influence of culture on management

8/9/2019 Influence of Culture on Management

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Journal of International Financial Management and Accounting 5:3 1994

The Influence of Culture on OrganizationalDesign and Planning and Control in Australiaand the United States Com pared withSingapore and Hong KongGraem e L. Harrison*, Jill L. McKinnon*, Sarala Panchapakesan**and Mitzi Leung****Macquarie University, **Hong Kong Polytechnic,***Hong Kong Technical Colleges Planning Team

AbstractThis study draws oti the tiational cultural ditnensiotis of power distatice, individualism,atid Confucian dynamism to predict and explain differences in philosophies for, andapproaches to organizational design and management planning and control systems inAustralia and the US, representing Anglo-American nations, and Singapore and HongKong, representing the 'five dragons' of East Asia. Data were gathered by surveyquestionnaires mailed to senior accounting and finance executives in 800 organizations.The results were largely as predicted and, in general, provide support for the im portanceof national culture in influencing organizational design and management planning andcontrol systems. In particular, the cultural values of Anglo-American society relative toEast Asian society are associated with a greater emphasis on decentralization andresponsibility centres in organizational design, and a greater emph asis on qu antitative andanalytical techniques in planning and control. By contrast, the cultural values of EastAsian society are associated with a greater emphasis on long-term planning and on groupcentred decision-making. The results are important to managers in global organizationswho need to understand the cultural bases of observed differences in organizationaland management planning and control practices in Anglo-American and East Asiannations.

I. IntroductionThe transferability of organizational and management planning andcontrol systems across nations is an issue of increasing importance asmovement towards the globalization of business and economies con-tinues. In particular, the questions of whether and how different national


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Influence of Culture on Organizational Design and Planning 243organizational design and planning and contrQl systems have been thesubject of a number of studies in recent years (Daley et al., 1985; Chow etal., 1991; Shields et al., 199 1; Fruco t and Shearon, 1991; Harrison, 1992,1993).

A significant early study in this area was that of Daley et al. (1985),who examined the attitudes of Japanese and United States (US) m anagersand controllers towards twelve aspects of budgeting and control systemsdesign. D aley et al. found differences in attitudes in respect of some of thebudget and control systems practices, but similarity of attitudes in respectof others. Importantly, Daley et al.'s findings con tradicted their hypothesesin respect of the predicted direction of difference in attitudes between theJapanese and US managers and controllers in 7 of the 12 aspects. Theauthors noted, in possible explanation of this, that their hypotheses hadbeen based on 'fairly common statements about attitudes in the US andJap an ' (Daley et al., 1985, p. 105), and that these statements may not havebeen valid.

Another characteristic of the Daley et al. (1985) study is that, while itwas highly insightful in raspect of differences and similarities in attitudesbetween Japan and the U S, its findings were restricted to those two nationsalone. This is because the hypo theses were based on prior statements andassertions about observed differences in attitudes between Japan and theUS, rather than on the instrinsic and componential cultural determinantsof those differences.

In the absence of working from componential determinants, cross-national studies are restricted to describing differences between practicesand/or attitudes in the nations actually studied. Such studies cannot explainthe reasons for the differences (or similarities), nor can they predict orseek to generalize their results to other nations which may have similar ordifferent cultural components.In recognition of this limitation, many subsequent cross-nationalstudies in both the financial and management accounting areas have beenbased on the explicit incorporation and examination of the cultural vari-able (see, for example, Soeters and Schreuder, 1988; Chow et al., 1991;Frucot and Shearon, 199 1; Harrison, 1992, 1993). In particular, these


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244 G. Harrison, J. McKinnon, S. Panchapakesan and M . LeungThis study is set within that framework, and examines the way in which

national culture, 'unbundled' into appropriate components, is associatedwith differences in philosophies for and approaches to, organizationaldesign and management planning and control systems in different nations.The organizational design issues that we examine are concentration ofauthority (decentralization/centralization), and use of responsibility centres.In respect of management planning and control systems, we examine theeffect of national culture on; (i) the emphasis on quantitative techniques,(ii) the planning time horizon (short-term and long-term planning), (iii)group or individual centred decision-making, and (iv) formalization ofcontrol. These issues of organizational design and planning and controlsystems are drawn from Khandwalla (1977) and Daley et al. (1985), andare not exhaustive of such systems. Other important issues, such asbudgetary participation, emphasis on budgets in performance evaluation,compensation, etc., have been the subject of other cross-cultural research(Frucot and Shearon, 1991; Harrison, 1992, 1993; Chow et al., 1991).

