Global management control systems reflecting balance and harmony between global strategies and local adaptations.

Decoding Corporate Control: How Culture Shapes Global Business Success

Soraya Malik in Business & Economy August 2025 • 4 min read.

"Navigating the Interplay of Culture, Agency, and Management Systems in Multinational Operations"

In today's interconnected world, multinational corporations (MNCs) are increasingly prevalent, making the study of their management control systems (MCS) a critical area of interest. MNCs face the unique challenge of maintaining standardized practices across diverse geographical locations, ensuring high-quality products and services at every local level. This requires a delicate balance between the global corporate strategy and the specific cultural contexts of their operating companies.

Management control in MNCs is further complicated by cultural differences. These organizations must navigate the influences of both the parent company's culture and the cultures of the various operating companies. While adherence to the parent company's mechanisms is important, it's also crucial to move beyond mere compliance and integrate the day-to-day activities and local culture of each operating company into the MCS. This approach recognizes that tailoring control systems to respect local cultures can significantly enhance their effectiveness.

A new study delves into the intersection of culture and MCS within multinational corporations, offering insights into how these organizations successfully blend global prescriptions with local realities. By examining the specific cultural context in which control systems operate, this research sheds light on the dynamics that shape effective management strategies in a globalized world.

The Cultural Compass: How Global Companies Steer Management Control

Global management control systems reflecting balance and harmony between global strategies and local adaptations.

A new study explores the multifaceted nature of management control systems (MCS) within multinational corporations (MNCs), highlighting the interplay between global mandates and local adaptations. The research focuses on Delta Lanka, an operating company of a Swiss-based MNC, Delta Global, to understand how MCS are shaped by external institutional influences and the agency of practice-level actors.

The study draws upon institutional theory, examining external institutions and the agency of practice-level actors. It uses a single-site case study approach, embracing qualitative research methods to deeply investigate the complexities at play.

External Institutional Forces: Global prescriptions from the parent company, including the Delta Quality Management System (DQMS) and Delta Continuous Excellence (DCE) system.
Agency of Practice Level Actors: Localisation efforts by the management accounting team, financial accounting team, and divisional heads, adapting controls to the operating company's culture.
Management Control Systems: The resulting MCS, which includes the operational master plan, dynamic forecasts, and budgets, reflecting both global standards and local realities.

The findings reveal that Delta Lanka's MCS encompasses both compulsory elements from the parent company and non-compulsory elements attuned to the local culture. This balance allows for both homogeneity, driven by the parent company's standards, and heterogeneity, arising from the adaptive actions of local actors.

The Future of Global Management: Embracing Cultural Intelligence

As multinational corporations continue to expand and operate across diverse cultural landscapes, the ability to effectively manage the interplay between global strategies and local customs will become increasingly critical. By understanding and embracing the nuances of different cultures, organizations can create management control systems that not only ensure compliance and efficiency but also foster innovation, engagement, and sustainable growth. This research offers a valuable starting point for exploring the dynamic relationship between culture, agency, and control in the ever-evolving world of global business.

About this Article -

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This article is based on research published under:

DOI-LINK: 10.1108/jaoc-07-2017-0056, Alternate LINK

Title: Institutions, Agency, Culture And Control: A Case Study Of A Multinational Operating Company

Subject: Organizational Behavior and Human Resource Management

Journal: Journal of Accounting & Organizational Change

Publisher: Emerald

Authors: Kumudu Kapiyangoda, Tharusha Gooneratne

Published: 2018-11-13

Everything You Need To Know

What is the primary challenge for multinational corporations (MNCs) in terms of management control?

The primary challenge for multinational corporations (MNCs) is to balance global strategies with local cultural nuances. MNCs must maintain standardized practices across diverse geographical locations while adapting to the specific cultural contexts of their operating companies. This requires a delicate balance between the parent company's directives and the realities on the ground, ensuring high-quality products and services at every local level.

How do Management Control Systems (MCS) function within multinational corporations (MNCs) to bridge global strategies and local realities?

Management Control Systems (MCS) act as a bridge between the parent company's directives and on-the-ground realities by integrating the global corporate strategy with the specific cultural contexts of the operating companies. The MCS, as seen in the case of Delta Lanka, incorporates both compulsory elements from the parent company, like the Delta Quality Management System (DQMS) and Delta Continuous Excellence (DCE) system, and non-compulsory elements tailored to the local culture. This approach allows for homogeneity, driven by global standards, and heterogeneity, resulting from the adaptive actions of local actors such as the management accounting team and divisional heads.

What are the key components of Delta Lanka's Management Control System (MCS), and how do they reflect both global standards and local adaptations?

Delta Lanka's MCS includes elements from both the parent company, Delta Global, and the local operating company. The global prescriptions include the Delta Quality Management System (DQMS) and Delta Continuous Excellence (DCE) system. Local adaptations are implemented by the management accounting team, financial accounting team, and divisional heads. The resulting MCS encompasses the operational master plan, dynamic forecasts, and budgets, reflecting both global standards and local realities. This balance ensures that Delta Lanka adheres to the parent company's standards while integrating the local culture, enhancing the effectiveness of the MCS.

What role do practice-level actors play in shaping the Management Control Systems (MCS) within multinational corporations (MNCs)?

Practice-level actors, such as the management accounting team, financial accounting team, and divisional heads, play a crucial role in shaping the MCS by adapting controls to the operating company's culture. Their localization efforts involve incorporating the local context into the MCS, allowing for heterogeneity. This means going beyond mere compliance and integrating day-to-day activities and the local culture, recognizing that tailoring control systems to respect local cultures can significantly enhance their effectiveness and foster innovation, engagement, and sustainable growth.

Why is embracing cultural intelligence important for the future of global management?

Embracing cultural intelligence is critical because multinational corporations (MNCs) operate across diverse cultural landscapes. Effectively managing the interplay between global strategies and local customs is crucial for sustainable growth. By understanding and embracing the nuances of different cultures, organizations can create management control systems (MCS) that ensure compliance and efficiency. These MCS also foster innovation, engagement, and sustainable growth. This approach allows companies to adapt to local needs while maintaining global standards, ultimately leading to greater success in the global market.