An Influence of
Culture on Management (Accounting) Practices and Research
Presented by Profesor
Susunu Ueno, MBA., DBA. From Konan University, Kobe, Japan. He is the President of Asia-Pacifi Management
Accounting Association (APMAA).
Cultural Perspectives Described in Management Acoounting
Studies: (1) Cultural perspectives in management and accounting studies; (2)
Geert Hofstede’s cultural dimensions; (3) Ueno’s cultural studies; (4) National
and organizational cultures: a conceptual framework.
Cultural Perspectives in Management and Accounting Studies
In research, culture is an
important component in terms of analysis, interpretations, and thoery
building. In management and accounting
articles, culture is often part of the research framework. Culture may be viewed as a cause and/or an
effect in theses articles. Major
research concern here is how national culture should be operationalized. In practice, cultural perspective have important
implications especially in a multinational environment.
Geert Hofstede’s Cultural Dimensions
Let’s look at the Hofstede’s cultural dimensions
briefly. His research is most widely
referred to in management cultural studies.
Dr. Geert Hofstede conducted the most comprehensive study of how values
in the workplace are influenced (different) by culture. While working at IBM as a psychologist, he
collected and analyzed data from 116.000 individuals from 50 countries, twice
1967—1968 and 1971—1973. Hostede
developed a model that identifies four primary dimensions for differentiate
cultures. He later added a fifth
dimension, long term orientation (Hofstede, 1980, 2004).
Hofstede’s four cultural dimensions: (1) Power Distance
Index (PDI), is the extent to which the lss powerful members of organizations
accept that power is distributed unequally. (2) Individualism (IDV), in
individualistic societes, the ties between individuals are loose. In collective societies, people are
integrated into strong, cohesive in groups.
(3) Maculinity (MAS), versus feminity, refers to the distribution of
roles between genders. The assertive
pole has been called ‘masculine’, and the modest, caring pole ‘feminine’. (4) Uncertainty Avoidance Index (UAI), deals
with a society’s tolerance for uncertainty and ambiguity. In unstructured (novel, unknown) situations,
people wich uncertainty avoidance minimizes uncertainty by strict laws and
rules, and safety and security measures.
Cultural dimensions by countries:
Country
|
PDI
|
IDV
|
MAS
|
UAS
|
Japan
|
54
|
46
|
95
|
92
|
USA
|
40
|
91
|
62
|
49
|
Malaysia
|
104
|
26
|
50
|
36
|
Indonesia
|
78
|
14
|
46
|
48
|
Germany
|
35
|
67
|
66
|
65
|
Italy
|
77
|
48
|
56
|
40
|
China
|
80
|
20
|
66
|
30
|
Indonesia has the largest Muslim population of any country
in the world with 88% of their populatio practicing the Muslim faith. Muslim countries’ scores Power Distance Index
(PDI) and Uncertainty Avoidance (UAI) are high but Individualism (IDV) is
low. Islam
demands from its believers that they
establish peace in the world, promote love and make such examples of themselves
that others, knowing that they are Muslims, feel at peace and harmony in that
knowledge. This is the true Islam and
what it means to be a Muslim.
Indonesia has one of the lowest world rankings for
individualism (IDV). The score on this Dimension
indicates the Indonesian society is Collectivist. This is manifest in a close long term
commitment to the member ‘group’, is that a family, extended family, or
extended relationships. Loyalty is a
collectivist culture is paramount, and over rides most other societiey fosters
strong relationships where everyone takes responsibility for fellow members of
their group.
Ueno’s Cultural Studies
Using Hofstede’s framework: The influence on budget control
practices in the USA and Japan, An empirical study. Ueno developed his conceptual framework by
using Hostede’s cultural dimensions. He
focused on IDV Index and UAI Index that show broad differences beteen USA and
Japan. Then, he hypothesized the
influence of culture (IDVD and UAI) on six aspects below budgent control
practices USA and Japan companies. (1) more formal communication and
coordination (USA.IDV). (2) longer time horizon in budget planning (Japan,
UAI). (3) Greatly structure budget
planning process (Japan, UAI). (4) build
more slack into budgets (USA, IDV). (5)
Gretaer controllability of budget (USA. IDV).