The nations we examine are Australia, the US, Singapore, and HongKong. Taken together, Australia and the US represent western societies ofAnglo-American origin, and Singapore and Hong Kong constitute two ofwhat are sometimes called the 'five dragons' of East Asia (Hofstede andBond, 1988, p. 5).' As such, Australia and the US com bined, com pared toSingapore and Hong Kong combined, represent important clusterings ofnations which share many cultural characteristics within the clusterings,but contrast on many such characteristics across the clusterings.^

The concept of culture, and the cultural components and characteristicswhich distinguish Australia and the US on the one hand, and Singaporeand Hong K ong on the other, are discussed in the next section of the paper.Following that, hypotheses about differences in philosophies and approachesto organizational design and planning and control systems in Australia/UScompared to Singapore/Hong Kong are developed, based on the culturalcomponents and characteristics. The method is then presented, followedby a discussion of the results and conclusions of the study.


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Influence of Culture on Organizational Design and Planning 245he (1984, p. 113) referred to culture as 'a system of meanings in the headsof multiple individuals within a population'. Hofstede (1980, p. 25)defined culture similarly as 'the collective programming of the mind w hichdistinguishes the members of one human group from another'. He wenton to describe the content of mental programmes as values. In a majorsurvey of employee attitudes in the world-wide subsidiaries of IBM (asurvey which took place initially between 1968 and 1973, and involved20 languages and 117,000 questionnaires), Hofstede identified four normvalues which he termed 'dimensions' of culture. These were power dist-ance, individualism, uncertainty avoidance, and masculinity. In a subsequentstudy (Hofstede and Bond, 1988), a fifth norm value was identified,termed Confucian dynamism.

Power distance (PD) refers to the way in which societies handle theproblem of human inequality. Some societies are characterized by a normvalue that inequalities between people should be minimized; and to theextent that hierarchies exist within society and its organizations, they existonly for administrative convenience (Hofstede, 1980, p. 122). Thesesocieties would be classified as low PD. In low PD societies, subordinatesand superiors regard each other as like (or equivalent) people, who haveequal rights (Hofstede, 1980, p. 122), and subordinates expect to beconsu lted on decisions or actions that affect them (Child, 1981, p. 327 ;Perera and Mathews, 1990; Hofstede, 1980, p. 110). By contrast, othersocieties are characterized by the acceptance of inequality and its institu-tionalization in hierarchies, which locate people in their 'rightful places'.Here the hierarchy reflects and reinforces inequality. These societies,would be classified as high PD . In high PD societies, superiors are expectedto lead, to make decisions autocratically and patemalistically, and subord-inates are generally afraid and unwilling to disagree with their superiors(Hofstede, 1980, p. 92 ; Child, 1981, p. 327).

The cultural dimension of individualism (IDV) 'describes the degree towhich individuals are integrated into groups' (Hofstede and Bond, 1988,p. 10). Hofstede (1983, p. 79) distinguishes societies on this dimension asfollows:


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246 G. Harrison, J. McKinnon, S. Panchapakesan and M . LeungThe former societies in this quotation would be regarded as high indi-vidualism (or individualist) societies, and the latter as low individualism(alternatively termed coUectivist). An individualist culture is characterizedby a focus on the individual as having a self-identity which is both uniqueand whole, and by an emphasis on the individual's interests and attributes,rather than on the interest of the group(s) to which individuals maybelong . By contrast, under the perspective of collectivism, a person is seenas whole only when considered in terms of an ingroup affiliation. It is thegroup, not the individual, that is seen as the basic unit of survival (Hui,1984, p. 28),

Uncertainty avoidance (UA) is related to how a society confronts theuncertainty of the future. A high UA society maintains a shared belief that'the uncertainty inherent in life is felt as a continuous threat that must befought' (Hofstede, 1 9 80, p. 1 84) by 'adhering to strict laws and rules, safetyand security measures, and (on the philosophical and religious level) abelief in absolute Truth' (Hofstede and Bond, 1988, p. 11). A low UAsociety is one in which life's uncertainty 'is more easily accep ted and eachday is taken as it comes' (Hofstede, 1980, p. 184), Masculinity (MAS)(versus femininity) is concerned with the ways in which the biologicaldifferences between the sexes become perpetuated in differences in socialand organizational roles played by men and women, 'Masculine cultures.,. expect men to be assertive, ambitious, and competitive, to strive formaterial success .., and expect women to care for the nonmaterial qualityof life, for children and for the weak. Feminine cultures ... definerelatively overlapping social roles for the sexes, in which neither men norwomen need to be ambitious or competitive' (Hofstede, 1984, p. 390).

