Institutions, agency, culture and control: a case study of a multinational operating company

Abstract

Purpose This paper aims to explore how management control systems (MCS) of an operating company (Delta Lanka) of a multinational corporation (MNC) is shaped through the interplay between external institutional influences via global prescriptions stemming from the parent company culture and localisation needs as suited to cultural context of the operating company through the agency of practice level actors. Design/methodology/approach Theoretically, the paper draws upon institutional theory, more specifically the notions of external institutions and agency of practice level actors, while methodologically, it adopts the single-site case study approach under the qualitative tradition. Findings The findings suggest that given the complex setting of being encountered with multiple cultural ramifications, MCS of Delta Lanka encompasses compulsory elements instigated by the parent company, and non-compulsory elements as attuned to the realities of the local culture of the operating company. The authors show how imposed practices in the institutional environment by the parent company (homogeneity) interact with agentic aspects of actors in the operating company giving rise to practice variation (heterogeneity) in the adoption of controls at the local level. Practical implications The paper offers insights on how practicing managers in operating companies of MNCs could formulate control systems by striking a balance between multiple cultural considerations (of the parent and operating company). This would be a lesson for managers of other firms (especially MNCs). Originality/value By bringing together multitude of cultural dimensions relating to the parent company and operating company into a single study in the area of management control, this paper adds to the burgeoning literature on the interplay between external institutions, agency of actors, culture and MCS. It also contributes to the on-going debate on MCS research taking a post-Hofstede orientation while extending the use of institutional theory in management accounting research in MNCs.

Firm culture and management accounting practices among manufacturing firms in Nigeria

“…To explore how MAPs are shaped through the interplay between the parent company culture and localization needs in Sri Lanka, Kapiyangoda [32] adopted the singlesite case study approach under the qualitative tradition. The findings show that given the complex set of being encountered with multiple cultural ramifications, MAPs of Delta Lanka show how imposed practices in the institutional environment by the parent company affect the MAPs in the company.…”

Firm Culture and Management Accounting Practices among Manufacturing Firms in Nigeria

“…To explore how MAPs are shaped through the interplay between the parent company culture and localization needs in Sri Lanka, Kapiyangoda [32] adopted the single-site case study approach under the qualitative tradition. The findings show that given the complex set of being encountered with multiple cultural ramifications, MAPs of Delta Lanka show how imposed practices in the institutional environment by the parent company affect the MAPs in the company.…”

Generic Strategy and Strategic Management Accounting Practices: Case Study of a Sri Lankan Telecommunications Company

“…Gamage and Gooneratne (2017) explored how management controls change according to the external institutional forces and the internal dynamics in an apparel firm in Sri Lanka and they pinpointed that coercive, normative and mimetic pressures in the environment affect management control changes. Kapiyangoda and Gooneratne (2018) conducted a study to explore how management control systems of a firm is affected by the parent companies' culture and the study has used institutional theory as the theoretical lens. They have identified the rules and procedures applied by the parent company to case company as coercive isomorphism.…”

“…The quality costing technique was started in Alpha due the impact of parent company management as the Japanese management was highly interested in MA techniques in quality perspective because of the Japanese culture. Kapiyangoda and Gooneratne (2018) also pinpointed that coercive pressure from parent company affected management control systems by referring to its case study in a Sri Lankan company. Mimetic pressure from the competition was also evidenced in the Japanese management as the emerging competition in the industry focused to Alpha to adopt customer analysis technique to capture new customers and retain existing customers.…”