the art of management control - issues and practices€¦ · · 2011-10-21chapter 10 –...

Why, in the era of globalisation, should management control take national cultures into account? Indeed, we are told that recent economic and technological changes

will encourage the harmonisation of management methods to the point where they will become one universal management tool. Yet, these companies face challenges adapting to globalisation as intercultural issues play an increasingly pivotal role: between the general principles of management and local practices, between formal management systems and informal aspects of performance management and so on.

Starting from this paradox, we will try to understand, using concrete examples, the chal-lenges posed by globalisation to management control practices. Contrary to what a reductive vision might have us think, it is not a question of companies adopting a universal model of control, but rather of integrating global and local logic in their different dimensions. We will examine this question from the angle of national cultures.

To understand these examples we will study the approach that considers the intercul-tural reality of companies, as apprehended through what are now ‘classic’ typologies and concepts in this area.

From this perspective, management control does not remain outside the cultural dynamics that affect companies. This is why we will examine the underlying assumptions (seldom made explicit) of ‘classic’ management control, first theorised and put into practice in the United States. More ambitiously, we will put forward a typology of control that includes national culture in its different roles. Finally, this preoccupation with national cultures will bring us to question the relationship between formal control systems and the informal aspects of management control.

1. Globalisation and management control practices

Does globalisation mean the gradual emergence of a single model of management control based essentially on financial performance? Is results control the only possible option?

1.1 The development of financial globalisation

The ever expanding globalisation of the economy goes hand in hand with its financialisa-tion: the growth of financial markets and worldwide accounting standards and regulations

Chapter 10

Management control and national cultures

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© 2011 Pearson Education France – The Art of Management Control – Françoise Giraud, Philippe Zarlowski, Olivier Saulpic, Marie-Anne Lorain, François Fourcade, Jeremy Morales

266 Part IV – Adapting Performance Management Systems to the Context

with the production of standardised quarterly financial statements based on rules that have mostly been adapted from Anglo-American financial markets. The unification of these standards globally and their adoption by large companies undeniably contributes to the uniformisation of the financial practices of large companies. This trend is strengthened by the fact that the way managers are educated is largely inspired by the North American model, disseminated through MBA programmes and supported by large consulting and certification firms which are mostly North American. All of this has been greatly encour-aged by the rise of new technologies.

Nevertheless, the cultural dimensions of organisations are still present, as if social and human aspects ‘survived’ and unavoidably had to be taken into consideration. And contrary to what some people may believe, in view of the spectacular rise of information systems, people’s actions cannot be guided solely with information systems. As shown by the examples presented below, management control cannot be reduced to mere technique: it encompasses techniques, organisations and people. And there is still room for paradoxes and ambiguities.

1.2 Examples of situations illustrating the issues between control and national cultures

The following four rather diverse examples will show the complexity of the issues that arise between control and national cultures.

1.2.1 The Chinese subsidiary of a French company

We will begin by examining the case of a French company that has been operating in China for several years. It has undertaken joint ventures in the main Chinese provinces. As with the company’s other subsidiaries throughout the world, uniform reporting procedures and tools have been put in place which nevertheless acknowledge a degree of local specificity.

The members of the Chinese internal reporting team were recruited by the French finance department (under the direction of a French expatriate). Together with his team, the chief financial officer (CFO) has set up a standardised financial reporting system.He has simplified the P&L account and balance sheet using an integrated software package that is identical to the one used by the parent company. Written procedures are now fully formal-ised. Reporting appears to function: information is transmitted on time and it follows the framework provided.

The finance managers thus affirm that there are no cultural problems and that local values do not influence management control. Indeed, their assertion is supported by:

• standardised management reporting procedures;

• corporate reporting which is carried out within established time frames.

However, in qualitative terms the picture is much less uniform: financial data lacks reli-ability and rigour. It seems to be delivered in a rather mechanical way, more concerned with observing the ‘letter’ of the procedures than the ‘spirit’. Employees have not really

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267Chapter 10 – Management control and national cultures

appropriated the reporting system: few initiatives have been taken to make suggestions or changes.

Actual practices call into question the reliability of the information transmitted and the capacity of local managers to appropriate the management tools.

According to the French CFO in charge of the entities located in China, ‘Chinese managers are disciplined, they follow our procedures well and they work hard. Integrating the use of reporting tools was easy because young Chinese managers were trained and they learn and understand quickly.’

Although the reporting system seems to work well, the CFO points out the fact that the Chinese financial controllers almost never question the sources of the information received from their Chinese directors.

In addition, when data is late arriving, the Chinese controllers absorb the delay. As their concern is to avoid having the Chinese directors ‘lose face’ (mianzi), they will not contact them directly. Instead, they seek ways to get around the conflict themselves. If necessary, the financial controllers will ask the French CFO to intervene to obtain the missing data from the Chinese directors, in observance of hierarchical legitimacy and authority.

In addition, Chinese controllers show little initiative to make changes or improvements to the processes. According to them, it is the responsibility of their superior, in this case the CFO, to perform this function. They see their role as simply following the directives that come from above and applying them.

In fact, there is no appropriation of the management tools by controllers.

Chinese managers are given a certain degree of autonomy in terms of attaining perform-ance results. We observe that the business is managed chiefly by experience rather than through the precise analysis of financial figures.

Indeed, their sales forecasts are often based more on a relationship approach (‘guanxi’ meaning interpersonal relations or network. ‘Thanks to my contacts and relations with people who have just been promoted to an important post, I predict that I will be able to generate sales.’) rather than on rational logic (market analysis). Achieving objectives is more an act of commitment or duty than a contract.

In Chinese culture, then, the evaluation of a manager is based more on social perform-ance, on commitment (loyalty to the superior, to the party, solidarity between colleagues, and a desire to show ‘renqing’ – human sentiment) than on measuring achievements and economic results.

1.2.2 SUNG, a Singaporean company

SUNG is an industrial company based in Singapore. It is a subsidiary of the SD group, a state-owned corporation that operates in the areas of engineering, weapons and aerospace.

SUNG employs many different methods and management tools to improve performance and deploy strategy and projects. Strategy is expressed through the budget. The EVA method

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is used to pinpoint problems. Once identified, they are resolved using other management methods such as business process reengineering (BPR), total quality management (TQM), just-in-time (JIT)1 and Kaizen.2 Likewise, the identification of performance drivers serves to determine key performance indicators (KPI).

However, these management tools alone are unable to manage all the complexity of reality and regulate the behaviour of organisational members. Other complementary control processes are employed at the same time.

The first is formalised: control through rules and procedures. This is a kind of ‘mechanical monitoring system’ where certain activities can be delegated and authorised while avoiding errors and the temptation to commit fraud. A manual of accounting rules and procedures is applied at SUNG. Several times a year the ‘Management’ department carries out an audit on different procedures in order to make sure they are being applied properly.

