Search results

Internal control mechanisms are fundamental to organizational governance; particularly, to the agency relationship associated with decentralization of decision rights. Management accounting and organizational literatures provide conflicting predictions on the association between decentralization and internal controls, with some research arguing that internal controls be tightened to mitigate the risks associated with greater decentralization of decision rights while other work avers that tighter internal controls defeat the purposes of decentralization. In this chapter, we argue that managers choose these two organizational design variables jointly. Capitalizing on a unique database of control practices in the purchasing and payment process within the procurement function, this chapter examines the relationship between control tightness – a critical characteristic of internal controls – and decentralization. Using a simultaneous equation model, the study finds that decentralization and internal control design are endogenously determined. Tight control is negatively associated with the level of decentralization, while decentralization has a positive effect on the tightness of control. These results reconcile the apparently contradictory results relating these two variables. The chapter also finds that decentralization and tight control mechanisms operate both independently and synergistically to improve performance.

This paper delves into the mechanism of the contingency framework for foreign entry mode decisions and identifies two essential tasks that jointly determine the outcome of the entry mode decision. It then recognizes a critical weakness in previous research pertaining to the comparison of entry modes along a key decision criterion, the degree of control. Existing studies generally treat equity involvement as the only source of entrant control, while largely ignoring non‐equity sources of control (i.e., bargaining power and trust). Non‐equity sources of control, when underutilized, amount to missed opportunities, increased resource commitments, and heightened risk exposures in foreign markets. Drawing from a pluralism perspective in transaction and relationship governance, the author presents a more integrative method for the ranking of entry modes along the degree of control. The central message is that companies entering foreign markets should make an earnest effort to identify trust and bargaining power situations and fully utilize their control potential in making entry mode decisions.

Purpose – This study focuses on the relationship between local governments and public sector joint ventures (JVs). Public sector JVs are separate administrative entities that undertake public service activities on behalf of local governments. The aim of this study is to examine the vertical management control packages that are used by local governments to control the relationship with their public sector JVs.

Design/methodology/approach – Two case studies have been conducted in two public sector JVs, owned jointly by more than 20 local governments. The analysis of the two cases is informed by an integrated conceptual framework describing how transactional and relational factors influence control, trust, and risk in the context of public sector JVs.

Findings – The case studies provide a nuanced understanding of the interplay between the vertical management control packages, trust between the parents and the public sector JVs, and risks as perceived by the local governments. The case findings not only reveal how local governments struggle with adequate outcome control but also highlight how and why they rely on behavioral control. A related finding is that while the probability of poor business performance does not have a significant impact on the design of the vertical control packages, the social impact of failure has the potential to create a sense of urgency with regard to changes in the design of vertical management control packages.

Originality/value – This study adds to the literature on interorganizational relationships by providing insight into the use of vertical management control packages in the specific, but relevant, setting of public sector JVs.

Determining the role of ethical leadership in the multinational companies’ (MNCs) control practices, the purpose of this paper is to extend Eisenbeiss’ (2012) four central ethical leadership orientations into multinational companies’ control contexts – the culturally diversified environment.

Adopting a multiple-case research design, the authors gather qualitative data from four MNC subsidiaries located in China, that connects three potentially diverse cultural contexts: German, Japanese and Chinese.

The findings of this paper confirm that ethical leadership compliance (or violation) positively (or negatively) contributes to the internalization of organizational practice transfer, moderated by cultural distance between foreign managers and subsidiaries’ employees. The results reveal that informal control and trust act as lubricants in the internalization process.

This paper evidences the connections between ethical leadership, organizational practice transfer and subsequent performance, along with inclusive cultural moderating factors.

This study aims to apply McCornack’s (1992) information manipulation theory to the context of fraud and investigates the effects of culture on perceived deceptiveness.

In total, 400 Chinese consumers and an equal-size sample of Canadian consumers were recruited to fill an online survey. The survey integrates four scenarios of insurance fraud and measures of perceived deceptiveness, cultural tightness and horizontal-vertical idiocentrism allocentrism, in addition to some control variables.

Results show that at the societal level of culture, perceived deceptiveness is higher in individualistic than in collectivistic cultures. When accounting for the level of situational constraint, cultural tightness was found to magnify the perceived deceptiveness. At the individual level of culture, vertical-allocentrism and vertical-idiocentrism were found to weigh against the perception of deceptiveness.

Understanding cultural differences in perceived deceptiveness is helpful to spot sources of consumers’ vulnerability to fraud tolerance among a culturally diverse public.

Drawing on the transactional cost economics (TCE) perspective, we aim to investigate the effects of the balance and imbalance between contractual and relational governance on a firm's bridging responses to supply chain disruptions. By adopting the institutionally contingent perspective, we further examine the moderating effect of cultural distance on the relationship between governance mechanisms and bridging responses.

Based on data collected from 183 firms in China, we use polynomial regression and response surface analyses to test our research model.

The bridging responses increase along with an increasing balance level between contractual and relational governance and decrease along with an increasing imbalance level between contractual and relational governance. Moreover, the positive effect of balance between contractual and relational governance is strengthened by a large cultural distance. We also find that a large cultural distance amplifies the negative effect of the combination of high relational governance and low contractual governance yet weakens that of the combination of high contractual governance and low relational governance.

Our study provides nuanced insights into the effects of the balance and imbalance between contractual and relational governance on bridging responses and into the cultural boundary conditions under which these effects vary.

