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The impact of cultural resemblance on management control of supplier relations: longitudinal evidence in the automotive industry

Listed author(s):
  • Pernot, E.
  • Roodhooft, F.

    (Vlerick Leuven Gent Management School)

This study explores the impact of cultural resemblance on the management control system (MCS) of supplier relationships. Although MCSs are contingent on situational characteristics and this contingency fit is associated with good performance, it remains unclear whether cultural resemblance between manufacturer and supplier contributes to the speed of MCS change, so that temporary misfits due to changing circumstances are less likely to occur. To illustrate this effect of cultural resemblance on MCS dynamics, we perform a twofold longitudinal case study of similar automotive manufacturer-supplier relationships that differ with respect to cultural resemblance. Findings show that in case of high cultural resemblance, the speed of increasing the level of management control is higher. That way, upcoming contingency changes are appropriately anticipated by an increase in the level of management control, already before contingencies actually change. Consequently, a MCS misfit and potential decreasing operational performance are avoided. Oppositely, in case of low cultural resemblance, adjusting the MCS to changing circumstances requires more time. This leads to a temporal MCS misfit that contributes to escalating operational difficulties, until the MCS is changed. Furthermore, the case data show three mechanisms by which cultural resemblance enhances management control according to earlier findings in the literature: increased communication on the initiative of the supplier, proper information exchange and trust enhancing signals. Finally, our findings show that the manufacturer influences supplier decision making to install a manager of the manufacturer’s choice and that way influences the supplier’s culture.

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Paper provided by Vlerick Leuven Gent Management School in its series Vlerick Leuven Gent Management School Working Paper Series with number 2008-18.

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Length: 58 pages
Date of creation: 25 Oct 2008
Handle: RePEc:vlg:vlgwps:2008-18
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