The NPM reforms promote the change of the traditional working environment of the public sector, with public sector organizations expected to accept private sector management. Specifically, in response to studies that call for the evaluation of the effectiveness of reform objectives in the public sector (Cuganesan.
Motivation
What is the extent of use and effectiveness of MCSs in the public sector?
Specifically, the thesis examines the effectiveness of MCSs based on the perceived effectiveness (utility) of MCSs and how such systems help achieve NPM reform goals, including organizational change, performance improvement, and organizational capability development. In addition to contributing to knowledge about the effectiveness of private-sector-oriented systems in the public sector, such insight will provide practitioners with an understanding of which aspects of MCS to emphasize in order to achieve public sector reform goals and how to leverage MCS in achieving public sector reform goals.
What is the effectiveness of the use of management accounting practices as a package? . 6
Contingency theory has been the dominant perspective explaining the use of MCS in general and the adoption of management accounting practices in particular. The results will give organizations insight into how to use their MCS environment to facilitate the use of modern management accounting practices.
What is the role of organisational capabilities in explaining the effectiveness of MCSs?. 9
Specifically, since contingency theory has been a dominant theory explaining the use of MCSs (Chenhall, 2003), this theory has been chosen as the theoretical lens that informs the use of MCSs. Furthermore, an emerging line of research (Bisbe and Otley, 2004; Henri, 2006a), the RBV theory, recognizes that the effectiveness of MCSs may be at the skill level.
Overview of the three papers
More specifically, the paper provides the first empirical insight into the use of management accounting practices as a package in the public sector. Paper Two: Adoption and Success of Modern Management Accounting Practices in the Public Sector.
Organisation of the thesis
Strategic flexibility and employee empowerment were found to mediate the relationship between the interactive approach to MCSs and organizational performance. Strategic flexibility also mediates the relationship between interactive approach to MCS and organizational change, while no evidence was found for the mediating effect of organizational capabilities on the relationship between diagnostic approach to MCS with organizational change and organizational performance.
Management control systems (MCSs)
Aspects of MCSs
This thesis examines three aspects of MCSs, including management accounting practices, approaches to the use of MCSs, and characteristics of MCSs. While traditional practices are those management accounting practices that were developed before the 1980s (Kaplan and Johnson, 1987), contemporary management accounting practices were.
Factors influencing the use of MCSs
In addition, Hoque (2004) found that strategic priorities had a positive effect on the use of non-financial performance measures. Similarly, Cadez and Guilding (2008) found that firm size and strategic choices (seeker strategy and deliberate strategy design) positively influence the use of strategic management accounting.
The effectiveness of MCSs
The success of MCSs
A number of previous studies have examined organizational and behavioral factors that influence the success of management accounting practices. For example, when examining the factors affecting the success of activity-based costing (ABC), Zhang and Che (2010) found that top management support was related to the success of ABC.
Organisational outcomes
- Organisational change
- Organisational performance
However, in contrast Pike (1984) found that the degree of sophistication of capital budgeting was negatively related to corporate performance. 2002) examined the relationship between activity-based costing and operational and financial performance of manufacturing firms in a survey of US manufacturing firms. The study found a positive relationship between activity-based costing and operational performance (ie quality level and improvements in quality and cycle time), but the relationship between activity-based costing and financial performance was indirect, through quality and time cycle.
Organisational capabilities
Paper Three therefore aims to contribute to the literature by examining the relationship between MCS characteristics (the extent of MCS information, the formality of MCSs and the rigor of MCSs) and organizational performance in the public sector investigation. Regarding the approach to using MCSs, a study by Henri (2006b) found the mediating role of four organizational capabilities (i.e. market orientation, entrepreneurship, innovativeness and organizational learning) in the relationship between the approaches to using Examining MCSs and organizational performance.
Summary
The relationship between the use of management accounting practices with organizational change and organizational performance. The relationship between the use of management accounting practices with organizational change and organizational performance.
Introduction
In particular, given the supposed usefulness of contemporary management accounting practices in the public sector (Lapsley and Wright, 2004), the increased use of such practices has been advocated in the public sector (Chia and Koh, 2007). Examine the extent of use of contemporary and traditional management accounting practices in the public sector.