(6) Less long term evaluation time horizon (USA, IDV).
Country
|
PDI
|
IDV
|
MAS
|
UAI
|
Japan
|
54
|
46
|
95
|
92
|
USA
|
40
|
91
|
62
|
49
|
Japan high in MAS and
UAI. USA high in IDV. To test hypotheses, Ueno collected data
through mail questionnaires from 70 manufacturing comanies in the USA and 149
such companies in Japan. It should be
noted that findings of Ueno’s study are derived by managers (respondents)’ perception.
The results of data analyses indicate that
Individualism-Collectivism dimensions explains well about why the USA
companies, compared to the Japanese companies tend to: (1) communication and
coordination more extensively. (2) buld budget slack to a greater esxtent. (3)
practice controllability of budget to a greater extent. (4) use long term performance evaluations to
a lesser extent. Two hypotheses
developed relying on Uncertainty Avoidance were not accepted. Those hypotheses posited that Japanese
companies: (1) have longer time horizon in budget planning. (2) greatly
structure budget planning process.
Some comments on Hofstede dimensions and indexes. (1) As with any generalized study, the
results may or may not be applicable to specific individuals or events. (2) Hofstede’s results are categorized by
country. However, often there is more
than one cultural group (heterogenous societies) within that country. Differences at sub cultural level
(organization, group, etc) and at individual level are also observeb. (3) Hofstede’s score were measured at 2
points (1967—1969 and 1971—1973) and do not reflect the dynamism of a culture
(longitudinal perspective). (4) The
individualism dimensions is highly correlated with the level of countries’
wealth. The relative nations’ wealth has
changed overtime. It implies Hofstede’s
indices can become outdated, thus making them inaccurate for current use.
National and Organizational Cultures: A Conceptual Framework.
For elaborating our conceptual framework, need to examine
the relationship below carefully.
National culture and organizational culture, any interaction or
correlation? National culture and
organizational culture with corporate performance and organizational effectiveneess,
any interaction or correlation?
Cultural conversion within a company. National culture with organizational culture
in a multinational enterprise (MNE) context culture of headquartersà culture of
subsidiaries: (1) organizational culture of multinational corporation (MNC) is
acculturated between headquarters and local organizations accross country (2
way). (2) transfer of parent company nationals (expatriates) facilitate
acculturation in overseas units. (3) IT
and business solutions used throughout organization units in MNCs such as SAP
R3 have facilitated uniformity of management practices across countries. (4) Dissimilatities in national culture are
slowly fading away due to globalization although there are still numerous
profound differences in cultural values.
Enculturation and acculturation. Is it effective to employ enculturation and
acculturation for explaining MNCs’ cultural traits at national and/or
organizational levels? What are they?
Enculturation (socialization) is the process where is the process by which a
person learns the requirements of the culture by which he or she is surrounded,
and acquires values and behaviors that are appropiate or necessary in that
culture. Acculturation entails two way
process of change. Original cultural
patters of either or both groups may be altered, but the groups remains
distinct (Kottak, 2007). If
enculturation is first culture learning, the acculturation is second culture
learning.
Popular research methods in international business
research. Ying, et al. (2006) surveyed
1.296 empirical articles published in six leading international business
journals from 1992 to 2003 with respect to data collection methods, sample
source including sampled countries and subjects, sampling methods, sample size,
and response rate. The result showed
that: (1) mail quisionnairre surveys dominate empirical reserach. (2) 60,9% of the studies use a one country
sample (88,9% from western countries).
(3) 33,7% of the studies are based upon sample frames provided by third
parties. (4) The median sample size is
180 with an average reponse rate of 40,1%.
Toyota Way: A
Management PracticeObserved in a Large Japanese Manufacturing Company
Panasonic (Matsushita) was japanese indutry’s role model in
1960s and 1970s. Konosuke Matsushita
(1994—1989), the founder of Panasonic, was called the God of Management. Toyota went up a number 1 japanese manufacturing
company in 1990s when the motorization in Japan reached at its final
stage. The company has been the Japanese
indutry’s role model since then.