The second is less formal: control through ‘company values’. The SD group and the SUNG subsidiary in particular want all of the company’s employees to internalise corporate values so that all of their approaches, judgments and actions will be in keeping with those recommended by the company. The manual of the company’s central values does not try to conceal this fact: ‘corporate values are beliefs that we consider important. These beliefs will influence our thoughts, our decisions, our judgments and our actions. The values are like an internal ‘programme’ that guides our thought processes and determines our approach and our actions.’

Adherence to the company’s values seems to be well accepted by SUNG employees. Some of them are derived from Confucian values3 and also seem to influence modes of control.

We will now explore the influence of Confucian values on modes of control in three phases: upstream, during and downstream.

Upstream phase

During this phase we observe that Confucian values,4 such as respect for hierarchy and the importance of not losing face, influence budget preparations. When budgets are being gathered together, each department must submit its budget within the prescribed dead-line. However, some departments do not meet the deadline, but this has no incidence on the department in question. Indeed, as a member of the finance department in charge of collecting data explained: ‘our department has the power to order a department manager

1. The purpose of this system is to ensure that each workshop or factory produces and delivers the correct quantity of the right products at the right time to the next factory.

2. ‘Kaizen’ is Japanese for improvement. This is a philosophy of continuous improvement that affects both managers and workers. Two kaizen methods are the system of employee suggestions and that of company encouragement to employees to ‘cultivate’ good work habits.

3. This point was confirmed by the finance department. Confucianism, founded by Kong Fuzi (Master Kong), whose name was Latinised as Confucius, states that the best way to govern a state is through morality, advocating loyalty, filial piety, benevolence and justice. Morality is acquired by studying and learning the rules of sociali-sation in order to behave with human goodness (ren). Based on the moral order, Confucian thinking aims to establish a harmonious and fair hierarchical social order. For further reading, see Anne Cheng (1997), Histoire de la pensée chinoise, Seuil.

4. These values are accepted by Singaporeans of Chinese origin because they come from their own culture.

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to submit his budget on time, but I don’t do it. I don’t want to cause the department manager to lose face, even if it means that I have to work late afterwards. As the depart-ment managers are hierarchically superior to me, I owe them respect... Moreover, if one day I need a figure from their department, they may give it to me more quickly.’

Monitoring phase

During the actual performance monitoring phase, SUNG endeavours to encourage its employees to take initiatives, which must be founded on company values that guide their actions. SUNG implicitly uses control through values, some of which stem from Confu-cianism (integrity, courage, compassion, etc.). The story of a company employee who did not want to accept a bribe while receiving raw materials is a typical example of the model of integrity that the company wants to promote. As a senior production manager pointed out: ‘there are values which are important for us: integrity, compassion, courage, commitment and value creation. If all the employees understand our values and the attitudes to take vis-à-vis a given problem, it will be easier for us to manage them... there will be less need to check up on them’.

Downstream phase

The influence of Confucian values is even more apparent in this final phase. It is mani-fested first of all in the criteria used for evaluating employees. They are evaluated not only on financial criteria, but also on qualitative criteria, in particular , their civic behaviour (for example, volunteering in associations), their attitude and their behaviour (integrity, for instance).

The influence of Confucian values is evident after employee evaluations. Very few sanc-tions are imposed when employees’ targets have not been achieved. The company seldom penalises incompetence. It usually gives the employee a second or even a third chance. And it promotes this understanding attitude among colleagues.

This attitude is attested by the director of the ‘management’ department: “Mr Ho is an executive and he works in our department because the sales department didn’t want him and then the marketing department wouldn’t keep him either. He is very obliging, but not very competent. I have asked one of my assistants to monitor him discreetly. We don’t fire him because that’s not part of our company values...”

The company apparently relies on perfected management tools. In this regard, it is anxious to conform to Western standards. It seeks to set a good example (‘mianzi’) for other Singa-porean companies and also vis-à-vis the West. It wants to demonstrate that an Asian company can be just as good as a Western company.

To sum up, this analysis shows the concomitant role of management and control through values during the three control processes:

• In the upstream phase: the introduction of a charter of values and internal socialisa-tion of these values. The aim is for employees to internalise the values so that they will discipline themselves, will restrict their freedom of movement and will not to stray from company values.

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• During the performance management phase: control is exercised with and through Chinese values rooted in Confucian rules of socialisation.

• In the post evaluation phase: performance evaluation is clearly based on criteria other than financial ones (civic behaviour of employees, humanity/compassion, behaviour, etc.). The influence of Confucian values seems to be particularly present during this phase.

1.2.3 A Moroccan company adapting to ISO standards

This is a relatively young Moroccan company employing nearly two hundred people and is currently experiencing strong growth in the production of flexible packaging for the agri-food industry. The founder of the company, a doctor by training and a very dynamic person, has decided to jump in and start his own company – a bit like his childhood friends who are all entrepreneurs – in a business that he knew nothing about. After a few years of learning how to be a businessman, he had an intuition that in order to stand out from his competitors he needed to position the company at the cutting edge in terms of quality. What followed is a continuous process of training and certification in Euro-pean quality standards for the company’s products and also for all of its management systems. Assisted by members of his office, the company’s chartered accountant is in charge of implementing quality management. A large number of graphs and quality indi-cators end up in the CEO’s office where they are put on display. This gives rise to a feeling of ‘excellence’, which gradually convinces all the large international agri-food compa-nies to contract the packaging of their products out to this company. Apart from a few high-level technical executives, all the employees (from rural backgrounds) submit to these new ‘figures of modernity’ that are wholeheartedly supported by the company’s founder. Quality management, as pointed out by Philippe d’Iribarne (1998) and his team referring to a similar experience in a North African country, fits perfectly into the frame-work of a traditional culture and ethic, “with its dimensions of honesty, willingness to cooperate and the recognition of each person’s contribution”(d’Iribarne, 1998). In prac-tice, however, the CEO does not get involved in setting up these systems; he devotes his time to developing markets and boasting about the management systems introduced and overseen by his chartered accountant. When we met, the CEO absolutely wanted us to assist his company in developing the latest management control tool that was in vogue in France: the Balanced Scorecard. In the end, the BSC contributed to a wave of publicity that the entrepreneur is surfing on in this emerging country. Thanks to these choices, the company has become an essential supplier to major multinational corporations operating in Morocco. The integration of these management tools by employees remains problem-atic. The introduction of these tools has sometimes been carried out like a transplant unevenly grafted onto local practices.

