Differential Impact of Cultural Elements in Financial Performance by Eric Flamholtz and Rangapriya Kannan Narasimhan – Article Example

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The paper “ Differential Impact of Cultural Elements in Financial Performance by Eric Flamholtz and Rangapriya Kannan Narasimhan“ is a meaningful variant of the article on finance & accounting. The paper has been critiqued as follows. The flow of the paper is also on the haphazard side although the qualitative and quantitative research has been effortlessly and seamlessly carried out so as to facilitate the identification of issues for further discussion and research. The sphere of neurobiology has been used in a vague and random manner which again, makes the study more specific.

Even though the disciplinary separation between comparative policies and social relations within the organization has been regularly challenged, in the traditional theories it continues to persist as a result of institutional inertia and hiring practices. The traditional perspective describes control as a means of regulation and a means of setting certain standards for inspection. In this regard, the traditional perspective more often than not seeks to restrain rather than enable in order to manage and exercise control. Here, the budgeting system will make use of the issue of democratization in an attempt to go beyond rhetoric and to develop a framework that integrates the role of transnational activism into the analysis of domestic regime change.

This is where the systems-based view of control fits in. While Comparative research on democratization confirms that underlying socioeconomic conditions affect the long-term sustainability of democratic reforms. This systems theory leads to several gaps in the performance as regards decision making at the lowest rungs of operation. This is where the budgeting and financial part requires reforms in terms of training and motivation.

The initiation of such reforms, as well as the process they take, can best be understood using an agency-based framework that links internal and external influences. Thus, with equal emphasis on external influences that constitute areas like the social standing of an employee, the management exercises relevant social control through the motivation of an employee to achieve the social standing he or she has in mind. While external interventions are a potent factor in the traditional perspective where challenging authoritarian practices are concerned, it is also interesting to note that they do not simply displace existing internal practices and conditions.

In this regard, the management may make optimal utilization of resources by diverting the same towards effectively influencing the behavior of the financial function in certain environments when they are in search of the ways of achieving certain goals. There is a close amalgamation of the traditional perspective with that of the economic perspective in all areas of the management system in the budgeting system. This will lead to uniformity of operations and an easy progression of the scale of activities over ten years.

From the economic perspective, management control systems seem more like a process that consists of strategic plans, long-range plans, annual operating budgets, periodic statistical reports, performance appraisal, apart from policies and procedures. This spectrum also includes personnel controls that coordinate personal objective with those of the organization so as to influence higher ranks in the organization as well as the action controls that influence various levels of organizational actors by prescribing actions to be taken which is true to the prescriptive nature of the economic perspective. Furthermore, these results control the influence over organizational actors so as to measure the results of their actions; as well as objectives, strategies and plans, target-setting, incentive and reward structures, and information feedback loops.

Thus it has been concluded that performance management can provide an important integrating framework for the economic perspective, unlike the traditional perspective.


Flamholtz, Eric; Kannan – Narasimhan, Rangapriya. (2005) Differential Impact of Cultural Elements in Financial Performance. European Management Journal. Volvo.23, No. 1 (Pp 50 – 64)
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