Considerable support has been provided for the four dimensions ofculture described above. First, these dimensions were also found in anindependent survey of the values of 1000 psychology Students in tennations using the Rokeach Value Survey (Ng et al., 1982; Hofstede andBond, 1 9 8 8 , pp. 1415). Second, Hofstede's classification and measureshave been replicated and supported for validity and reliability in sub-sequent studies (Bosland, 1984; Hofstede and Bond, 1984; Ronen andSchenkar, 1985).


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Influence of Culture on Organizational Design and Planning 247were irrelevant to respondents in other cultures, particularly easterncultures, and might have excluded questions (about values and attitudes)that would have been relevant to those cultures (Hofstede and Bond , 1988,p. 15). Consequetitly, therefore, a subsequent study was conducted basedon a questionnaire developed by researchers in eastern nations. Thisinstrument was called the Chinese Value Survey (GVS) (Hofstede andBond, 1988, p. 15).

The administration of the GVS questionnaire produced the followingresults. First, the dimensions of power distance, individualism and mascu-linity, identified in the original study, were also present in the second.Hofstede and Bond (1988, pp. 15-16) note that these three dimensionsrefer to 'three types of expected social behavior: behavior toward senioror jun iors, toward the group, and as a function of one 's s ex '. They (1988,p. 16) argue that these are cultural choices 'so fundamental to any humansociety that they are found regardless of whether the values surveyed w eredesigned by a Western or an Eastern mind'. Second, the uncertaintyavoidance dimension was not found, and third, a new dimension was foundwhich Hofstede and Bond (1988) termed Confucian dynamism.The Confucian dynamism (GD) dimension was identified as polarizingsocieties on a set of values derived from the teaching of Gonfucius. Speci-fically, societies were found to differ between those that regarded as relat-ively important the four values of perseverance, thrift, the observation ofrelationships ordered by status, and having a sense of shame; and thosethat regarded as relatively important the four values of personal steadinessand stability, the protection of face, respect for tradition, and the reci-procation of greetings , favours and gifts (Hofstede and Bond, 1988, p. 17).Societies which regarded the first four as relatively important tended toregard the second four as relatively unimportant, and vice versa. Hofstedeand Bond (1988, p. 16) contended that the first four values reflect anorientation toward the future, while the latter four reflect an orientationtoward the past and the present. Hofstede and Bond (1988, pp. 12-13)ranked 22 nations on this dimension, contending that those ranked highreflected 'a dynamic future-oriented mentality', while those ranked lowreflected 'a more static, tradition-oriented mentality' (Hofstede and Bond,


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248 G. Harrison, J. McKinnon, S. Panchapakesan and M . Leungnations), and the fourth because of its particular potential to polarize anddistinguish nations in eastern and western groupings. By contrast, theresults of the surveys suggest that uncertainty avoidance is not a dimen-sion applicable to western/eastern comparative studies, but rather is re-stricted to those studies comparing western nations only.

Hofstede and Bond (1988, pp. 19-20) contend that the non-universalityof uncertainty avoidance and Confucian dynam ism reflects a philosophicaldivide between western and eastern nations, based on the acceptance orrejection of an ultimate truth. They argue that western societies believe inthe existence of an ultimate truth and, therefore, are stimulated to searchfor such truth. They cite the tenets of the religions of Judeaism, Christ-ianity and Islam as reflections of such a belief. By contrast, eastern societiesare argued to reject the assumption of an ultimate truth.

Human truth is seen as partial, so that one truth does not exclude its opposite.This is why people in the East can readily adhere to more than one religion orphilosophical school at the same time (Hofstede and Bond, 1988, p. 20).The studies of Hofstede (1980) and Hofstede and Bond (1988) scored andranked each of 53 nations on power distance (PD), individualism (IDV),uncertainty avoidance (UA) and masculinity (MAS), and 20 on Confuciandynamism (CD). The studies show that Australia and the US are high IDVand low PD, contrasting sharply with Singapore and Hong Kong, whichare low IDV and high PD. The latter two nations are high CD comparedto a low score and ranking for Australia/US. The difference betweenAustralia/US on the one hand, and Singapore/Hong Kong on the other, aresharpest for these three cultural dimensions.'

