the paper.

Discussion

Scientific Relevance of Effects of Cultural Control on Management Control Systems

The subject of cultural control has been debated as a typology for MCS in the decision-making process that guides organizational managers on means of directing employees' behavior (Malmi & Brown, 2008). Adopting a new topology that includes cultural controls contributes to the literature of management control systems that were not previously addressed on a broader perspective. Therefore, Miami & Brown (2008), contribute significantly to the conception of MCS about cultural controls. Additionally, cultural controls can be further incorporated into factors such as institutional pressures for sustainability (IPS), as an approach of explaining the element about MCS (Wijethilake, Munir, & Appuhami, 2017). IPS revolve around the stakeholders of the firm who include employees and customers among others. These stakeholders' behaviors are guided by a set of belief and norms referred to as culture. As a result, cultural controls are an essential aspect for the managerial team to deliver on its roles in MCS.

According to Shimoni (2011), to improve cultural controls among managers, organizations need to re-evaluate and establish cultural control models that hybridize organizational management and local culture through a personalized socialization perspective. The development of cultural control measures will have a ripple effect on globalized corporations. To further investigate the relevance of cultural controls on organizations, Ljubica, Dulicic & Aust (2016), conducted empirical research aimed at assessing the effect of individual and organizational culture on the performance of MNCs'.

An Analysis of the Relation between the Effects of Cultural Control on MCS and the Literature

Four scientific articles were selected to give insights into the evaluation of cultural control and its effect on management control systems. In the first study, MCS adopted a new model that entailed the element of cultural control among other control factors (Malmi and Brown, 2008). Many organizations believe cultural controls are subtle controls; therefore, most firms do not link them to their administrative decision-making process. Despite the assumption that cultural controls are slow to change, its relevance in MCS cannot be understated. On that note, cultural control was investigated based on value, symbol, and clans (Malmi & Brown, 2008). The main theory used to describe cultural controls concerning MCS is the belief systems that define the values of the employees. Malmi & Brown (2008), further based their study on previous research that depicted a positive relationship between controlled MCS and performance of the growth and manufacturing industries. In this regard, cultural control affects employee behavior which in turn affects MCS.

By a similar token, Wijethilake, Munir, & Appuhami (2017), acknowledge the importance of controlled MCS packages on improving organizational performance. However, the three researchers present their concern on the effectiveness of a single control system as they believe multiple controls require each other for MCS performance effectiveness to be guaranteed. As a result, the study focused on three key areas specification and communication aims, feedback and control, and employee motivation. The study was conducted on an apparel manufacturing organization through interviews. The institutional theory that governs the IPS framework is the main theory under discussion in the study.

Shimoni (2011), has based his arguments on a new perspective on a culture that is based on change and hybridization. The two main theories the arguments have been based upon include socialization and hybridization. The research adopted a narrative research design aimed at investigating local managers of Thailand and Mexico. Lastly, Ljubica, Dulcic, & Aust (2016), examined two main aspects of culture individual and organizational cultural competence to determine the effect of cultural control on MNCs. A qualitative research design was adopted to gather information and findings on expatriates located in Croatia.

Main Message on the Effects of Cultural Control on MCS from the Literature

The effect of cultural control on MCS is significant as demonstrated by the new typology adopted in the MCS package by Malmi & Brown (2008), which was aimed at governing employee behavior with a focus of improving MCS and organizational performance at large. The effects of cultural control are well evaluated through the establishment of a connection between the different kinds of control systems in an MCS package. The established relationships are further extended through recommendations on further evaluation of the various configurations required among the specific controls for effective performance to be guaranteed. To exemplify, the study advocates for the establishment of particular settings on cybernetic control and cultural control types that when aligned together will boost MCS's efficiency.

The research by Wijethilake, Munir, & Appuhami (2017), contributed to accounting and finance literature through the provision of insights into the different uses of MCS tools concerning IPS. The main message passed through the literature is that organizations should embrace the dynamics of institutional change in the implementation of MCS taking into consideration IPS. As a result, the concept of cultural control and its effect on MCS will have been vividly discussed. Additionally, the three researchers insist on the importance of multiple controls in MCS while responding to IPS and organizational improvements. MCS plays a significant role in support of strategic responses to IPS governed by cultural controls. In this regard, it is crucial for corporate management to understand the influences of IPS on sustainability since this factor regulates the effectiveness of the roles performed by MCS.

Shimoni (2011), main arguments are that a hybrid-based cultural control model should be adopted in the assessment of the cultural effect on employee behaviors and global firm operations. The research conducted on Thailand and Mexico revealed that local managers of globalized corporations operate in environments controlled by constant cultural negotiations and hybridization. Therefore, to ensure smooth operations of globalized corporations that consist of multiple cultures, the local managers should adopt the hybridized cultural control framework. The concept of cultural control and its effect on MCS can be illustrated in Ljubica, Dulcic, & Aust (2016), by the positive relationship between organizational outcomes and cultural competence. In particular, the study exhibited a positive correlation between individual and corporate cultural competency and organizational innovativeness of MNC subsidiary.

Critical Reflection

Strengths and Weaknesses of the Effects of Cultural Control on MCS in relation to the Literature

The major strength of cultural control and its effect on MCS in the study by Malmi & Brown (2008), is the use of a unique model that recognizes the control managers have over their employee behaviors. The model is structured around control; as a result, illustrating the different managerial powers bestowed on managers and how they could be used to align employee behaviors to organizational goals. Additionally, the new typology adopted addresses cultural control an element that has received little attention in management accounting literature. The major weakness of the study is that the structuring mechanisms of the new topology do not give detailed information regarding the context of adaptability of cultural control concepts and its effect on other controls in the typology.

The findings by Wijethilake, Munir, & Appuhami (2017), are crucial to different stakeholders in the business environment including the managers and regulators. In particular, the top management team of an organization should understand the different MCS tools for effective responses and improved performance to be attained. Moreover, the study contributes to cultural concepts and its effect on MCS through its detailed exploration on the relevance of MCS in IPS and how variations in IPS require specific strategized MCS responses. The major weakness of the study was the broad concept covered by the term sustainability which would affect the strategic responses of MCS. In particular, organizations operate on a broad context and by a wide range of governed by cultural controls. Therefore, for effective MCS response to be guaranteed the context of the firm's operation with regard to sustainability has to be narrowed down. The effect of cultural controls on MCS majorly relies on the cultural differences and mixtures of the different employees, a concept that has been significantly held by Shimoni (2011). Additionally, the dynamics of culture which affect firms through hybridization and exchange are an important element of cultural concepts that guide its specific effect on MCS. However, these cultural dynamics have not been well expounded upon in the study by Shimoni (2011), and further research would address the issue.

Ljubica, Dulcic, & Aust (2016), shed new light on the impact of the different cultural competence levels on organizational outcomes. In particular, an MNC located in Croatia was found to have a high multicultural operational development ex...