1.2.4 Differences in the perceptions and behaviours of controllers working in the same company depending on their nationality

A study was carried out to measure the impact of cultural differences on the prac-tices of controllers working in the same large industrial corporation employing nearly 200,000 people and operating worldwide, mainly in Europe where it realises two thirds

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of its 43 billion euros in turnover.5 In this relatively decentralised company, management control constitutes one of the major tools for the coordination and monitoring of strategy, thanks to regular and standardised reporting across all the entities. The survey was based on seventy questionnaires that were sent out to all of the company’s controllers working in twenty different countries. It revealed, first of all, the importance of intercultural issues for these controllers in their daily work, in their relations with head office and in their percep-tion of reality within a large multinational corporation. Nearly 80% of the controllers stated that they were sensitive or very sensitive to these issues. We observe that, depending on their nationality and their country of residence, most controllers have different percep-tions and attitudes to the problems and situations encountered: modes of communication, implementing new directives, meeting deadlines, identifying internal dysfunctions, finding solutions, consideration of ethical problems, the relationship between the controller and operational teams, the roles of the controller, etc.

In the second stage of the study, the values and attitudes of the controllers at this international company were mapped out on a scale from 1 to 5. The controllers stated their perceptions of the country and the entity where they work. In the table 10.1, we have extracted the responses of the controllers from three countries (Japan, France and the United States).

Table 10.1: Perceptions of controllers in a large international corporation

Japan France USA

Risk taking (1 low to 5 high) 2.6 2.7 3.8

Decision making (1 hierarchical to 5 consensus) 2.2 2.6 2.6

Negotiation style (1 collaborative to 5 competitive) 2.5 3.7 3.4

Deadlines (1 strict to 5 flexible) 1.6 2.9 3.1

Business relationship (1 short term to 5 long term) 3.5 3.8 2.3

Individualism (1 yes to 5 group) 4.3 2.9 1.9

Pro-activeness (1 yes to 5 no) 3.3 3.3 2.0

Egalitarian (1) to hierarchical (5) 3.8 3.5 3.4

Confrontational (1) to non-confrontational (5) 4.8 2.3 3.5

Resistant to changes (1) to progress oriented (5) 2.5 2.4 3.4

Work to live (1), Live to work (5) 3.7 2.8 2.7

Communication style (1 direct to 5 indirect) 4.3 2.5 2.2

Shows initiative (1 takes initiative to 5 waits) 3.3 2.2 1.9

Importance of internal controls (1 low to 5 high) 2.5 3.5 4.5

Missed targets (1 early warning to 5 nothing) 3.0 2.5 1.5

Understanding of business issues by controllers (1 low to 5 high)

2.0 4.1 4.2

5. Study coordinated by E. Riot (HEC France).

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Risk taking(1 low to 5 high)

Decision making(1 hierarchical to 5 consensus)

Negotiation style(1 collaborative to 5 competitive)

Deadlines(1 strict to 5 flexible)

Business relationship(1 short term to 5 long term)

Individualism(1 yes to 5 group)

Proactiveness(1 yes to 5 no)

Egalitation(1) to hierarchical (5)

Confrontational (1)to non-confrontational (5)

Resistant to changes(1) to progress oriented (5)

Work to live(1) to live to work (5)

Communication style(1 direct to 5 indirect)

Shows initiative(1 takes initiative to 5 waits)

Importance of internal controls(1 low to 5 high)

Missed targets(1 early waming to 5 nothing)

Japan

France

USA Understanding of business issuesby controllers

(1 low to 5 high)

Figure 10.1 – Perceptions of controllers in a large international corporation

The above chart shows both the similarities and differences between the perceptions held by the controllers of these three countries.

The decision-making process is seen in a rather uniform way, halfway (2.5) between a hier-archical approach and a consensual one. The same goes for the mode of organisation which is seen to be closer to a hierarchical approach (3.5) than an egalitarian one. The fact that the company is based in France no doubt has an impact on the perceptions of controllers working in the United States, who are traditionally characterised by a more egalitarian vision from an organisational point of view.

Greater variances are observed for the United States in an area such as risk taking where the controllers feel that the US is much more inclined to take risks (3.8 compared with 2.6 for the other two countries). It is the same for business relationships, which are seen as much shorter term than in the other two countries. Even more significant is the variance on individualism, which is greater in the United States (1.9), compared with a more collective approach for Japan (4.3). Contrary to Japan and France, internal control and early warn-ings about variances with targets are much more important for controllers in the US. It is the same for the expression of personal opinions, which seem to be freer and more accept-able in the US.

The company’s Japanese controllers stand out from the other two countries in terms of negotiation style, characterised by collaboration and negotiation, which is carried out in a non-confrontational way. The controller in Japan is positioned less as a ‘business partner’

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and has less knowledge of the operational aspects of the business. He is rarely the one who takes initiatives. Communication is seen as less direct in an organisation, which plays an essential role in their lives. In Japan, the organisation operates on a long-term horizon.

The controllers working in France perceive their environment and their profession in an intermediate way between the other two countries, occasionally sharing the views of one or the other.

This survey shows the divergences and convergences between the perceptions of controllers in the three countries, which must lead to differentiated control practices.

How can one measure the variances between countries when the company, which is greatly decentralised, develops and implements common reporting systems that are entirely uniform? Conversely, should one not also take into account the divergence between corpo-rate culture and local culture? How can global issues be coordinated with local ones?

1.3 The local/global coupling

The four examples provided above show the implementation of relatively standardised control systems, which extend across all large companies on a worldwide scale. Against this uniformisation, which may appear relatively abstract to a certain number of parties, there is a ‘local reality’ where national cultures play a major role in people’s actions. In fact, it is observed that there is little or no adaptation of management control systems to local specificities because the culture creates differences in the social perceptions of control and because these systems are part of a ‘new normative logic’ that is so characteristic of globalisation, as shown by M. Abélès in Anthropologie de la globalisation (2008). Very often problems arise in the appropriation of the methods and tools coming from head office. In the example of the joint venture in China, the finance department of the parent company in France may be satisfied with the regular and relatively reliable stream of information coming from China. But as we observed in carrying out this research, the local-level teams are rarely in contact with this financial reporting system. In fact, another mechanism – control through values – was put in place without the primary formal system of results control even being fully aware of it.

In fact it is a matter of coordinating a global way of doing things with local specificities. In the case of the Moroccan company, a ‘subtle alchemy’, to borrow the expression of Philippe d’Iribarne, has gradually taken shape between management tools and national culture. To achieve this, it is essential to understand the mechanisms of national culture and its roles.

2. Importance and characteristics of national culture

2.1 Quantitative approaches to national cultures

Contrary to all the managerial theories in vigour until the 1970s, a Dutch practitioner and theorist with a background in social psychology, G. Hofstede, would show the importance of cultural differences on corporate practices and modes of organisation. G. Hofstede carried out a survey among one hundred thousand employees of IBM in nearly seventy

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countries in order to identify the principle characteristics of national cultures. He identi-fied several cultural dimensions:

• power distance (low, high), measured by the perception and acceptance of power between a superior and subordinates;

• individualism vs. collectivism;

• uncertainty avoidance, which indicates an organisation’s degree of tolerance with respect to unpredictability and risk. This is why very strict control tools and procedures are put in place in some cultures to cope with this lack of stability;

• ‘masculinity’ vs. ‘femininity’, which refers to the opposition between the ‘masculine’ values of competitiveness and materialism, and ‘feminine’ values such as solidarity, justice and quality of life;

• short-term vs. long-term orientation: this dimension was added later based on a study of Asian societies which favour the long-term Confucian values of saving and patience.

