The Impact of Culture on the Relationship between Budgetary Participation, Management Accounting Systems and Managerial Performance: An Analysis of Chinese and Western Managers

Posted: 13 May 1998

See all articles by Ferdinand A. Gul

Ferdinand A. Gul

Monash University Sunway Campus

Judy S.L. Tsui

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: Undated

Abstract

This study tests the hypothesis that the behavior and attitudes of Chinese and Western managers to budgetary participation will be different because of cultural differences. Chinese managers were used to represent managers from high collectivist, large power distance and long term orientation culture while Caucasian expatriate managers were used to represent a culture that was low collectivist, small power distance and short term orientation. Data was collected from 51 Chinese sub-unit managers in Xian, China and 38 Caucasian expatriate sub-unit managers in Hong Kong who were requested to respond to questionnaires designed to measure the "availability" of broad scope and timely management accounting systems (MAS), budgetary participation and their managerial performance. Multiple regression analysis showed that the three-way interaction term was significant thus suggesting that the interaction effects of MAS and budgetary participation on managerial performance were different depending on the cultural background of the managers. More specifically, the relationship between MAS information and managerial performance of Chinese managers was negative for high levels of participation but positive for Caucasian managers. These results which have implications for the design of effective control subsystems also suggest that the management accounting theories developed in the context of western economies may not be generalizable to the Chinese environment.

JEL Classification: M40, M46, D23

Suggested Citation

Gul, Ferdinand A. and Tsui, Judy S.L., The Impact of Culture on the Relationship between Budgetary Participation, Management Accounting Systems and Managerial Performance: An Analysis of Chinese and Western Managers (Undated). Available at SSRN: https://ssrn.com/abstract=2689

Ferdinand A. Gul (Contact Author)

Monash University Sunway Campus ( email )

Jalan Lagoon Selatan
Selangor Darul Ehsan
Bandar Sunway, 46150
Malaysia

Judy S.L. Tsui

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon, Kowloon
Hong Kong
852 2766 7828 (Phone)
852 2334 7830 (Fax)

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