This paper aims to understand the role that the “cultural capital” of managers has on the stability and change of management control systems (MCS) in the subsidiary of a global corporation.
A seven-year longitudinal case study was conducted at the US subsidiary of a Japanese-based global corporation. The theoretical concepts of cultural capital and MCS package typology are used to examine how management controls were understood by locally hired employees and expatriate Japanese managers at the case study site.
The findings show that the managers at the Japanese headquarters transferred an MCS package that had a high level of interdependence between cultural control and results control to their US subsidiary in the 1960s. This MCS package did not influence the behavior of locally hired employees in ways that the Japanese expatriate managers expected; instead, it led to the cultural exclusion of local employees. Even when the Japanese managers were faced with a changing environment, the MCS package did not change. When Japanese managers realized they could not achieve their goals in the USA without local managers, they slowly started to hire mid-career local managers. As the number of local managers increased, the expatriate Japanese managers started to become more aware of the impact of their cultural capital. This has resulted in changes in the MCS package for local managers in the US subsidiary.
This study revealed that even when the strategy of a company and the environment in which it operates changes, an MCS package may not change quickly. The authors show that the cultural capital of managers plays a role in MCS stability and change.