What follows, as shown in the table 10.2, is a ranking of countries on a scale of 1 to 120, which can then be gathered together into groups of countries in the form of cultural maps. We distinguish, for instance, countries with a strong desire to avoid uncertainty and a high power distance (such as Latin countries) from individualistic countries with low uncer-tainty avoidance (such as Anglo countries).

Table 10.2: Cultural dimensions

Country Power distance Individualism Masculinity Uncertainty avoidance

Argentina 49 46 56 86

Australia 36 90 61 51

Austria 11 55 79 70

Belgium 65 75 54 94

Brazil 69 38 49 76

Canada 39 80 52 48

Chile 63 23 28 86

Colombia 67 13 64 80

Costa Rica 35 15 21 86

Denmark 18 74 16 23

Ecuador 78 8 63 67

Finland 33 63 26 59

France 68 71 43 86

Germany 35 67 66 65

Great Britain 35 89 66 35

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Country Power distance Individualism Masculinity Uncertainty avoidance

Greece 60 35 57 112

Guatemala 95 6 37 101

Hong Kong 68 25 57 29

India 77 48 56 40

Indonesia 78 14 46 48

Ireland 28 70 68 35

Israel 13 54 47 81

Italy 50 76 70 75

Jamaica 45 39 68 13

Japan 54 46 95 92

Korea 60 18 39 85

Malaysia 104 26 50 36

Mexico 81 30 69 82

Netherlands 38 80 14 53

New Zealand 22 79 58 49

Norway 31 69 8 50

Pakistan 55 14 50 70

Panama 95 11 44 86

Peru 64 16 42 87

Philippines 94 32 64 44

Portugal 63 27 31 104

Salvador 66 19 40 94

Singapore 74 20 48 8

South Africa 49 65 63 49

Spain 57 51 42 86

Sweden 31 71 5 29

Switzerland 34 68 70 58

Taiwan 58 17 45 69

Thailand 64 20 34 64

Turkey 66 37 45 85

United States 40 91 62 46

Uruguay 61 36 38 100

Venezuela 81 12 73 76

Source: Hofstede (1991).

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According to Geert Hofstede (2001, p.381), two complementary dimensions have a signifi-cant influence on control and planning. The first, power distance, has more influence over control because it involves the exercise of power. The second dimension, uncertainty avoid-ance, acts more on planning, which constitutes an attempt to reduce uncertainty.

By combining these two dimensions, one can deduce cultural profiles and control methods that differ depending on the country.

The figure 10.2 shows a ‘typical company’ depending on the country, with typical charac-teristics that are generally attributed to these regions (Schneider and Barsoux, 2003).

Uncertainty avoidance

Low

Low

High

High

Village Market(Anglo/Nordic)

DecentralisedPeople as free agentsMore delegationCoordination through informal,personal communicationOutput control

Power distance

Family or tribe(Asian)

CentralisedLoyaltyPaternalisticPersonal relationshipsSocial control

Well-oiled machine(Germanic)

Decentralised decision-makingNarrow span of controlCoordination through routines and rulesThroughput controlEfficiency

Traditonnal bureaucracy“pyramid of people” (Latin)

Centralised decision-makingCoordination at the topLess delegationInformal relationshipsInput control

Figure 10.2 – Characteristics of a ‘typical’ company by region

Four cultural regions are identified. In the area where power distance and uncertainty avoidance are high, the dominant organisational form is a pyramid-shaped bureaucracy. The dominant control mode is centralised decision-making with coordination at the top. In the area where power distance is high and uncertainty avoidance is low, the dominant organisational form is termed ‘family’. The dominant form of control is more centralised and personalised. When power distance is low, the organisation is described as a ‘well-oiled machine’ and appears more functional, as found in Germanic countries. Coordination is achieved through rules and routines. Decision-making is more decentralised. When power distance and uncertainty avoidance are both low, the form of organisation called ‘village market’ appears more decentralised. Results control (output control) is dominant.

Working from Hofstede’s analytical framework, we can match cultural dimensions to different control modes.6

6. Summary chart developed by Léon Laulusa, 2005, L’influence des valeurs confucéennes durant le processus de contrôle organisationnel au sein des entreprises chinoises en Asie : Etudes de cas en Chine, à Singapour et à Taiwan, doctoral dissertation in management science, University of Paris-Dauphine.

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Table 10.3: Implications of cultural differences on the design of the control system

Implications of the ‘individualism/collectivism’ dimension on the control system

Individualism Collectivism

• Individual performance favoured• Disinclined to budgetary control

• Preference for group decision making and rewards• Interest in the achievements of the group and the

company• Greater acceptance of tight budgetary control

Implications of the ‘power distance’ dimension on the control system

High power distance Low power distance

• Tend to favour discretionary bonuses• Tend to favour sustained budgetary control• Tend to favour subjective performance evaluation

from a superior• Preference of subordinate for an evaluation based

on budget achievement because he is not consulted during the evaluation process

• More inclined to accept directives from head office in business units (subsidiaries)

• Want bonuses based on formulas• Want less budgetary control• Want standardised performance evaluation• Possibility of building a management control

system based on the confidence of subordinates• Favour the personalisation of the planning and

management system (or there is little formal planning)

Implications of the ‘uncertainty avoidance’ dimension on the control system

High uncertainty avoidance Low uncertainty avoidance

• Preference for collective bonuses• Strategic planning is little used because it calls into

question today’s certainties• Preference for detailed and short-term planning• Fixed bonuses or bonuses based on formulas• Preference for an interactive budgeting process

• Long-term planning• Greater acceptance of discretionary bonuses

Implications of the ‘masculinity/femininity’ dimension on the control system

Masculinity Femininity

• Acceptance and desire for challenging budgets• Desire to be evaluated against the performance of

another individual• Preference for motivation based on bonuses

• Prefer group evaluation• Performance based on bonuses seems to be less

motivating• Rewards based on intrinsic values

Implications of the ‘Confucian dynamic’ dimension on the control system

High long-term orientation Low long-term orientation

• Less orientation toward financial performance• Focus on sales and market share• Motivated by deferred compensation• Preference of managers for long-term planning

• Focus on achieving short-term financial performance

• Preference for performance• Oriented toward the past and present• Preference for the use of quantitative techniques

High individualism and low power distance Low individualism and high power distance

• Preference for the decentralisation of authority• Preference of managers for responsibility centres

(autonomous decision making and responsibility)

• Preference for the centralisation of authority• Little desire of managers for responsibility centres

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It follows that management control in a broad sense, i.e. organisational, will take different forms depending on the characteristics of the national culture.