III. Theory Development and H ypotheses FormulationIn this section, hypotheses are developed for expected differences inphilosophies for, and approaches to, organizational design and manage-ment planning and control systems in Australia and the US (hereafter


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Influence of Culture on Organizational Design and Planning 249Organizational designThe aspects of organizational design that we examined w ere concentrationof authority (decentralization versus centralization) and use of respons-ibility centres. The two cultural dimensions relevant to concentration ofauthority are power distance (PD) and individualism (IDV). Because PDis directly concerned with the acceptance (high PD) or the rejection(low PD) of the unequal distribution of power, Hofstede (1980, p. 107)contends that high PD will be associated with greater centralization inorganizational design, and low PD with greater decentralization.

Individualism (IDV) is relevant in that it encompasses attributes offreedom, autonomy, initiative and challenge; attributes which are also atissue in the decentralization decision. Hofstede (1980, p. 166) contendsthat, in high IDV societies ; (i) more importance is attached to freedom andchallenge in jobs, (ii) managers aspire to leadership and variety, (iii)managers rate having autonomy as more important, and (iv) individualinitiative is socially encouraged, compared to low IDV societies in whichsuch initiative is 'socially frowned upon'. Because decentralization is fre-quently advocated as an organizational mechanism to promote theseattributes, it is expected that high IDV will be associated with greaterdecientralization and low IDV with greater centralization. Based on theirrelative levels of PD and IDV, we expect S/HK to demonstrate greatercentralization and A/US to demonstrate greater decentralization.

Associated with decentralization is the use of responsibility centres.Responsibility centres, whether they be investment, profit, or cost centres,are organizational design vehicles for assigning or allowing decisionalautonomy and accountability to discrete and individual organizationalunits, and to the m anagers thereof. Although the decisional scope may bedifferent across types of responsibility centres, with profit centres containinga greater number of performance influencing variables compared to costcentres, and thereby providing the profit centre manager with greaterdecisional scope; nonetheless the use of responsibility centres of which-ever type reflects the choice to devolve decision autonomy, and is thereforemore consistent with a high IDV, low PD society than its converse.


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250 G. Harrison, J. McKinnon, S. Panchapakesan and M. Leungsequential and reciprocal interdependence) is evidence of the perceivedemphasis in western (high IDV) society on the individual units them-selves. The formality of unit interdependencies is less likely to be at issuein low IDV (collectivist) societies.

The hypotheses to be tested for the directional relation between nationalculture and organizational design are as follows.HI: There is a greater degree.of decentralization in organizations in

A/US compared to S/HK.H2: There is a greater use o f responsibility centres in organizations in

A/US compared to S/HK.Planning and controlThe aspects of planning and conbol that we examined were: (i) theemphasis on quantitative techniques, (ii) the planning time horizon (short-term versus long-term), (iii) group or individual centred decision-making,and (iv) formalization of control.Emphasis on Quantitative Techniques: Hofstede and Bond (1988, p. 20),in explaining the CD cultural dimension, argue that an outcome of thedifference between western thinking which accepts the existence of, andsearches for, an ultimate truth, and eastern thinking which rejects such acircumstance, is that 'Western thinking is analytical, while Easternthinking is synthetic'. This suggests an expectation that A/US will placegreater emphasis on the use of quantitative techniques in the planning andcontrol process thati will S/HK. Hypothesis 3 is as follows.H3: There is a greater extent of use of quantitative techniques in

planning and control in A/US compared to S/HK.The Planning Time Horizon: It is expected that S/HK will place greateremphasis on long-term p lanning than w ill A/U S. The cultural d imensionsof CD and IDV are both relevant here. A major distinguishing feature ofnations high on CD, compared to those which are low, is their greater


