National Culture Literature Review

1. Literature Review

In this chapter the concepts of national culture, management control systems and how national culture affects management control systems will be explained. The goal of this chapter is to get an oversight of the different theories of national culture, what they

1.1 National culture conceptualization of culture,

1.1.1 What is culture?

There are many different, but very similar, definitions of culture (Tsiu et al., 2007). One definition that is frequently cited is the one by Hofstede(2001): "the collective programming of the mind which distinguishes the members of one group or category of people from another." (p.9) He specifies that cultural values are manifested in practices.

A similar definition comes from Birnberg

(2004). The GLOBE project investigated the influence of culture on Leadership and organizational effectiveness in an aim to increase knowledge regarding cross-cultural interactions. This research started in the early 1990’s and broadened its scope since then, but the focus has always been on culture and leadership (Dorfman et al., 2012).

In the GLOBE study cultural values and cultural practices are seen as 2 separate factors that define national culture, therefor they the dimensions were measured for both variables (House et al. 2004). This is a clear distinction between this research and the work of Hofstede who views cultural practices as one of the manifestations of cultural values (Hofstede, 2001, p10)

The 9 dimension of the GLOBE study(House et al., 2001):

- Uncertainty avoidance; the extent to which a group avoids unpredictable situations through social norms, bureaucratic practices and rituals.

- Power distance; the extent to which a group accepts unequal power distribution.

- Institutional collectivism; the extent to which institutional practices promote collective distribution of resources and

The other dimensions were derived from various other papers, thus replicating and expanding on Hofstede’s research.(House et al., 2001). The main critique Hofstede(2006) has on this framework is that it has become too complex and the number of dimensions should be reduced for it to be experienced as usefull. Javidan et al.(2006) Responded to this and concluded researchers now have a choice to continue to use model by Hofstede(1991) or the more complex GLOBE model.

Despite the contributions by Schwartz(1994) and House et al. (2001), offering more different cultural frameworks, and the restricted view of cultural framework of Hofstede(1980, 1991, 2010) offers (Chenhall, 2003), studies that seek to investigate the influence of national culture on management control systems keep, for a big part, relying on Hofstede’s dimensions (Harrison & Mckinnon)

Reasons for this are that Hofstede’s framework has been validated and used in previous management control system research (Chow et al. 1991; Merchant et al. 1995; Smith et al., 1996), increasing comparability. Using different frameworks will decrease comparability until a dominant theory arises (Tsui,