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Patterns of Cultural and Budgetary Controls in International Joint Ventures in South Korea

Patterns of Cultural and Budgetary Controls in International Joint Ventures in South Korea This study, conducted in a field setting, examines the pattern of budget and cultural controls across Korean firms and Korean joint ventures with U.S. and European firms in South Koreaa nation with a dominant Confucian philosophy divergent from the modern capitalist philosophy that dominates AngloAmerican approaches to control. The empirical results provide support for the hypothesis that differences exist in the pattern of controls between U.S. and European joint ventures. While European joint ventures exhibited stronger forms of budget control, U.S. joint ventures exhibited a stronger form of cultural controls. Cultural controls were evidenced by lower levels of power distance exhibited by the presence of younger, higher educated Korean managers who have been in a joint venture for a longer period of time. Interview data was used to further examine aspects of control. The education and experience of Korean managers and self selection were found to facilitate the adoption of foreign parent controls. Accordingly, this paper provides a contribution to theory development on the transfer of parent company management control practices to joint ventures in a specific Asian nation context. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asian Review of Accounting Emerald Publishing

Patterns of Cultural and Budgetary Controls in International Joint Ventures in South Korea

Asian Review of Accounting , Volume 5 (2): 20 – Feb 1, 1997

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1321-7348
DOI
10.1108/eb060687
Publisher site
See Article on Publisher Site

Abstract

This study, conducted in a field setting, examines the pattern of budget and cultural controls across Korean firms and Korean joint ventures with U.S. and European firms in South Koreaa nation with a dominant Confucian philosophy divergent from the modern capitalist philosophy that dominates AngloAmerican approaches to control. The empirical results provide support for the hypothesis that differences exist in the pattern of controls between U.S. and European joint ventures. While European joint ventures exhibited stronger forms of budget control, U.S. joint ventures exhibited a stronger form of cultural controls. Cultural controls were evidenced by lower levels of power distance exhibited by the presence of younger, higher educated Korean managers who have been in a joint venture for a longer period of time. Interview data was used to further examine aspects of control. The education and experience of Korean managers and self selection were found to facilitate the adoption of foreign parent controls. Accordingly, this paper provides a contribution to theory development on the transfer of parent company management control practices to joint ventures in a specific Asian nation context.

Journal

Asian Review of AccountingEmerald Publishing

Published: Feb 1, 1997

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