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Culture and management control interdependence : An analysis of control choices that complement the delegation of authority in Western cultural regions

Malmi, Teemu LU ; Bedford, David S. ; Brühl, Rolf ; Dergård, Johan LU ; Hoozée, Sophie ; Janschek, Otto ; Willert, Jeanette ; Ax, Christian ; Bednarek, Piotr and Gosselin, Maurice , et al. (2020) In Accounting, Organizations and Society 86.
Abstract

This study examines the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesise that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our... (More)

This study examines the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesise that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our results show that the interdependence between delegation and incentive contracting is confined to Anglo firms. In the Nordic and Germanic regions, we find that strategic and action planning participation operate as a complement to delegation, while delegation is also complemented by manager selection in Nordic firms. Overall, our study demonstrates that cultural values and preferences significantly influence MC interdependence, and suggests that caution needs to be taken in making cross-cultural generalisations about the complementarity of MC practices.

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publishing date
type
Contribution to journal
publication status
published
subject
keywords
Complementarity, Culture, Delegation, Incentives, Interdependence, Management control
in
Accounting, Organizations and Society
volume
86
article number
101116
publisher
Elsevier
external identifiers
  • scopus:85081960030
ISSN
0361-3682
DOI
10.1016/j.aos.2020.101116
language
English
LU publication?
yes
id
8903e0e9-cd46-4150-81f7-96541030f76f
date added to LUP
2020-04-09 11:05:55
date last changed
2022-04-18 21:29:38
@article{8903e0e9-cd46-4150-81f7-96541030f76f,
  abstract     = {{<p>This study examines the influence of cultural regions on the interdependence between delegation of authority and other management control (MC) practices. In particular, we assess whether one of the central contentions of agency theory, that incentive contracting and delegation are jointly determined, holds in different cultural regions. Drawing on prior literature, we hypothesise that the MC practices that operate as a complement to delegation vary depending on societal values and preferences, and that MC practices other than incentive contracting will complement delegation in firms in non-Anglo cultural regions. Using data collected from 584 strategic business units across three Western cultural regions (Anglo, Germanic, Nordic), our results show that the interdependence between delegation and incentive contracting is confined to Anglo firms. In the Nordic and Germanic regions, we find that strategic and action planning participation operate as a complement to delegation, while delegation is also complemented by manager selection in Nordic firms. Overall, our study demonstrates that cultural values and preferences significantly influence MC interdependence, and suggests that caution needs to be taken in making cross-cultural generalisations about the complementarity of MC practices.</p>}},
  author       = {{Malmi, Teemu and Bedford, David S. and Brühl, Rolf and Dergård, Johan and Hoozée, Sophie and Janschek, Otto and Willert, Jeanette and Ax, Christian and Bednarek, Piotr and Gosselin, Maurice and Hanzlick, Michael and Israelsen, Poul and Johanson, Daniel and Johanson, Tobias and Madsen, Dag Øivind and Rohde, Carsten and Sandelin, Mikko and Strömsten, Torkel and Toldbod, Thomas}},
  issn         = {{0361-3682}},
  keywords     = {{Complementarity; Culture; Delegation; Incentives; Interdependence; Management control}},
  language     = {{eng}},
  publisher    = {{Elsevier}},
  series       = {{Accounting, Organizations and Society}},
  title        = {{Culture and management control interdependence : An analysis of control choices that complement the delegation of authority in Western cultural regions}},
  url          = {{http://dx.doi.org/10.1016/j.aos.2020.101116}},
  doi          = {{10.1016/j.aos.2020.101116}},
  volume       = {{86}},
  year         = {{2020}},
}