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Influence of Culture on Organizational Design and Planning 251individual interests to those of the group in the latter. Hofstede (1980,p. 166) notes that this gives rise to a calculative basis of involvement ofthe individual in an organization in a high IDV society, and a moral basisof involvement in a low IDV nation. This circumstance is relevant to thepreparedness of individuals in organizations to plan long-term, and to takedecisions that are in the best long-term interests of the organization. Manysuch decisions (the introduction of a new product or service, or the entryinto an export m arket, for example) frequently involve a sacrifice in short-term performance and profits to obtain the long-term benefits. A con-sequence of this is that an individual associated with such a decisionmay see his/her unit's performance decline in the short-term, and m ay havemoved on from that unit before the benefits are captured in unit performance.It is expected that such a situation will be accepted by individuals inlow IDV societies with the consequence of a greater prepardness to em-phasize long-term planning. By contrast, individuals in high IDV societiesare expected to be more concerned with the effects of decisions on unitperformance in the short-run; and to be reluctant to take decisions thatmay provide long-term benefits if those decisions prejudice the unit's andunit manager's performance in the short-run. Empirical support for thisexpectation is provided by Daley et al. (1985). They (1985, p. 102) foundthat Japanese managers believed more strongly than did US managers thatlong-range plans were more valuable than short-range plans. AlthoughDaley et al. did not draw on a cultural explanation, Japan is ranked higheron CD and lower on IDV than is the U S (H ofstede and B ond, ^1988,pp. 12-13). Shields et al. (1991) also note the greater orientation ofJapanese managers to the future compared to US managers. Hypothesis 4is as follows.H4: There is a greater emphasis on long-term planning in S/HK

compared to A/US (H4.1), and a greater emphasis on short-termplanning in A/US compared to S/HK (H4.2).

Group or Individual Centred Decision-making: It is expected that therewill be a greater emphasis on group centred decision-making in S/HKcom pared to A/US deriving from a low versus high ranking on IDV. In the


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252 G. Harrison, J. McKinnon, S. Panchapakesan and M. Leungp . 160) and 'policies and practices should allow for individual initiative'(Hofstede, 1980, p . 173). Hyp othesis 5 is as follows.H5: There is a greater emph asis on individual (versus group) centreddecision-making in A/US compared to S/HK.Formalization of Planning and Control: The higher PD in S/HK com-pared to A/US leads us to expect that the processes of planning andcontrol will be more formalized, more rule-oriented, and more rigidly andtightly administered from top management down in S/HK than in A/US.The acceptance of, and emphasis on the retention of power at top man-agement levels, and the taller organizational pyramids of high PDsocieties (Hofstede, 1980, p. 107) are expected to translate into moreformalized, mechanistic planning and control systems' characteristics inS/HK than in A/US. By contrast, low PD is expected to translate into lessformalized, more organic-styled planning and control systems.'' Hypo-thesis 6 is stated as follows.H6: There is a greater degree of ormalization of planning and control

in organizations in S/HK compared to A/US.IV. MethodData were gathered by survey questionnaires mailed to senior accountingand finance executives in 800 organizations, 200 in Australia, the US,Singapore and Hong Kong. The organizations were randomly selectedfrom the relevant business directories.^* The US data w ere gathered in thelatter months of 1991 and the data for the other three countries in 1992.The business directories provided both functional/positional titles andthe names of the incumbents of those positions, and all questionnaireswere addressed p ersonally to the selected resp onden ts. For the A ustralianand US sam ples, 'phone calls were made to each organization prior to themailing to confirm names and positions. In those instances where therehad been a change of personnel since the printing of the directory, thename ofth e new incumbent w as obtained and used. This confirmation wasnot feasible economically for the Singapore and Hong Kong samples.


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254 G. Harrison, J. McKinnon, S. Panchapakesan and M. Leung(b ) Strong emphasis on always getting personnel to follow the formally

laid down procedures; Strong emphasis on getting things done evenif this means disregarding formal procedures.(c) Strong insistence on a uniform managerial style throughout the firm;Managers' operating styles allowed to range freely from the veryformal to the very informal.(d) Strong emphasis on getting line and staff personnel to adhere closelyto formal job descriptions; Strong tendency to let the requirements ofthe situation and the individual's personality define appropriatebehaviour on the job.

(e) Strong emphasis on detailed rules and procedures and their docu-mentation; Little emphasis on detailed rules and procedures and theirdocumentation.

V. ResultsOf the 200 questionnaires distributed in each of Australia, the US,Singapore and Hong Kong, the numbers (percentages) returned were 140(70%), 104 (52% ), 65 (32.5%) and 55 (27.5% ) respectively. These responserates were obtained from one mailing only. Cost and the preservation ofconfidentiality precluded a follow-up mailing, and it was not possible toassess any potential non-response bias. The higher response rates inAustralia and the US are likely to have resulted in large part from thetelephone calls made to each company prior to mailing to confirm thecurrency, names and titles of the respondents drawn from the directories.This telephone confirmation was not feasible for Singapore and HongKong.