Hofstede’s study is seminal in many respects. It constitutes one of the foundations of inter-national management by bringing to light the importance of national cultural differences. It has also been criticised on several different grounds.

Indeed, one limitation to this approach concerns the analysis of the scores obtained to differentiate cultures. As shown by some scholars, these scores should be seen rather as an indication of the similarities and differences that one might expect to find among the employees of such an organisation in different countries. But these differences are too restrictive to characterise a national culture, especially as there may be great disparities within a single culture. A country might obtain the same results as another, but not have the same reactions and interpretations. A study of fast-food managers in Canada and the United States shows a very low level of individualism, combined with a high power distance. In this sector, organisational members must work in close collaboration with each other. There is reduced job security and a lot of competition. This study reveals a profile of values contrary to those presented by Hofstede. This divergence can no doubt be explained by the specificity of the environment and the business sector in question.

Furthermore, characterising a culture using certain dimensions raises the risk of getting caught in stereotypes and caricatures. G. Hofstede (1980) for instance considers Chinese culture to be rather collectivist. Yet, for Anne Cheng, the author of Histoire de la pensée chinoise, the Chinese are individualists. One should be less categorical, no doubt. For the Chinese, collectivism serves to maintain and guarantee the well-being of the individual.

Contrary to what G. Hofstede claims, there is indeed a certain interdependence of the variables. In this sense, the cultural dimensions sometimes give rise to conflicting implica-tions for management control systems. For example, a person from a highly individualistic culture is supposed to prefer performance-based bonuses. However, if the same person is also from a culture with high risk avoidance, then the preference for performance-based bonuses may be diminished.

Finally, in terms of the methodology employed, G. Hofstede uses a linear approach, meas-uring the values on a scale. The comparison between cultures is determined by higher or lower values on this scale. But the issue of national cultures is not to find out whether France accepts more power distance and less individualism than Great Britain. What is important, is to be able to analyse traditions which may diverge from each other and to understand the reasons for this.

This prompts us to examine other approaches to understanding the differences between national cultures.

2.2 Ethnographic approaches to national culture

Following the trend started by G. Hofstede, new research approaches would be developed by scholars such as F. Trompenaars and E.T. Hall who examine other cultural dimen-sions: the attitude toward time, the attention paid to people and tasks, the relationship

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with nature, the relationship with the Other, etc. All of these analyses are susceptible to the same criticisms that have been made of G. Hofstede’s work, however, because they are based on a research methodology which oversimplifies the complexity of reality. Only a thorough ethnographic field study, carried out on a well-defined area, can properly depict this complexity.

2.2.1 Comparison of three national cultures (‘the honour principle’)

Unlike G. Hofstede, who collected cultural values through questionnaires and inter-view, Philippe d’Iribarne7 and his team would study the influence of national cultures on management by observing companies in the field in several countries in the manner of ethnologists. Their first studies were published in a seminal book, La Logique de l’honneur (1989) in which the author carries out a thorough examination of three large, virtually identical factories belonging to the same company, located in France, the US and the Neth-erlands. Different management methods are observed in the three countries.

In the United States a ‘customer/supplier’ relationship prevails between employer and employees. This contractual relationship is based on the notion of ‘fairness’. For Ameri-cans, writes Philippe d’Iribarne, ‘the essential role of setting objectives is to allow each individual to be evaluated fairly.’ In this model, contractual relationships are established between superiors and subordinates in the company. Interpersonal relations are based more on what seems to be fair and therefore objective. Consequently, Americans prefer to have a more objective evaluation with quantifiable indicators, rather than an evaluation by the hierarchy which would be more qualitative and subjective.

This explains the importance of management control based on figures, reporting and measurable indicators. The type of control exercised in American companies thus corre-sponds to results control.

This ‘customer/supplier’ relationship is hard to introduce in France because relationships there are governed by an honour principle8 as described by Montesquieu, involving ranks and professions, ‘which are distinguished as much by the extent of their duties as by that of their privileges.’ Consequently, ‘a French manager would do well to be aware of the notion of honour held by the various categories that he is in charge of managing, what this honour will accept and what will hurt it’ (d’Iribarne, 1989). At the factory located in France the rules are much less strict and codified than at the American factory, as indicated by P. d’Iribarne with the phrase ‘I feel responsible’: a French subordinate does not need to have responsibility placed on him in a formal way for him to feel responsible. For example, a foreman in the French factory will assume responsibility for an activity without precise objectives being clearly set for him by his superior. In this factory everyone sorts out a way to conduct the activity that they are in charge of and there may be a considerable divergence between ‘official’ responsibility and ‘unofficial’ responsibility. Procedures are adhered to formally, but in reality they are empty vessels. While hierarchical reports are well-defined

7. Research director at the CNRS in the ‘management and societies’ unit.

8. “So what is honour? According to Montesquieu, it is the prejudice of each person and each social rank or station in life.” (d’Iribarne, 1989).

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formally, in reality there are constant adjustments and negotiations between the different levels.

The management model in the Dutch factory shows, on the contrary, a very precise defini-tion of the organisation with its different hierarchical levels and strict observance of rules and procedures. Unlike what happens in the United States, however, subordinates are made to accept these procedures without any sanction/reward system. This goes hand in hand with ‘a strong affirmation of the individual’ to whom it is necessary to explain that one must listen in order to build consensus.

Finally, P. d’Iribarne argues in this book that new management practices cannot be implemented unless they are in conformity with the entire set of perceptions held by organisational actors. These perceptions are rooted in a deep cultural tradition and hold particular significance. Different perceptions and ways of thinking underpin national modes of management.

2.2.2 Cultures and globalisation

Philippe d’Iribarne and his team then expanded their research to other cultures and other issues (controlling companies abroad, mergers and acquisitions, etc.) using the same ethnological approach involving the descriptive and direct observation of actual situations in companies (Cultures et mondialisation, 1998). Other monographic research, as well as studies on the confrontation of two cultures following a merger or a takeover, are related in this book.9

Concerning the management of foreign subsidiaries, P. d’Iribarne observes that American parent companies very often entrust the entire management of the subsidiary to locals in the country where it is located. In this way, the parent company establishes systematic control procedures, whether elaborate financial control or auditing procedures.

As for French companies, they ‘rely less on a set of strict procedures than on informal rela-tions where ties of personal loyalty and shared schooling play a major role’ (d’Iribarne, 1987). Consequently, French parent companies prefer to place expatriates at the head of subsidiaries. Other difficulties may arise, particularly concerning the relations between management and local employees. The management control system in the subsidiary may be affected by this.

French companies tend to exercise what may be termed ‘upstream control’, i.e. control, which is done at the time of recruiting and hiring new staff. Indeed, French companies are very concerned with staff recruitment and tend to hire future senior executives coming from the French grandes écoles system (elite business and engineering schools), assuming that they are ‘the best and the most intelligent’ and that they will therefore manage well and produce results. Moreover, a relationship of trust may be established based on the fact that they went to the same school or belong to the same professional group as certain senior executives of the company.