Toyota Culture: A Model of J-type Management
Liker, et al., (2008) said the heart and soul of Toyota Way
are (1) selecting employees for life (life time employment). (2) Developing competent and able people
(OJT, etc). (3) Engaging component and
willing people in continuous improvement.
(4) Work groups and team problem solving. (5) Two way communication and visual
management. (6) Slow promotion and
rewards for teamwork (seniority system).
(7) Hoshin Kanri (a type of
management by objective).
J Type Management has been descibed by the folloeing 3 pillars
of human resources management (1) lifetime employment; (2) seniority based
wages/salaries; (3) Company Labor Unions.
In J Type Management (Companies), workers’ discipline, hard work, and
dedication to their respective companies are unquestionable. Full time permanent employees prioritize
their careers over their families for the good of company.
Toyota’s Company Philosopy and Principles
Toyota Motor Corporation (TMC) has positioned the stable
long term growth of corporae value as a top priority management issue. Toyota has sought harmony between people,
society, and global environment, as well as the sustainbale development of
society, through provision of innovative and high quality products and services
that lead the times.
Toyota’s guiding principles: (1) honor the language and
spirit of the law of every nation and undertake open and fair corporate
activities to be a good corporate citizen of the world. (2) Respect the culture and customs of every
nation and contribute to economic and social development through corporate
activities in the communities. (3)
Dedicate ourselves to providing clean and safe products and to enhancing the
quality of life everywhere through all our activities. (4) Create and develop advanced technologies
and provide outstanding products and services that fulfill the needs of
customers worldwide. (5) Foster
corporate culture that enhances individual creativity and teamwork value, while
honoring mutual trust and respect between labor and management. (6) Pursue growth in harmony with the global
community through innovative management.
(7) Work with business partners in research and creation to achieve
stable, long term growth and mutual benefits, while keeping ourselves open to
new partnerships.
Toyota Way
Toyota Way is an integrated socio technical system that
comprises Toyota’s management philosophy and practices. The underlying principles are outlined by
Toyota as: (1) Continuous improvement: (a) Challenge,
we form a long term vision, meeting challenges with courage and creativity to realize our dreams. (b) Kaizen,
we improve our business operations continuosly, always driving innovation and
evolution. (c) Genchi Genbutsu, go to the source to find the facts to make
correct decisions. (2) Respect for people: (a) Respect, we respect others, make every
effort to understand each other, take responsibility and do our best to build
mutual trust. (b) Teamwork, we stimulate personal and professional growth, share the
opportunities of development and maximize individual and team performance.
Genchi Genbutsu means
go and see for your self. It is an
integral part of the Toyota Way. Actually
looking and being the workplace both activity ‘snapshots’ and ‘work process’ to
observed in their full context. This
makes theory generation and decision making relvenat, therefore more powerfull
and better understood. It is also
increase the chance that actual issues and unplanned events will be observed
first hand can be managed immediately.
Toyota Production System (TPS) has Just In Time (JIT)
System, Kaizen (continuous
improvement), and Total Quality Control (TQC) as its companies. Traits of TPS: (1) The company has focused on
shop floors. (2) Small circle activities
lead activities of Kaizen, TQC, etc. (3)
In designing, Toyota has been using Design-in (a cooperative designing of parts
and modules with suppliers under long term transactions. (4) In costing, Toyota is a pioneer of Target
Costing.
Chief Officers and Managing Officers
On site operations, Chief Officers, who are directors, serve
as the highest authorities of their specific operational functions while non
board managing officers implement the actual operations. The above system was introduced in 2003 and
encompass various operational functions accross the entire company. Based on Toyota’s phylosophy of empashizing
developments on the site, the chief officers serve as the link between
management and on site operations instead of focusing exclusively on
management. The system enables the
management to make decisions directly with n site operations, by reflecting on
site personnel opinions on management strategy and swiftly implementing
management decisions into actual operations (genchi genbutsu).
Toyota’ governance policy and structure, Company with
corporate auditors. Policy: working
ensure fair and trasparent corporate governance by emphasizing frontline
operations and multidirectional monitoring.
