Culture and Management Control Interdependence: An Analysis of Control Choices That Complement the Delegation of Authority in Western Cultural Regions

Posted: 17 Apr 2020 Last revised: 2 Feb 2021

See all articles by Teemu Malmi

Teemu Malmi

Aalto University School of Business

David S. Bedford

University of Technology Sydney (UTS)

Rolf Brühl

ESCP Europe Business School Berlin

Johan Dergard

Lund University

Sophie Hoozée

Ghent University - Department of Accountancy and Corporate Finance

Otto Janscheck

University of Vienna

Jeanette Willert

Copenhagen Business School

Christian Ax

University of Gothenburg - School of Business, Economics and Law

Piotr Bednarek

Uniwersytet Ekonomiczny we Wrocławiu

Maurice Gosselin

Université Laval

Michael Hanzlick

ESCP Europe, Berlin

Poul Israelsen

Aalborg University - Center for Industrial Production

Daniel Johanson

Norwegian School of Economics (NHH)

Tobias Johansson

Örebro University - School of Business

Dag Øivind Madsen

University of South-Eastern Norway

Carsten Rohde

Copenhagen Business School

Mikko Sandelin

Aalto University - Department of Accounting and Finance

Torkel Strömsten

Stockholm School of Economics

Thomas Toldbod

Aalborg University Business School

Date Written: February 13, 2020

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 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.

Keywords: Management control, Delegation, Incentives, Complementarity, Interdependence, Culture

JEL Classification: M41

Suggested Citation

Malmi, Teemu and Bedford, David S. and Brühl, Rolf and Dergard, Johan and Hoozée, Sophie and Janscheck, Otto and Willert, Jeanette and Ax, Christian and Bednarek, Piotr and Gosselin, Maurice and Hanzlick, Michael and Israelsen, Poul and Johanson, Daniel and Johansson, Tobias and Madsen, Dag Øivind and Rohde, Carsten and Sandelin, Mikko and Strömsten, Torkel and Toldbod, Thomas, Culture and Management Control Interdependence: An Analysis of Control Choices That Complement the Delegation of Authority in Western Cultural Regions (February 13, 2020). Accounting, Organizations and Society, Vol. 86, 101116, 2020, Available at SSRN: https://ssrn.com/abstract=3560062

Teemu Malmi

Aalto University School of Business ( email )

P.O. Box 21220
Aalto, 00076
Finland
+358 40 5100827 (Phone)

David S. Bedford

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Rolf Brühl

ESCP Europe Business School Berlin ( email )

Heubnerweg 8-10
Berlin, 14059
Germany

Johan Dergard

Lund University ( email )

Box 117
Lund, SC Skane S221 00
Sweden

Sophie Hoozée (Contact Author)

Ghent University - Department of Accountancy and Corporate Finance ( email )

Sint-Pietersplein 7
Ghent, 9000
Belgium

Otto Janscheck

University of Vienna ( email )

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

Jeanette Willert

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Christian Ax

University of Gothenburg - School of Business, Economics and Law ( email )

Vasagatan 1
Po Box 610
Goteborg, 40530
Sweden

Piotr Bednarek

Uniwersytet Ekonomiczny we Wrocławiu ( email )

Komandorska 118/120
Wrocław, 53-345
Poland

Maurice Gosselin

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada

Michael Hanzlick

ESCP Europe, Berlin ( email )

Heubnerweg 8-10
Berlin, 14059
Germany

Poul Israelsen

Aalborg University - Center for Industrial Production ( email )

Fibigerstræde 16
Aalborg, 9220
Denmark

Daniel Johanson

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Tobias Johansson

Örebro University - School of Business ( email )

Örebro, SE-701 82
Sweden

Dag Øivind Madsen

University of South-Eastern Norway ( email )

Bredalsveien 14
Hønefoss, Buskerud 3511
Norway

Carsten Rohde

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Mikko Sandelin

Aalto University - Department of Accounting and Finance ( email )

P.O. Box 1210
Helsinki, 00100
Finland
+358 9 4313 8457 (Phone)
+358 9 4313 8678 (Fax)

Torkel Strömsten

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Thomas Toldbod

Aalborg University Business School ( email )

Fredrik Bajers Vej 7E
Aalborg, DK-9220
Denmark

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