9. The takeover of a Slovenian company by a French company, a Franco-Swiss merger and a Franco-Swedish merger.

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Similarly, another study carried out by P. d’Iribarne’s team in Cameroon shows the failure of the results control model of management control with authority cascaded down, target setting and evaluation. This entire process cannot be applied as such to Cameroonian companies. The performance evaluation of a subordinate in Cameroon is seldom consid-ered to be subjective. The subordinate perceives the evaluation as an ‘expression of a relationship either of connivance or hostility’ with the superior. And if it is negative, it tends to be qualified as an unkind act... Decentralisation requires the use of other procedures, which make less use of performance assessment and more of minutely detailed prescrip-tions that define what to do in a wide variety of circumstances’ (d’Iribarne, 1998). Thus, in this concrete situation in Cameroon, the implementation of rules and procedures that we might consider in Europe to be ‘bureaucratic’ will be seen there as a regulatory system that makes it possible to set standards and expected behaviour for the benefit of all.

All of these studies have shown the richness and complexity of these cultural phenomena, which are hard to capture using statistical surveys. We can however point out some limita-tions to this ethnographic approach. Indeed, some scholars have criticised P. d’Iribarne for failing to provide a complete cultural typology, but only a general approach. This approach takes a great deal of time and requires cultural references and a good knowledge of the history of the country being studied.

Sociologist E. Friedberg (1994) criticises this method, arguing that ethnology analyses a total social object, for example a remote tribe. But ‘a company is not a total phenomenon because it is related to other companies and it is immersed in a society. The analogy there-fore poses a problem.’

Another limitation pointed out by E. Friedberg is the distinction between corporate culture and national culture during the analysis. ‘How can one extrapolate from detailed obser-vations in a company to a national culture? One would have to make the assumption of twofold homology, namely that one can read the local in the global and the past in the present.’

Finally, as for every case study, there is the problem of over generalisation. Is there not a danger in thinking that something is general when it is only particular?

This is why we propose to extend the conceptions of national culture, while drawing on the advantages of this psychological and ethnographic approach.

2.3 A broad conception of culture

National culture, according to G. Hofstede, is defined as a kind of ‘mental programming’ through values. It is therefore psychological in origin and is expanded by P. d’Iribarne to a socio-historic aspect in that it includes a national way of thinking and doing things. Scholars such as Maurice, Sellier and Silvestre will consider culture as a construction of individuals and organisations, taking into account all professional relations as well as the education system and organisation systems. A comparison of German and French companies, for example, cannot be made without studying systems of education, promotion and social relations, failing which one cannot fully understand the differences between these two systems. Ascribing these to a cultural difference is to misunderstand these socio-economic

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determinants. National culture is not a psychological element that is added to the other variables. National values fit into a socio-economic whole where companies and markets are built. Companies must be situated in a societal framework. They form, as R. Sain-saulieu (1987) puts it, ‘a social system in addition to an economic and technical system.’ Culture is ‘much more a procedure of connecting differences than the problem-free sharing of common values and representations.’

According to some scholars (Schneider and Barsoux, 2003), we end up with regional cultures made up of a string of countries with similar modes of organisation, such as Anglo countries, Nordic countries, Germanic countries, Latin European countries, Latin Amer-ican countries, Arab countries, African countries, Asian countries, and so on.

These regional cultures become veritable cultural spheres of influence combining industry and professional cultures, functional cultures and corporate cultures. The national culture enters the interaction between these cultural spheres.

Far from being an adjustment variable or a factor that one can act on and that can be exploited, culture is what allows us to understand the context that the organisation oper-ates in. As P. d’Iribarne remarks, it is what ‘gives meaning to situations, to events, to the actions of those they meet and to their own actions and consequently to feel them and react to them’ (d’Iribarne, 2003). Organisations can benefit when culture, people and manage-ment systems are in agreement.

Culture describes modes of integrating groups as well as their way of adapting to the envi-ronment. The North American anthropologist C. Geertz provides a beautiful definition of culture: ‘Believing, with Max Weber, that man is an animal suspended in webs of signifi-cance he himself has spun, I take culture to be those webs, and the analysis of it to be therefore not an experimental science in search of law but an interpretive one in search of meaning.’ (Geertz, 1973). We are very far from an instrumental or contingent vision of culture! This rich yet subtle approach prompts us to question the assumptions of certain managerial processes, which are at times simplistic.

3. Challenging the North American model of control and the emergence of new practices

3.1 The underlying assumptions of the North American model of management control

As indicated by P. d’Iribarne, the ‘classic’ model of management control developed by early theorists such as that of R. Anthony, a Harvard professor, in 1965, is based on underlying assumptions that are specific to North American culture:

• the assumption that two or more individuals or independent parties make a contract on the ‘customer/supplier’ model;

• the accuracy and fairness of the contract, which must be measurable in order to monitor its execution in the interests of both parties;

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• the intervention of management control which will measure whether or not pre-defined targets have be achieved;

• an essentially financial and accounting translation of the objectives that managers are held accountable for.

But these assumptions are based on a certain number of representations – both explicit and implicit – which are specific to the North American societal model. In its broad outline, this model is characterised by the role of financial markets and competition. The state only intervenes in a limited way to enforce these rules and the social system is characterised by a competitive labour market with great inequalities. Finally, we observe the importance of the role of the entrepreneur, sanctioned by a whole series of accounting and financial indicators that measure – on a rather short-term horizon – the success of the strategies undertaken.

The results control model is based on these assumptions: the way the company’s objec-tives are defined as well as forms of organisation and coordination, staff motivation, etc. However, other countries such as Japan, China, Germany or Brazil may have different ways of acting with respect to the three stages of the management control process, namely the three traditional phases of target setting, performance monitoring and finally the evalua-tion of results (and possibly undertaking corrective action). In his comparison of the three factories that were studied, P. d’Iribarne observes that the French factory – where results control is rather poorly applied – achieves a better level of performance than the North American factory, which fully applies the principles of the classic management control model.

More fundamentally, one may ask oneself whether the concepts of management are universal and if they can be understood in the same way everywhere. Indeed, the same terms may have relatively different meanings and connotations in different countries. The terms ‘management’ and ‘management control’ can be expressed and understood differ-ently depending on the country.

In English ‘management’ can of course refer both to managers collectively, at several levels of responsibility, as well as the administration of the business. In France, the English word ‘management’ seems to have a more noble connotation than the French word ‘gestion’. For this reason, French business schools now prefer to be called ‘école de management’ instead of ‘école de gestion’. Yet according to R-A. Thiétart (2003), the word ‘management’ originated in a 16th century French term, ‘ménager’, which means to arrange or to handle carefully and skilfully. In China, the term guanli (management) has a connotation of action and is close to the terms ‘organise’, ‘direct’ and ‘manage’. In Korea, guanli has the same meaning as in China.