Directors, 29 persons, with respect to our system regarding directors,
we believe that it is important to elect individuals that comprehend and engage
in TMC’s strenghts, including commitment to manufacturing, with an emphasis on
frontline operations and problem solving based on the actual situation in the
site (genchi genbutsu), TMC will consider the appoinment of outside
directors should there be suitable individuals.
Toyota’s Recall Issues
Over the past decades, people thought Toyota’s practices at
shop floor and assembly lines to be almost perfect. What recall issues at Toyota was: (1)
Sticking pedal accelerator recall. (2)
potentially floor mat interference with accelerator pedal recall (November
2009). (3) Software glitches linked to
brake problems in 2010 Prius and other.
The issue is how all the parts work together.
Cars now use more electronics. Digital electronics use more software. For electronics, quality is largely designed
at the design stage. With phases of
product life cycle does quallity make at?
Committed (planned) quality versus realized quality. A similar concept of life time costing: (1) Quality
review, similar to cost review, should start from product development
stage. (2) In today’s electronics age,
emphasis shoul be moved from the production stage to the R & D and design
stage.
Diagnosis and treatments: Toyota’s recall issues. From prediction management to product
management. (1) Toyota Way of
“accumulation of small improvements” has turned out to be insufficient in the
stage of complex electronic cars. Cars
now use more electornics. Digital
electronics use more software. (2) The issue
at hand is the trade off between complexity and safety in an age in which
electronics and computers dominate the vehicles. Has Toyota been too much aggresive to utilize
new techologies? (3) Toyota Way needs o
be refined to cope with the age of electronic cars.
2011 New Year’s Message for Employees from President Toyoda
(1) Strengthening
unity with the 2020 vision. Toyota wants
to be a company that choosen by customers and Toyota wants to be a company that
makes customers happy they chose us.
These are the conclusions that i have reached out of the many
experiences of the past year. (2) Year
to enhance regional management. We
should not use the logic that Toyota has developed for Japan. Rather, we want
each region to create its own vision and strengthen its own local
managemen. (3) An Individualized Toyota
Way with face is improvement. Last year,
our attitudes was issued, This year i would
like to take step forward and incorporatee our attitudes into your own
workplaces and the jobs of each individual, so as to practice My Toyota Way. (4) Achieving earning and crreating a strong
base of monozukuri. Toyota’s production facilities have all
established a solid foundation of monozukuri. To be more specifin, at each of our
locations is a mechanism or culture for achieving long term human resources
development, focusing on OJT to train people in skills, professional ablities
and technical expertise; a concentration of suppliers with excellent quality
and delivery times, or a just in time logistics network. (5) For the refurgence of Toyota. Unfortunately, last year’s challenges will
continue. But that does not mean we
should be pessistic. We have the culture
to do that. We have the solidarity and
the ablity to focus, which we proved last year, in our efforts to restore
profitability and in our response to the US Congres hearing February 24,
2010. We have the technology, as
demonstrated in our hybrids, and we have the practical practical skills for
responding to changes in production.
Discussins
Social Dynamism and A Strereotyped J Model
The Japan of today is no longer the
Japan of the past. Changes in mindset
workers and managers. With the burst in
the bubble economy in 1990, the limitations and problems of life time
employment and seniority based wages/salaries become questioned. When the economic downtown continued for 2
decades, downsizing companies’ staff and replacing full time workers with part
timers happened frequently. Attitudes
towards have changed so much, and quality of life now plays a more vital role
than work life. Maintaining the three
pillars is very costly. However they are
still maintaned in large companies in rewarding loyal full time employees. Do the evidences imply the termination of J
Type management in Japan?
Year to Enhance Regional
Management
2011 New Year’s Toyota’s President
Message. I have said repeately that in
controlling different regions, we should not use the logic that Toyota has
developed for Japan. Rather, we want
each region to create its own vision and strengthen its own local
management. Because Toyota is MNC, it
must be “the most admired company in town” in each of the different regions it serves. While the head office will look out over the
world and determine the basic direction of “what to do”, our basic approach
will be to leave “how to do it” up to local organization or those that are
familiar with local circumstances. Locus
of decision makings (desentralization and integration), transfer of parent
company nationals versus delegation of decision authority to locally employed
managers.
