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

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 Korea—a nation with a dominant Confucian philosophy divergent from the modern capitalist philosophy that dominates Anglo‐American 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.

Citation

O'Connor, N.G. (1997), "Patterns of Cultural and Budgetary Controls in International Joint Ventures in South Korea", Asian Review of Accounting, Vol. 5 No. 2, pp. 1-20. https://doi.org/10.1108/eb060687