Studying the meaning of the word management helps to avoid hastily concluding that culture does not influence organisations when one finds similar organisations in different environments. For F. Trompenaars (1993), in this type of study, ‘this may mean little more than that uniformity has been imposed on global operations, or that leading company practices have been carefully imitated, or even that technologies have their own impera-tives... The issue is not whether a hierarchy in the Netherlands has six levels, the same as a

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similar company in Singapore, but what the hierarchy and those levels mean to the Dutch and Singaporeans.’

The criterion of excellence, for example, is far from identical throughout the world. In the United States it can be characterised by financial performance, in Japan by job security, and in Hong Kong by stability or the improvement of family fortunes.

Concerning the question we asked earlier – whether organisational effectiveness is a universal concept – it would be more appropriate to ask whether organisational effec-tiveness should be treated as a universal concept. Otherwise it would mean that we are imposing the universality of this concept.

For management terms that cannot be translated literally, some scholars suggest creating new concepts, which would be general enough to encompass the international variations of their expression and specific enough to be used in models.

The Chinese term ‘danwei’, for example, which is usually translated as ‘work unit’, refers to much more than the workplace. It binds the individual to his social environment.

Philippe d’Iribarne (1998) also points out that the notion of ‘being accountable to share-holders’, for example, conceals a variety of ways of doing things depending on the culture. In North American culture, there is a risk of being exposed to a lawsuit. “They have to prove that in accepting such and such a decision, they did not harm their shareholders. But it is easier to provide proof that one acted in the interests of one’s shareholders in short-term profit making than in long-term strategies.”

The very notion of economic effectiveness (reaching a target) does not exist in China according to F. Jullien in Traité de l’efficacité (1997). For the Chinese, performing well means achieving the objective with the least amount of resources possible, which is there-fore more a question of efficiency.

Management control doubtless reflects the governance modes of companies. In this sense, it also reflects different types of capitalism, i.e. economic and social modes of organisation. Positing the existence of a single mode of organisational control is equivalent to positing a single mode of economic and social organisation. And of course there is not only one model of capitalism.

3.2 A typology integrating culture and management control

Based on a case study of companies located in the Chinese sphere of influence, we will now analyse how different control approaches (such as results control, control through values, control through socialisation) can interact during the traditional control process in three stages: upstream, during the performance management process and at the time of evalua-tion, in a precise cultural sphere (Chinese influenced).

In the context of regulation through culture, we will point out the cases where culture is a factor favouring the control mechanism or not.

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Tab

le 1

0.4

: Im

pac

t o

f cu

ltu

re o

n c

on

tro

l pro

cess

ph

ases

- th

e ca

se o

f a C

hin

ese

com

pan

y

Ph

ase

Cu

ltu

re a

s fa

cilit

ato

r: c

on

tro

l mec

han

ism

C

ult

ure

as

ob

stru

ctio

n: r

ole

of i

nfl

uen

ce

Mo

dal

itie

s C

ase

of a

Ch

ines

e co

mp

any1

Mo

dal

itie

s C

ase

of a

Ch

ines

e co

mp

any

Up

stre

am:

bef

ore

the

cont

rol

actio

n b

egin

s

Soci

al c

ontr

ol th

roug

h th

e in

trod

uctio

n of

a c

hart

er o

f va

lues

Cont

rol o

f att

itude

s an

d b

ehav

iour

s th

roug

h sh

ared

ne

twor

k an

d ex

tern

al re

latio

ns

Soci

al c

ontr

ol th

roug

h re

crui

tmen

t fav

ourin

g th

e at

titud

es a

nd b

ehav

iour

s ex

pec

ted

by th

e co

mp

any

Cont

rol o

f em

plo

yees

’ m

enta

litie

s to

gui

de th

eir

beh

avio

ur

Indi

rect

con

trol

of t

he

beh

avio

ur o

f cer

tain

Chi

nese

ex

ecut

ives

thro

ugh

guan

xi,2

whi

ch p

lays

the

role

of

sanc

tion

in th

e ev

ent o

f no

n-ob

serv

ance

The

imp

lem

enta

tion

of a

ne

w fo

rmal

con

trol

sys

tem

is

rest

ricte

d by

loca

l val

ues.

The

imp

lem

enta

tion

of a

new

form

al

cont

rol s

yste

m is

lim

ited

to s

ave

the

face

of

sup

erio

rs b

ecau

se th

ey a

re u

nfam

iliar

w

ith th

is n

ew s

yste

m b

ut d

o no

t say

so.

Litt

le u

se is

mad

e of

str

ateg

ic p

lann

ing

in p

rivat

e C

hine

se c

omp

anie

s ov

erse

as

due

to th

eir C

hine

se w

ay o

f thi

nkin

g:

no d

esire

to c

ontr

ol n

atur

e, b

ut ra

ther

a

desi

re to

be

in h

arm

ony

with

nat

ure.

Th

eir d

ecis

ion-

mak

ing

rule

s ar

e b

ased

m

ore

on in

tuiti

on a

nd e

xper

ienc

e.

Mon

itorin

g an

d co

rrec

tive

actio

n s

Favo

urin

g co

ntro

l thr

ough

the

soci

alis

atio

n ru

les

of th

e lo

cal

coun

try’

s tr

aditi

ons

to c

reat

e an

d m

aint

ain

soci

al h

arm

ony

(pea

ce)

Giv

e fa

ce (m

ianz

i) to

one

’s su

per

ior a

nd to

sen

iors

(o

lder

per

sons

), gr

eat r

esp

ect

for h

iera

rchy

, bao

(Chi

nese

re

cip

roci

ty) r

enqi

ng (h

uman

se

ntim

ent)

Ob

stac

le to

mon

itor in

g sy

stem

Form

al m

onito

ring

syst

em

i s n

ot fa

vour

ed in

a c

ultu

re

whe

re in

terp

erso

nal r

elat

ions

ar

e im

por

tant

; dire

ct

sup

ervi

sion

is u

sed

mor

e an

d b

ased

on

the

soci

al c

odes

of

the

loca

l cou

ntry

.

‘Fac

e’ is

a c

onst

rain

t for

col

leag

ues

shar

ing

info

rmal

info

rmat

ion

durin

g m

eetin

gs w

hen

the

sup

erio

r is

pre

sent

.

