Abstract
The literature review in Part I has confirmed that influence of culture on control is typically covered in management accounting and control research, but less emphasis is given the opposite: the influence of control on culture. This study supports the latter stance: not only does culture influence control, but so does control influence culture. By integrating all prior results from field and theory, this chapter attempts to address this gap in the literature. A unique framework that explains how managers can establish a culture for effective controls is presented.
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Notes
- 1.
- 2.
For an overview of the drivers see Sect. 4.3.1.
- 3.
- 4.
See driver 5-4 in Chap. 4.
- 5.
See driver 3-4 in Chap. 4.
- 6.
See driver 1-1 in Chap. 4.
- 7.
See driver 1-2 in Chap. 4.
- 8.
See driver 1-3 in Chap. 4.
- 9.
See driver 2-4 in Chap. 4.
- 10.
See driver 3-2 in Chap. 4.
- 11.
Derived from O’Reilly and Chatman (1996, p. 161).
- 12.
See Ashforth and Anand (2003).
- 13.
See O’Reilly et al. (1991), Wiener (1988).
- 14.
Derived from interviews with Lisa Lee, Google and Phil Greybas, SureWest.
- 15.
Derived from Ashforth and Anand (2003).
- 16.
See driver 1-4 in Chap. 4.
- 17.
See driver 3-3 in Chap. 4.
- 18.
See driver 3-4 in Chap. 4.
- 19.
See driver 5-5 in Chap. 4.
- 20.
See in more detail Appendix C.
- 21.
Simons (1995, p. 7).
- 22.
Simons (2005, p. 8–12).
- 23.
These are two major differences from other approaches in the literature. In more detail, the differences between the control-and-culture framework to Merchant and Simons will be discussed at the end of the chapter.
- 24.
Barlow et al. (2003, p. 567) and Sarros et al. (2005, p. 160).
- 25.
Wilkins and Ouchi (1983, p. 498).
- 26.
For example, O’Reilly and Chatman (1996) and Wiener (1988).
- 27.
See driver 1-1 in Chap. 4.
- 28.
See driver 2-1 in Chap. 4.
- 29.
See driver 2-2 in Chap. 4.
- 30.
See driver 2-5 in Chap. 4.
- 31.
See driver 3-1 in Chap. 4.
- 32.
See driver 2-3 in Chap. 4.
- 33.
See driver 1-5 in Chap. 4. With regard to reinforcing the opening drivers through accountability, Steinmann and Schreyögg clarify that the incentive and sanctioning system of the organization should support openness. For example, organizations should not sanction transmitters of bad news and critical comments by isolating these people or not promoting them (e.g., the role of whistleblowers in companies) (Steinmann and Schreyögg 1986, p. 761).
- 34.
See driver 3-5 in Chap. 4.
- 35.
According to Yin (1994, p. 13) a case study is defined as: “an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident”.
- 36.
Among the destinations of alleged bribery in the Siemens scandal are Azerbaijan, Brazil, Cameroon, China, Egypt, Greece, Hungary, Indonesia, Israel, Italy, Kuwait, Libya, Malaysia, Nigeria, Norway, Poland, Russia, Saudi Arabia, Spain and Vietnam (Heimann and Dell 2008, p. 45).
- 37.
Heimann and Dell (2008, p. 45).
- 38.
The allegations concern the payment of bribes by high-level Siemens employees in connection with Siemens telecommunications, power generation, power transmission, transportation systems, health care and industrial solutions groups. Siemens’ bribings were allegedly transferred through a network of intermediaries, front companies and bank accounts in Austria, the British Virgin Islands, Cyprus, Hong Kong, Italy, Liechtenstein Monaco, Puerto Rico, Switzerland, and the US (Heimann and Dell 2008, p. 45).
- 39.
A case study would also need to clarify which level it focuses on (e.g., executives, senior managers, employees).
- 40.
Economist, March 6 2008: Stopping the rot.
- 41.
Heimann and Dell (2008: 45-46).
- 42.
Economist, March 6 2008: Stopping the rot.
- 43.
Paine (1994, p. 108) explains: “Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds”. About the role of executives for the effectiveness of ethics control systems, see also Weaver et al. (1999).
- 44.
Löscher had previously headed divisions at Siemens’ competitor General Electric and Merck, a pharmaceutical giant (Economist, March 6 2008: Stopping the rot).
- 45.
Financial Times, January 20 2008: Scandal puts Siemens to the test.
- 46.
Economist, July 8 2008: Time to fix Siemens.
- 47.
Economist, March 6 2008: Stopping the rot.
- 48.
Financial Times, January 20 2008: Scandal puts Siemens to the test.
- 49.
The division in different time periods is adapted from Alt (2006).
- 50.
Michela and Burke (2000, p. 229).
- 51.
For various measurement techniques for organizational culture, see Alexander (1978), Cooke and Lafferty (1983), Denison et al. (2006), O’Reilly et al. (1991).
- 52.
Simons states that in order to address organizational design issues, research needs to be interdisciplinary (Simons 2005, p. vii).
- 53.
See Sect. 2.1.2.
- 54.
For example, Collier (2005) and Nixon and Burns (2005).
- 55.
The relative amount of drivers from the field study may give an indication as to how the drivers should be mixed in order to establish a culture for effective controls. This statement, however, is subject to further investigation and is not supported by this study here.
- 56.
For more detail about this discussion on strong cultures and their negative effects see Chap. 1.
- 57.
- 58.
The framework from Ouchi, which was introduced in the literature review, is excluded here. Ouchi’s framework was an important contribution to the study of culture and control. However, as a research framework it provided relatively little empirical support. Moreover, the framework from Merchant builds on Ouchi’s terminology and implicitly includes Ouchi’s concepts (see Merchant and Otley 2007).
- 59.
For example, the definition of management control by Anthony (Sect. 2.1.2).
- 60.
See the discussion about the interrelations of systems in Sect. 3.4.
- 61.
Accountability (as a reinforcing driver) can reemphasize not only closing but also opening drivers. For example, if constructive debate within the culture of a sub-unit is not given even through the overall culture promotes open debates, the higher managers could held the responsible sub-unit manager accountable for not promoting constructive debates.
- 62.
See Anand et al. (2005), Ashforth and Anand (2003), Lange (2008).
- 63.
In the management accounting and control area exists research on involvement (e.g., sub-unit’s controller involvement), which addresses these types of questions (for example, Rouwelaar 2007).
- 64.
- 65.
See Sect. 8.3.1.
- 66.
Nevertheless, the study of Birnberg and Snodgas discusses other factors such as national culture, which has a fundamental impact on the perceived explicitness of the control system. Therefore, reinforcing drivers are one part of a larger story (see also Sect. 3.3; Birnberg and Snodgrass 1988).
- 67.
For example, understanding interrelations between drivers (or controls) can help explain why formal control mechanisms are informally undermined (for example, Sect. 8.2.2).
- 68.
See the literature review in Sect. 3.3.
- 69.
See Sect. 3.4.
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Pfister, J. (2009). A Framework for Control and Culture. In: Managing Organizational Culture for Effective Internal Control. Contributions to Management Science. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2340-0_8
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