The relationship between national culture, capital budgeting systems and firm financial performance: Evidence from Australia and Indonesia

Research output: Contribution to journalArticlepeer-review

Abstract

The aim of this study is to examine the relationship between national culture, capital budgeting systems (CBS) and firm financial performance. Prior research has found that capital budgeting systems are influenced by national culture. However, these studies measure national culture narrowly. We contribute to the literature by including a refined measure of national culture and examine its effects on capital budgeting systems. We surveyed a sample of 100 non-financial firms in Indonesia and Australia. We found that firms using sophisticated capital budgeting procedures (a type of CBS) performed better than firms using less sophisticated capital budgeting procedures. In contrast, firms using more non-financial information (a naïve type of CBS) did not perform as well as firms using less non-financial information. We also found that Indonesian firms use more sophisticated capital budgeting systems than Australian firms due to the differences in national culture.

Original languageEnglish
Pages (from-to)650-673
Number of pages24
JournalInternational Journal of Management Practice
Volume13
Issue number6
DOIs
Publication statusPublished - 28 Oct 2020

Fingerprint Dive into the research topics of 'The relationship between national culture, capital budgeting systems and firm financial performance: Evidence from Australia and Indonesia'. Together they form a unique fingerprint.

Cite this