Mon

itorin

g th

roug

h gu

anxi

(net

wor

k),

per

sona

lised

man

agem

ent o

f a te

am b

y its

sup

erio

r

Dow

nstr

eam

: ev

alua

tion

pha

se

Judg

men

t by

the

hier

arch

ical

su

per

ior,

pee

r s, t

he n

etw

ork,

re

latio

ns (i

nter

nal a

nd

exte

rnal

)

Eval

uatio

n of

the

indi

vidu

al’s

soci

al b

ehav

iour

on

his

soci

al

per

form

ance

Eval

uatio

n b

ased

mor

e on

w

hat o

ne’ s

colle

ague

s sa

y an

d on

gua

nxi (

netw

ork)

Eval

uatio

n of

the

hum

an

oblig

atio

ns to

war

d th

e gr

oup

re

n (h

uman

ity,

ben

evol

ence

)

Ham

per

s an

ob

ject

ive

eval

uatio

n of

eco

nom

ic

per

form

ance

Eval

uatio

n b

a sed

mor

e on

loya

lty

to

one’

s su

per

ior a

nd t o

the

par

ty th

an to

ec

onom

ic p

erfo

rman

ce

Eval

uatio

n of

eco

nom

ic p

erfo

rman

ce is

di

stor

ted

by fa

ce a

nd b

y re

spec

t for

the

hier

arch

y

1.

Sum

mar

y ta

ken

from

the

wor

k of

Lau

lusa

(200

5).

2.

Inte

rper

sona

l rel

atio

ns, n

etw

ork.

7538-Livre.indb 285 26/09/11 19:14



Constructed from cases situated in the Chinese sphere of influence, this table shows the interaction between control and national cultures, which can either facilitate or obstruct the mechanisms of control. Cultural values are very difficult to harness. Here we see that a given value, for instance the Chinese value of face (mianzi), can either be an obstacle or a facilitator of the control mechanism.

3.3 Formal systems and informal aspects of management control

To conclude, the question of national cultural differences sheds light on a major aspect of management control, namely the existence of an informal and invisible dimension to control, containing all the psycho-sociological elements of organisations. Relatively few studies have been made of these elements and they have received little attention in the management control discipline. However, the formal and visible aspects of management control, made up of management systems, tools and rules occupy almost the entire disci-pline as well as the concerns of managers. The figure below shows this ‘hidden side’, like the submerged part of an iceberg, made up of values, relations between people, etc., which in reality represents a significant though still poorly understood area.

Management toolsRules, procedures

BehavioursStandards

Beliefs

Values

Fundamental assumptions

Formal / Visible / Tacit

Informal / Invisible / Implicit

Figure 10.3 – The visible and hidden sides of management control

The goal is to connect the formal elements of management control with its invisible aspects. Such is the challenge of the discipline, both at a local level and at a multinational level. Knowledge of the cultural sphere constitutes a decisive asset, which can only favour this interaction between formal management systems on one hand and largely informal local representations and practices on the other.

Our point of view on this concurs with that of anthropologist M. Abélès (2008) who says that we must ‘think about globalisation, not based on an imperturbable logic that can be

7538-Livre.indb 286 26/09/11 19:14



conceptualised in general statements and notions which themselves are all encompassing, but rather as a web of interactions that can be apprehended from localised sites.’

Taking into consideration the interplay of the different systems in a much finer way diverges from a mechanistic, reductive and overly normative vision. It leads to the integration of the different perceptions of business management and thus relates local visions to global models of performance management.

In this perspective, instead of being juxtaposed or set at odds with each other, national cultures are intertwined and interconnected. Through the deployment of management control tools, which are vectors of values, there is a cross fertilisation of national cultures. In response to certain dangers brought on by globalisation, companies can build dynamic processes from the interplay of cultures, which may generate major competitive advantages.

Finally, the differences in national cultural provide an opportunity to question the funda-mental assumptions of management control with a view to increasing its relevance. This is what we have attempted to do in this chapter.

References

anThony, R. N., Planning and Control Systems: Framework for Analysis, Graduate School of Business Administration Harvard University, Boston, 1965

aBélès, M., Anthropologie de la globalisation, Payot, Paris, 2008.

cheng, A., Histoire de la pensée chinoise, Seuil, Paris, 1997.

friedBerg, E., d’iriBarne P., and Beffa J.L., “Peut-on parler de modèles nationaux de gestion?”, École de Paris, conference, 16 May 1994, Université Paris-Dauphine.

geerTz, C., The interpretation of cultures, Basic Books, New York, 1973.

hofsTede, G., Culture’s consequences: international differences in work related values, Sage Publications, 1980 (2001, new expanded edition).

hofsTede, G., Cultures and Organizations: Software of the Mind, McGraw Hill, New York, 1991.

d’iriBarne, P., “Ce qui est universel et ce qui ne l’est pas”, Revue Française de Gestion, Sept-Oct, 1987, pp. 6-9

d’iriBarne, P., La Logique de l’honneur, Seuil, Paris, 1989.

d’iriBarne, P., Cultures et mondialisation. Gérer par-delà les frontières, Seuil, Paris, 1998.

d’iriBarne, P., Le Tiers monde qui réussit, Odile Jacob, Paris, 2003.

jullien, F., Traité de l’efficacité, Le Livre de poche, Paris, 2002.

laulusa, L., L’influence des valeurs confucéennes sur le processus de contrôle organisa-tionnel au sein des entreprises chinoises en Asie : Études de cas en Chine, à Singapour et à Taiwan, doctoral thesis , Université Paris-Dauphine, 2005.

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sainsaulieu, R., Sociologie de l’organisation et de l’entreprise, Presses de la Fondation nationale des sciences politiques et Dalloz, Paris, 1987.

schneider, S., and Barsoux, J.L., Management interculturel, Pearson Education France, Paris, 2003.

ThiéTarT, R-A, Le Management, PUF, Que-sais-je ?, Paris, 2003.

TroMPenaars, F., Riding the Waves of Culture: Understanding Cultural Diversity in Business, 1st edition, London: Nicholas Brealey, 1993.

van der sTede, W., “The effect of national culture on management control and incentive system design in multi-business firms: evidence of intracorporate isomorphim”, European Accounting Review, 2003, 12(2), pp. 263-285

Key messages• Far from being a mere contingent variable or a factor that can be exploited, national

culture – one of the elements that make up corporate culture – allows us to understand the context in which the organisation operates.

• The search for the ‘one best way’ in management practices in view of organisational performance is one of the recurring myths in both the theory and practice of business administration. Reality attests to the diversity of implementations, notwithstanding globalisation, because in spite of ostensible standardisation, management concepts do not necessarily have the same meaning or the same social representation from one culture to another. Many of the theoretical hypotheses on which management control is founded were created and developed in a very specific cultural context: that of North America.

• The question of national cultural differences thus sheds light on major aspects of management control. Management control cannot be reduced to its formal and visible dimension, which is undeniably moving toward greater standardisation. Indeed, an informal dimension of management control reflects national cultures in an ongoing interaction with the explicit and visible dimension of control.

• In other words, one may also say that this interaction is part of the coordination between global logic and the local logic inherent in management control

• Taking into consideration the cultural differences and the interactions between the various dimensions of control can constitute a lasting competitive advantage for compa-nies.

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