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Publication
Management control procedures in multinationals versus subsidiaries
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Advisor(s)
Abstract(s)
Purpose: Much scientific research, and consequent contributions, has been done
on multinationals versus subsidiaries in recent decades, particularly with regard to the
management control system, a subject that remains current and relevant in the scientific
literature in the management area. Thus, the aim of this study is to analyze the different
perspectives of use of the management control system in organizations, in general terms,
and a posteriori its importance in multinationals versus subsidiaries, through the
inclusion of some variables (mechanisms for the exercise of control, commitment,
autonomy) fundamental to the efficient and effective functioning of this system.
Methodology: This is a theoretical and exploratory study between 2005 and
2014 focused on the accounting area magazines included in the ABS ranking (version 4).
The selection of articles for the literature review for this topic was initially patented by
the choice of four or five journals from the accounting area for the selection of scientific
articles from the last five years. However, given the particularity of the chosen topic, it
was necessary to extend the universe of journals to other areas of management, namely
the area of international studies and business (journals according to the classification of
the journals). It should be noted that in the other management areas not included, there
were also articles on the subject, however, these did not cover the desired period of time.
From research carried out in the most reputable journals in the management
area, the time period from 2005 to 2014 was reviewed. However, in some of the selected
journals no articles on the subject published in 2014 were identified.
In summary, the following sample resulted from research on articles published
by management journals: Accounting journals: Management Accounting Research,
Accounting, Organization and Society, The British Accounting Review; International
Business Review and Journal of International Management; Journal of Organizational
Studies and Organization Science.
In addition, we have included a further article from The British Accounting
Review in 2009, as well as an article from The Organization Science in 2014. The latter
was the basis for defining the subject of this work. The extension of the time period is due
to the fact that this theme was reviewed in the literature in the 1990s, hence the change in
the initial selection criteria. It should also be noted that articles in accounting journals
on the management control system focus on the general perspective, fundamentally, and
not on the perspective of multinationals versus subsidiaries, which also justifies the
extension of the scope of the journals.
Results: The results show that multinationals adopt several mechanisms to
control their subsidiaries spread over several countries, such as expatriation, active
participation among managers, training, sociability and technology transfer. However,
they must focus on the commitment of local managers in the implementation of strategies
Academy of Accounting and Financial Studies Journal Volume 25, Special Issue 3, 2021
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with critical and aggregate value, in the flexibility vis-à-vis the internal and external
environment, so that their Control System is dynamic and interactive. Another important
fact is the essence of autonomy, with the aim of sharing and transferring knowledge,
regardless of the differences between the organizational and local culture between the
country of origin and the host country. Given the complexity of the Relationships between
the multinational and the subsidiaries, it is crucial to have a network relationship, as the
network construction influences performance.
Conclusions: This analysis has returned to the importance of management
control systems for multinationals and their geographically dispersed subsidiaries, which
require managers to be committed to the values of the parent company, to balance the
autonomy of the subsidiary to avoid dynamic tensions. The empirical studies carried out
only cover a specific geographical area (Japan, China, Korea, among others); Not all
studies include all variables of the control system; Limited attention to the importance of
social control.
Description
Keywords
Subsidiaries Multinationals Management control
Citation
Rodrigues, M.; Silva, R.; Oliveira, C.; Oliveira, M.; Machado-Santos, C. (2021). Management control procedures in multinationals versus subsidiaries. Academy of Accounting and Financial Studies Journal, Volume 25, Special Issue 3.
Publisher
Allied Business Academies