Literature review
Management accounting practices
- Traditional versus contemporary management accounting practices
- The use of management accounting practices in the public sector
Although traditional and contemporary management accounting practices are private sector innovations (Lapsley and Wright, 2004), these practices have also spread to the public sector (Jackson and Lapsley, 2003; van Helden and Jansen, 2003). Therefore, contemporary management accounting practices have become increasingly important in the public sector (Ter Bogt, 2008).
Organisational change
Regarding organizational change as a change in strategy, some researchers (Abernethy and Brownell, 1999; Naranjo-Gil and Hartmann, 2007) consider it simply a change in generic strategy. Therefore, they define and conceptualize organizational change as a change in the strategic orientation, for example from a defender to a prospector or vice versa.
The association between the use of management accounting practices with organisational
- The association between contemporary management accounting practices with
- The association between traditional management accounting practices with
H3: The extent of using traditional management accounting practices as a package is negatively associated with organizational change. H4: The use of a package of traditional management accounting practices is not associated with organizational performance.
Method
Measurement of variables
- Organisational change
- Use of contemporary and traditional management accounting practices
- Organisational performance
The extent of organizational change was measured using a 13 item scale developed following a review of the literature (Cray et al., 1988; Dean and Sharfman, 1996; Gimbert et al., 2010; .The scores of the nine retained items were then retained.aggregated to reflect the extent of organizational change with higher (lower) scores reflecting greater (less) change.
Results
Reliability and validity of constructs
The extent of use of management accounting practices
The association between the use of management accounting practices with organisational
Discussion and conclusion
Discussion
Future studies may aim to provide a more in-depth examination of the factors that hinder the adoption of contemporary management accounting practices in the public sector. The study also found that the use of these contemporary management accounting practices as a package was positively associated.
Conclusion
First, the study informs practitioners that in their efforts to improve performance and drive change through organizational systems and practices, they should consider using several contemporary management accounting practices simultaneously. Second, given that public sector reforms have encouraged the use of innovative management practices in public sector organizations (Farneti and Guthrie, 2008; Milakovich, 1991), some practical measures are suggested by which practitioners and policy makers could encourage the use of such practices . in the public sector.
Limitations and direction for future research
Organizational culture and the adoption of management accounting practices in the public sector: a study in Singapore. Given the low adoption rate, investigating the factors associated with the adoption of contemporary management accounting practices is therefore a research effort.
Contemporary management accounting practices
In the following section, an overview of the approaches to the use of MCSs and modern management accounting practices is given, together with the development of the research hypotheses. Some of the modern management accounting practices commonly used by organizations include benchmarking, activity-based management (ABM), activity-based costing (ABC), Balanced Scorecard (BSC), Key Performance Indicators (KPI), Value Chain Analysis (VCA) and Strategic Cost Management (SCM) ).
The use of contemporary management accounting practices in the public sector
Approaches to using MCSs
The association between the approaches to using MCSs and the adoption of contemporary
- The interactive use of MCSs
- The diagnostic use of MCSs
H1: Interactive use of MCS is positively related to the extent of adoption of modern management accounting practices. H2: There is a positive relationship between the diagnostic approach to the use of MCS and the extent of adoption of modern management accounting practices.
The association between the adoption of contemporary management accounting practices
The relationship between the extent of adoption and the success of contemporary management accounting practices can also be explained by the system implementation literature which claims that the extent of use of a system has an impact on the benefits obtained from the use of the system ( Pierce and Brown, 2006). H3: There is a positive relationship between the extent of adoption of contemporary management accounting practices and their success.
Variable measurement
- Interactive approach to using MCSs
- Diagnostic approach to using MCSs
- The extent of adoption of contemporary management accounting practices
- The perceived success of contemporary management accounting practices
Accordingly, the average scores of the remaining six practices (see Appendix A) were used as the measure of the extent of overall adoption of contemporary management accounting practices. Similar to the scope of adoption, a measurement model was devised to measure the overall success of contemporary management accounting practices.
Descriptive statistics
Reliability and validity
Variables Interactive use of MCS Diagnostic use of MCS Adoption of CMAP Success of CMAP Descriptive statistics. Note: Activity-based cost indicators and key performance indicators are not included in the evaluation of the overall result for the adoption and success of modern management accounting practices.
