Does Culture Matter? – A Systematic Literature Review on How Culture Interacts with Management Control Systems

The purpose of this paper is to synthesize evidence about how culture affects management control systems (MCS). To accomplish this, a systematic literature review is conducted based on 57 journals in the accounting field ranked 4 – 2 in the Chartered Association of Business Schools’ Academic Journal Guide 2015. 98 articles were initially chosen and the most significant of these articles are used for a discussion. The paper takes a wide approach to culture, combining national culture with upper echelon theory and organisational culture. The framework, by Malmi and Brown (2008), on management control systems structures the paper, as it focuses on five groups of control systems, and the effect of culture is considered in relation to these groups. It is found that the literature on the effects of culture on MCS is fragmented, as a variety of definitions of culture is in use, resulting in a lack of coherence of the cultural influence. Several examples of how culture influences management accounting practices are identified for each of the five groups, but several papers are also found to report no effect of culture. This relates to the Malmi and Brown framework, and a discussion of why the results differ is undertaken, where it is argued that it is mainly due to a negligence of considering internal and external aspects of culture in cohesion. The main contribution of this paper is that it shows that culture does matter for MCS, but that culture needs to be seen from a perspective combining internal aspects of culture such as cultural controls, sometimes driven by upper echelon theory, with external aspects of culture such as national culture. The discussion of whether national culture matters for MCS, as such, is slightly misguided, as focus should rather be on which of the two aspects of culture dominates. In addition, a model is developed for practitioners showing where different elements of culture are found to have an influence on selected MCS based on the literature reviewed