The purpose of this research is to examine how differences in multinational institutional environments shape the design and use of management control systems (MCSs) in multinational enterprises (MNEs). This study is motivated by the lack of research into how MNEs from less developed countries (LDCs) design and use MCSs in the coordination and control of subsidiaries. A case study research design was adopted in this research in order to gain insight into the impact of the MNE environment on the design and use of MCSs. Data was gathered by means of semi-structured interviews, informal discussions, document analysis and observation. Interviews were conducted at the Nigerian headquarters and United Kingdom (UK) subsidiary of the Nigerian service multinational enterprise (NSMNE). Theoretically, this study is based on new institutional sociology (NIS) and social capital theories. NIS allows for an understanding of the impact of the MNE's external environments on the design and use of MCSs, but has been criticised for being too externally focused. Therefore, social capital theory is employed in this research to address this criticism and enable an understanding of the impact of the MNE's internal workings on the design and use of MCSs. Findings show that the NSMNE designs and uses formal and informal MCSs. Both forms of MCS are shaped by environmental factors, which also account for the non-imposition of MCSs designed by the headquarters on the subsidiary. MCSs were also found useful in order to limit the challenges of the institutional environment and to direct employees' efforts towards set goals. These findings have implications for understanding the role of MCSs in a MNE from an LDC.
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The design and use of management control systems in a multinational enterprise - evidence from an emerging multinational
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