Budget processes and national culture - putting Hofstede to the test. An empirical case study of the Swedish and Russian sales divisions of a Swedish multinational company

Abstract: The aim of this study is to provide a greater understanding of how multinational companies (MNCs) adapt their budget processes across countries, and to what extent this can be explained by differences in national culture. This is investigated through a single case qualitative study, comprising 31 interviews, within the Swedish and Russian sales divisions of a Swedish MNC. The collected data is analysed using Hofstede's Cultural dimensions model (Hofstede, 1980). Due to a scarcity of previous studies within this field, the study is unique in terms of research method used, studied geographies, and the combination of cultural dimensions investigated. The findings are split into two parts: (i) observed differences in the budget process that can be explained by Hofstede's model, and (ii) observed differences in the budget process that cannot be explained by Hofstede's model. The main conclusion is that the observed differences that are in line with Hofstede's predictions mainly relate to the Uncertainty avoidance dimension, while the observed differences that are not in line with Hofstede's predictions mainly relate to the Power distance dimension. For the latter observations we introduce a number of alternative explanations to the observed patterns. These alternative explanations focus on: the impact of the case company's bonus system in Russia, and the impact of differences in market and regulatory dynamics between Sweden and Russia.