Behavioural aspects of transfer pricing in U.K. decentralised companies
The central theme of this dissertation is the organisational and behavioural dimension of the transfer pricing problem as part of the management control process in the large decentralised company. The study examines the origin and developments of the problem through an extensive review of both the theoretical literature and a large number of previous empirical investigations. It is concluded from this literature review that the divergence between the theoretical prescriptions and practice stems from a conceptual and methodological deficiency as the problem has been repeatedly studied out of its context of decentralised managerial responsibility. Hence, the present study attempts to provide explanations as to why companies have particular transfer pricing policies by locating the problem in its context, that is the decentralised company. The organisational and behavioural approach adopted relates the transfer pricing system to the company's strategy, structure and culture through a multi-disciplinary analysis. The study draws on the literature on contingency theory, economics of the firm and agency theory to analyse the intricate relationships between the transfer pricing system, the company's structure and strategy and managerial behaviour. Great emphasis is placed on the managerial implications of transfer pricing through a questionnaire and interview survey of a sample of large divisionalised companies in the U.K.