Beyon Enculturation and
Acculturation
Effort to enctulturation (toward a
homogeneous organization?) Increasing CEOs and management personnel who truly
share Toyota Way is very important.
Effort to acculturation (allowing heterogeneity in a company?) While
expatriate personnel with adequate cultural knowledge of the host country do
contrinbute to the MNCs’ control ability, those without cultural knowledge do
not. An individualized Toyota Way with a
face is important: (1) Improved quality of life; (2) Improved customer
satisfaction; (3) Improved performance.
Expatriatte managers and MNC’
ablitiy to control international subsidiaries. According to Yongsun and Junhoon
(2004) building upon the notion of behavioral means of control, this paper
contends the level of cultural knowledge of expatirates plays a critical role
in determining the effectivness of expatirates as a means of control over
international subsidiaries of MNCs. An
empirical investigation with a sample of Japanese MNSs indicates that while expatriate
personnel with adequate cultural knowledge of the host country contribute to the
MNC’s control abllitiy, those without cultural knowledge do not.
Are Hofstefe’s Cultural Dimensions
and Scores Effective?
Some questions for future studies: (1) how can one apply Hofstede’s
Cultural Dimensions for explaining Toyota Culture and/or Totoya Way? How about situational
factors are? Have you considered of longitudinal effects in your study? (2) In the other word, what explanatory power do
Hofstede’s Cultural Dimensions have in the context of Toyota? (3) How do we evaluate explanatory powers by Hofstede’s
Cultural Dimensions? (4) Hofstede collected
data from IBM, and the derived cultural dimensions of host countries in 1967—1969
and 1971—1973. Societies are dynamic, and
culture change gradually over time, is it only a snapshot?
Business Research for
Academicians in Indonesia
Presented by Grahita Chandarin, Profesor from Merdeka
University Malang. Member of
Asia-Paacific Management Accounting Assocition.
Business Researh is defined as an organized, systematic,
data based, critical, objective, scientific inquiry or investigation into a
specific problem, undertaken with the purpose of finding answers or solutions
to it. In essence, research provide the
necessary information that guides managers to make informed decisions to
succesfully deal with problems (Sekaran, 2010: 3).
Type of business research are (1) Basic/fundamental/pure
research, research done chiefly to make a contribution to existing knowledge.
(2) Applied research, research done with the intention of applying the results
of the findings to solve specific problems currently being experienced in an
organization (Sekaran, 2010: 5—6).
The Hallmarks of scientific research: purposiveness, rigor,
testability, replicabillity, precission and confidence, objectivity,
generalizability, parsimony.
Type of research funded by DP2M Dikti: Hibah Pasca, Hibah
Fundamental, Hibah Bersaing, Hibah Kompetensi, Strategi Nasional, Hibah
Desertasi, PKM, etc.
Type of research funded by Directorate of Human Resources,
Directorate General of Higher Education, Ministry of National Education: Program
of Academic Recharging (PAR). PAR A is designed for the Indonesian Graduate
School Administrators (Pejabat struktural, 1—2 minggu). PAR B is designed for senior lecturers
(Profesor and/or Ph.D.) undertaking academic recharging (penulisan buku,
seminar,visiting profesor, 3—4 bulan). PAR C is designed for lectures (Ph.D.
holder) undertaking research collaboration with their counterparts overseas.
Program Insentif funded by Miistry of Research and
Technology: Insentif Riset Dasar (Basic Research Incentive); Insentif Riset
Terapan (Applried Research Incentive); Insentif Peningkatan Kapasitas Iptek
Sistem Produksi (Incentive for Information Technology Capacity Improvement for
Production System); Insentif Percepatan Difusi dan Pemanfaatan Iptek (Incentive
for acceleration of diffusin and use of Information Technology).
Osaka Foundation of International Exchange (OFIX)
Scholarship: Researh for Student Program,
for Master Program, and Doctoral Program. Established for liberal arts, economics,
finance and management. Biotechnology and nanotechnology.
Disarikan dari:
Seminar Internasional dengan Topik “An Influence of Culture on Management
Accounting: Pranctices and Research”.
Universitas Merdeka Malang, 10 Maret 2011.