The purpose of the present study is to assist academics and practitioners in supporting and managing digital production innovation projects using managerial controls. The focus is on projects that deliver innovations containing new combinations of physical, digital and/or cyber-physical components, developed to be used within a production system. More specifically, this paper aims to explore the applicability of different managerial controls for managing and supporting digital production innovation projects, i.e. projects that are characterized by high levels of complexity and uncertainty.

This is a multiple-case study in which interview data was collected from five digital production innovation projects in two manufacturing firms. The empirical data was used to analyze success factors, challenges and obstacles in different phases of the studied projects, and to connect these to the application of different types of managerial controls.

The findings provide an increased understanding of who to control, what to control and how to control in digital production innovation projects.

This paper is focused specifically on the perception of managerial controls in digital production innovation projects and has not explicitly focused on manufacturing companies' intended usage of managerial controls. This paper's focus on manufacturing companies with producing customers and on projects developing solutions for their respective customers' production systems also encourages further studies at other companies undergoing a comparable transition. Given the necessary system perspective on managerial controls that is being highlighted, this paper emphasizes further research needs on how firms can also apply managerial controls to support external collaborations.

The results have a number of managerial implications regarding digital production innovation projects. The most prominent findings revealed the importance of giving attention to the managerial controls related to the decision-making process and the involvement from stakeholders outside the organization itself. In particular, it was shown that managerial controls securing a more holistic involvement in the decision-making process should be applied, and that managerial controls suitable for customers and partners need to be developed.

The study is among the first studies to focus on the application and perceived effectiveness of managerial controls in digital production innovation projects. The ways in which managerial controls are applied to collaborations with customers and partners and the ways in which action, cultural and personnel controls are combined and aligned to support the corporate decision-making process particularly stand out as essential for manufacturing companies' Industry 4.0 transition.

The goal of this study is to propose and test a model of the effect of the socio-cultural context on the disability inclusion climate of organizations. The model has implications of hiring people with disabilities.

To test the model, we conducted a cross-sectional study across four countries with very different socio-cultural contexts. Data were gathered from 266 managers with hiring responsibilities in Canada, China, Norway and France. Participants responded to an online survey that measured the effect of societal based variables on the disability inclusion climate of organizations.

Results indicated support for the theoretical model, which proposed that the socio-cultural context influenced the disability inclusion climate of organizations through two distinct but related paths; manager’s value orientations and their perception of the legitimacy of legislation regarding people with disabilities.

The vast majority of research regarding employment of people with disabilities has focused on supply side factors that involve characteristics of the people with disabilities. In contrast, this research focuses on the less researched demand side issue of the socio-cultural context. In addition, it responds to the “limited systematic research examining and comparing how country-related factors shape the treatment of persons with disability” (Beatty et al., 2019, p. 122).

By reinforcing monetary policy independence, reducing international financing pressures and avoiding high-risk takings, capital controls strengthen the stability of the financial system and then reduce the volatility of capital inflows. The objective of this study was to conduct an empirical examination of this hypothesis. This topic has received strong support in the theoretical literature; however, empirical work has been quite limited, with few empirical studies that provide direct empirical support to this hypothesis.

This study analyzed quarterly data of 32 emerging economies over the period between 2000 and 2015 and proposes two methods to identify capital control actions. Using panel analysis, Autoregressive Distributed Lag and local projections approaches.

This study found that tighter capital controls may diminish monetary and exchange rate shocks and reduce capital inflows volatility. Furthermore, capital controls respond counter-cyclically to monetary shocks. Under capital controls, countries with floating exchange rate regimes have more potential to buffer monetary shocks. We also found that capital controls on inflows are more effective for reducing the volatility of capital inflows compared to capital controls on outflows.

This study contributes to the question of the effectiveness of capital controls in attenuating the effects of international shocks and reducing the volatility of capital flows. Previous studies have mostly focused on the role of macroprudential regulation; however, there is a lack of systematic effects of capital controls on monetary and exchange rate policies. To our knowledge, this is the first preliminary study to suggest that capital controls may buffer monetary and exchange rate shocks and reduce the volatility of capital inflows. This study investigates the novel notion that capital controls allow for a notable counter-cyclical response of monetary and exchange rate policies to international financial shocks.

The purpose of this paper is to generate an observable relationship between five control mechanisms used by parent firms to direct international joint ventures (IJVs) with three distinct performance measurements. By observing relationships with different performance measures it serves to enhance the debate on IJV creation and control functions.

This paper looks at IJVs and analyzes the application of control mechanisms through a survey of IJVs in South Korea, then a further review of the different performance measurements is provided to expound upon the increasing reasons of IJV creation.

The paper determines different impacts upon performance measures through the use of either personnel or policy measures. Parents' use of personnel shows a direct relationship with satisfaction levels of IJV performance, while policy measures show significant relationships to both financial and growth measurements. The paper finds that through the use of multiple performance measurements there is a greater understanding of the implications of control of different aspects of an IJV.

The paper is concentrated solely on IJVs in South Korea; and further, measurements based on perception are consistently subject to accuracy concerns in statistical analysis.

IJVs are set up with different goals. Utilizing control mechanisms that enhance the performance goal of a parent can provide support during the creation and negotiation process.

The value provided by this paper is the critical analysis of control mechanisms on more than one performance measurement and a quantifiable statistical analysis that shows significant impact of certain mechanisms.