Cross-cultural effects of the budgeting cycle: the impact of power distance on participation, voice and explanation (an empirical analysis of Anglo-American and Libyan companies operating in Libyan oil sector)

Abstract: Globalization is causing the rapid integration of markets, nations, and technology, which facilitates quicker contact between people, corporations, and nations. However, there is a failure to notice cultural differences that exist between workforces across nations. Therefore, all employees need to have cultural sensitivity, which could be helped by studying cross-cultural differences. In this context, cultural influence on budgeting processes has been extensively researched in manufacturing and service industries but has been rarely studied in relation to the culturally diverse oil and gas industry. This study utilizes the societal cultural dimension ‘power distance’ identified by Hofstede to identify differences in budgeting processes in terms of participation, voice, and explanation between Libyan and Anglo-American companies operating in the Libyan oil sector. Results indicate that there are significant differences between Libyan and Anglo-American companies. However, Libyan workers in Libyan companies do not significantly differ from Libyan workers in Anglo-American companies. Libyan workers tend to maintain their own culture when it comes to participation, voice and explanation.