Knowledge that Transforms

In the management control literature there is growing interest in the role of management control systems (MCS) in planned organizational change. The existing literature is concerned with either rational, technical change principles or more social and political interpretations of MCS facilitated change. This paper aims to extend this literature by combining technical approaches to MCS facilitated change with a behavioral approach in the study of two similar organizations. Moreover, the paper employs a holistic approach to change to develop a comprehensive understanding of the role of MCS in planned organizational change. A framework by Huy [Huy, Q. N. (2001). Time, temporal capacity, and planned change. Academy of Management Review 26(4), 601–623] is used to provide an integrative approach that focuses on both rational, systematic practices and the behavioral processes involved in their implementation. This is achieved by identifying four idealized intervention types: commanding, engineering, teaching and socializing. Understanding the application of these four intervention types requires analysis of the way they interact through time.

This study explores socio-cultural aspects of management control in a Chinese Indonesian manufacturing company. Ethnographic data collection methods were combined with grounded theory data analysis to explore how cultures, ethnic differences, history, politics, and commercial considerations shaped management controls. A combination of emic and etic methods were used to generate grounded comparisons with nomethetic research on culture and control in a cultural contingency tradition. Chinese Indonesians own most Indonesian private domestic capital despite being an ethnic minority (3–4% of population) and having suffered extensive discrimination. The case links the Chinese businessmen’s values to socialisation during childhood and then examines how their interaction with the Javanese culture of pribumi employees, ethnic tensions between employers and employees, and organisational and economic factors affected management control. Consistent with previous cultural contingency research the Chinese owners’ preferences resided with controlling behaviour through personnel and behavioural controls, low budget participation, centralisation, subjective rather than objective controls, and tentatively, few rewards tied to results and the use of group rewards. Whether Chinese managers exhibited longer term orientations concerning planning and rewards could not be ascertained. However, ethnic tensions and commercial considerations mitigated the owners’ ability to control according to cultural preferences. Based upon these findings reflections on past research and suggestions for further developments are made with respect to methods, methodology, and incorporating a broader range of theories and issues, especially ethnicity, politics, and history.