Exploring the influence of national culture on performance management systems.

Abstract

Globalisation has resulted in the increase of internationalisation for large and small organisations alike. Since Performance Management Systems (PMS) are vitally used by top management to make them aware of their attainment of the planned organisational goals, their use has become widespread in most companies (Speckbacher et al., 2003). At the same time, the expansion of organisations outside their birthplaces has compelled top managers to use their home developed Performance Management Systems in different cultures. Each national culture has its unique combination of National Culture dimensions, which had originally emerged from the anthropology field (Nardon & Steers, 2009, House et al., 2004). This phenomenon prompted scholars to call for the investigation of the impact of national culture on performance management systems (Otley, 2003). Therefore, the aim of the study is to investigate the impact of national culture on the design and use of Performance Management Systems. The researcher first reviewed published literature in performance measurement and management control systems, but found it to be scarce and fragmented; an inductive case study design was employed to collect data from four diverse national cultures to bridge the knowledge gap. Four national cultures were tested: China, Italy, Qatar and the UK. The researcher used Hofstede’s (1980) framework of national culture to map the relationship between the design and use of Performance Management System in different national cultures. The research findings confirmed that national culture dimensions of Power Distance (PD) and Uncertainty Avoidance (UA) impact the design and use of Performance Management Systems individually or combined. PD dimension influence starting a balanced PMS, the degree of collaboration in Performance Management Systems’ design, the intended aim of Performance Management Systems’ implementation, type of performance measures employed, Performance Management Systems’ adoption and the frequency of Performance Management Systems’ use. While UA dimension influences information accessibility and collaboration patterns in PMS use. The research also identified different moderators that affect the action of national culture dimensions such as leaders’ age, and education and innovation based goods