Characteristics of control system design in joint venture context - Case Tech Inc.

Abstract

PURPOSE OF THE STUDY

The purpose of this study was to examine the formation, development, and operation of a management control system in joint venture context. Moreover, the study sought to improve the functionality of the case organization’s control system by analyzing its functionality and by giving recommendations for improvements.

DATA

The theoretical framework built on journal articles and text books discussing management control systems and joint venture control. The study was conducted as an empirical case study. The data was collected through semi structured interviews, examining written materials of the case company, and by observing behavior inside the organization.

RESULTS

Several findings derived from the study. First, cultural differences, lack of leadership in integration issues and incomplete pre-deal planning complicated the construction of the control system. Second, although the firms control system has been developing to a more functional direction during the past years, some problems were still observed. Third, no factors in the vertical and horizontal control packages were detected that would have significantly harmed the functionality of the firms control system.

KEY WORDS

Management control system; Joint venture; Contingency theory; Transaction cost theory; Mechanisms of control; Dimensions of control