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.