The lower response rate for these latter nations is not inconsistent withthe comments and findings of Seah (1991) and Ang et al. (1986), cited inGul and Chia (1993, p. 12). Seah (1991, p. 12) notes an 'expected retumof 25% for most postal surveys' in Singapore, and Ang et al. (1986)attribute low retum rates in Singapore and, by extension, other high powerdistance societies, to the cultural orientatipn of companies in those nations.Although our response rates for Singapore and Hong Kong are consistent


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256 G. Harrison, J. McKinnon, S. Panchapakesan and M . LeungOrganizational designTable 2 shows the mean, observed range, and standard deviation for eachorganizational design variable in hypotheses 1 and 2 for each of thegrouped nations, A/US and S/HK. As a single item question was used foreach variable, no reliability statistics can be computed. The t-statisticscalculated for a comparison of means between A/US and S/HK for eachvariable are also shown, as are the predicted directions of differences.

As predicted in HI, a greater emphasis was placed on decentralizationin A/US com pared to S/HK (t = 2.64, p = 0.005). Also, as predicted in H2 ,A/US demonstrated greater incidence of responsibility centres than S/HKin both profit centre (t = 5.70, p = 0.000) and cost centre (t = 6.47,p = 0.000) form.

Planning and controlThe results for H3 to H6, which relate to specific aspects of planning andcontrol, are shown in Table 3 and are discussed in turn. Again, as singleitem questions were used to measure short-term and long-term planning,group versus individual centred decision-making, and each of the threeaspects of quantitative techniques, no reliability statistics could be com-puted.'" For the formalization of planning and control variable, which wasmeasured using a five-item instmment, the alpha reliability measure(Cronbach, 1951) was 0.87.

Table 2. Organizational Design in Singapore/Hong Kong versus Australia/USVariable(Expected direction)

Greater emphasis on(A/US > S/HK)

Group Mean Min

Concentration of Authoritydecentralization A/USS/HK 3,55 13,08 1

Max

11

Stddev

1,621,48

t-stat(prob1-tail)

2,64(0.005)


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Influence o f Culture on Organizational Design and Planning 257The results for use of quantitative techniques were in accordance with

H 3. Each of the three questions designed to capture differences in the useof quantitative techniques in production control, inventory control, andcapital investment appraisal, produced a significantly higher mean for theA/US group com pared to the S/HK group. The t-statistics were 2.21, 1.66,and 2.92, and the significance levels were p = 0.014, 0.049, and 0.002 forproduction control, inventory control, and capital investment appraisalrespectively.

Results were also in accordance with predictions in respect of theplanning time horizon hypothesis (H 4). The A /US sam ple reported g reateremphasis on short-term planning than the S/HK one (t = 6.38, p = 0.000),while the S/HK sample reported greater emphasis on long-term planning

Table 3. Planning and Con trol - Other AspectsVariable(Expected direction) Group Mean Min Max Stddev t-stat(prob

1-tail)Use of Quantitative Techniques

In the control of production(A/US > S/HK)In the control of inventories(A/US > S/HK)In capital investment appraisal(A/US > S/HK)

A/USS/HKA/USS/HKA/USS/HK

4,984,563,553,184,734,07Planning time horizon

Emphasis on short range planning A/US 6,11(A/US > S/HK) S/HK 5,13Emphasis on medium range A/US 4,32planning (no direction predicted) S/HK 4,49Em phasis on long range planning A/US 2,14(S/H K > A/US) S/HK 3,05Group versus Individual Decisions

1,601,802,041,952.071.98

1,121,761,501,561,311,74

2,21(0,014)1,66(0.049)2,92(0,002)

6,38(0,000)1,01(0,155)5,58(0,000)