Structural equation modelling
- The association between the extent of adoption of contemporary management
It was hypothesized that the extent of adoption of contemporary management accounting practices would be positively associated with the success of contemporary management accounting practices. The findings also support the claim that the degree of adoption of contemporary management accounting practices increases the level of success.
Limitations of the study and directions for future research
- Approaches to using MCSs
- MCS characteristics
Therefore, research into the impact of MCSs on organizational change and performance in the public sector is paramount. The approach to using MCSs (i.e., the interactive and diagnostic use of MCSs) is operationalized based on Simons' (1995) handle of control framework, and the characteristics of MCSs are operationalized based on Whitley's (1999) framework (i.e. . the extent of MCS information), the formality of MCSs and the density of MCSs).
Organisational capabilities
- Strategic flexibility
- Employee empowerment
The concept of employee empowerment is broadly defined or categorized based on the psychological and situational (management) perspectives (Yang and Choi, 2009). 11 In the literature, employee empowerment is defined in different ways, with terms such as employee engagement, employee participation and individual development having a similar meaning to employee empowerment (Honold, 1997).
The association between the approaches to using MCSs and organisational capabilities 135
- The association between the diagnostic use of MCSs with strategic flexibility and
Consequently, the diagnostic use of MCSs stifles flexibility (Tessier and Otley, 2012), as using MCSs in a diagnostic manner discourages deviations from preset standards and promotes conformity to the status quo (Henri, 2006a). Similarly, the diagnostic use of MCS limits strategic flexibility by discouraging learning and innovation (Henri, 2006a), all of which are associated with strategic flexibility (Bierly and Chakrabarti, 1996; Zhou and Wu, 2010).
The association between MCS characteristics and organisational capabilities
- The association between broad scope MCS information with strategic flexibility and
- The association between the formality of MCSs with strategic flexibility and
- The association between the tightness of MCSs with strategic flexibility and employee
Similarly, while strategic flexibility requires taking initiatives and moving away from the status quo when necessary (Nadkarni and Herrmann, 2010), the greater formality of MCS stifles such actions. Given that the formal use of MCSs means controlling employees with impersonal rules and standard operating procedures, selecting employees and.
The association between employee empowerment and strategic flexibility with
The association between employee empowerment and strategic flexibility with
Consequently, many studies (e.g. Hitt et al., 1998; Sanchez, 2007) have confirmed the role of strategic flexibility in improving organizational performance. Similarly, the ability of strategic flexibility, which allows an organization to seize opportunities, results in higher performance (Sanchez et al., 1996).
The mediating role of employee empowerment and strategic flexibility in the association
- Interactive use of MCSs
- Diagnostic use of MCSs`
- Broad scope MCS information
- Formality of MCSs
- Tightness of MCSs
- Organisational capabilities
- Organisational change
- Organisational performance
Accordingly, the mean score of the five items was used to reflect the degree of interactive use of MCSs. The average score of the six items was then used to measure the degree of organizational performance.
Reliability and validity
Convergent validity was assessed based on the standard errors of factor loadings and their values. Similarly, discriminant validity, a measure of the degree to which one construct is different from others, was assessed by comparing the Cronbach's alphas (reliability coefficients) of each construct with their correlation coefficients with other constructs ( Kaynak, 2003).
Structural equation modelling
- The association between the approaches to using MCSs and the characteristics of
- The association between organisational capabilities with organisational change and
- The mediating role of strategic flexibility and employee empowerment in the
The results in Table 2 and Figure 1 show a positive association between the interactive use of MCSs with strategic flexibility (β = 0.222, p = 0.011). Based on the results of the structural equation model, indirect relationships exist between the interactive use of MCSs, broad scope MCS information and the formality of MCSs with organizational change through strategic flexibility.
Limitations and direction for future research
Interactive and diagnostic uses of management control systems in IS projects: antecedents and their impact on performance. An empirical investigation of the relationship between the use of strategic human capital and the design of the management control system.
Summary of findings
Finally, section 6.3 discusses the limitations of the thesis and directions for future research.
Contributions and implications
- Contribution to the literature
- Practical implications
Limitations and suggestions for future research