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258 G. Harrison, J. McKinnon, S. Panchapakesan and M . Leungthan the A/US sample (t = 5.58, p = 0.000). A by-product result is thatboth A/US and S/HK reported a greater emphasis on short-term comparedto long-term planning.The results for group versus individual centred decision-making (H5)were as predicted with the A/US sample perceiving greater emphasis onindividualistic decision-making by the formally responsible executivethan the S/HK sample (t - 2.83 , p = 0.003). With respect to formalizationof planning and control (H6), the scores on the five questions wereaggregated and compared for A/US and S/HK. The aggregate scores werenot significantly different, although the direction of a higher aggregatemean score in S/HK relative to A/US was as hypothesized. Examinationof the five individual questions showed that the mean scores for eachquestion were in the hypothesized direction of greater formalization in plan-ning and control in S/HK compared to A/US, but none was significant.VI. ConclusionsThe results of this study generally provide support for the influence ofnational culture on philosophies for, and approaches to, organizationaldesign and management planning and control systems. In particular,differences in the cultures of Anglo-Am erican and East Asian nations w ereshown to be associated with differences in organizational design charac-teristics and the design characteristics of planning and control systems.Of six hypotheses relating the differential cultural components of Aust-ralia and the US (as Anglo-American nations), and Singapore and HongKong (as East Asian nations), to specific design characteristics, the resultsfor five were significant and in the predicted direction. These were thegreater use of decentralization and responsibility centres in organizationaldesign in Australia and the US compared to Singapore and Hong Kong;and the greater emphasis on long-term planning, the greater emphasis ongroup centred decision-making, and the lesser emphasis on quantitativetechniques in Singapore and Hong Kong compared to Australia and theUS. The result for the other hypothesis (the formalization of planning andcontrol) was in the predicted direction, although not significant.


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Influence of Culture on Organizational Design and Planning 259means that the results are not restricted to the four nations alone. Rather,they can be extrapolated to understand or explain similarities and differ-ences in organizational design and planning and control systems in othernations which cluster with the nations studied in respect of their culturalcomponents.

Notes1, The other three dragons are Taiwan, South Korea and Japan,2, Hofstede (1983) notes the cultural commonalities existing among the Asian nationsincluding not only the 'five dragons', but also Thailand, the Philippines, Malaysia andIndonesia. The cluster including Australia and the US also includes Great Britain, Canadaand New Zealand,3, Hofstede (1984) provides a number of useful graphs which depict the relativelocation of a variety of nations on the cultural dimensions,4, The characteristics chosen to represent formalization of planning and control aredrawn from Khandwalla (1977, p. 649, pp. 684-5), and are detailed in the Method section,5, The Australian sample was drawn from companies in the Sydney metropolitan arealisted in Ridd ell's The Business Who 's Who of Australia (\99\). The US sample was drawn

from the Orange County Business and Industrial Directory (1990/91) and the SouthernCalifornia Business Directory and Buyer's Guide (1991), published by the Orange Countyand Los Angeles Area Chambers of Commerce respectively, and covering SouthernCalifornia from Los Angeles to San Diego, The Singapore sample was drawn from theTimes Business Directory of Singapore (1992), and the Hong Kong sample from Dun'sGuide: Registry of Hong Kong Traders (1991/92),6, The organizations were drawn from a wide range of industries in each country inorder to randomize out any confounding effect of industry on organizational design orplanning and control systems.7, A copy of the questionnaire is available from the Macquarie University authors.8, Khandw alla's (1977) questions have also been drawn on in other studies of organ-izational and accounting systems design. See, for example, Gordon and Narayanan (1984),9, The higher IDV scores found for Singapore and Hong Kong in recent studiescompared to Hofstede's original study may be associated with changes in the wealth ofthose nations over the last quarter century, Hofstede (1983, pp, 79-80) notes the statisticalrelation between IDV and wealth, and Hofstede and Bond (i988, p. 5) note the substantialincrease in wealth in Singapore and Hong Kong over the 20 years since Hofstede's datawere gathered in the late 1960s and early 1970s,

However, Franke et al, (1991, p, 169) note that while Hofstede (1980) found a statisticalassociation between IDV and level of attained wealth, no relation was found between IDVand economic growth in the decade prior to IDV measurement. They suggest that whilethe first of these associations 'supports an interpretation of individualism as a dependent


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260 G. Harrison, J. McKinnon, S. Panchapakesan and M. Leungdirection and timing of causation in the relations among culture, wealth, and wealthcreation through economic growth, are complex. It should also be noted that the samplesizes used in Hofstede's original survey were much larger than those in the current studyand in the studies of Chow et al, (1991) and Harrison (1992, 1993).10, The three aspects of quantitative techniques were analysed separately for produc-tion control, inventory control, and capital investment analysis. Although a combined measurewas not used in the analysis, the alpha reliability coefficient (Cronbach, 1951) for the threeitems was 0,64.

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