Evidence on the usefulness of management accounting systems in integrated manufacturing environment

Abstract

Purpose This paper aims to report the results of a study investigating the mediating role of managerial use of management accounting system (MAS) information in the relationship between integrated manufacturing practices (IMPs) and organisational performance (OP). IMP comprises three manufacturing practices, namely, just in time (JIT), total quality management (TQM) and advanced manufacturing technologies (AMTs). Design/methodology/approach Using a mailed questionnaire, the data were gathered from senior managers working in 110 manufacturing firms listed in the Federation of Malaysian Manufacturers (FMM) Directory. Partial least square (PLS) was used to analyse the data. Findings The results reveal that the relationship between IMP and OP exists via managerial use of MAS information, that is, adoption of IMP is positively associated with managerial use of MAS information, which in turn, is positively associated with the performance. In other words, managerial use of MAS information plays a significant role in linking adoption of IMP with OP. Originality/value The use of MAS information in integrated manufacturing environment is found to assist firms in improving performance. Prior research on the IMP–OP relationship reports mixed (inconclusive) results. The authors contend that a possible reason for such results reported in prior studies is that the studies did not investigate the relationship between OP and IMP comprising each of the three manufacturing practices and performance as proposed by Dean and Snell (1991).

The mediating effect of management accounting system on the relationship between competition and managerial performance

“…This result indicates that the use of sophisticated MAS causes improvement in managerial performance. This finding is consistent with previous researches in management accounting (Baines and Langfield-Smith, 2003;Etemadi et al, 2009;Hammad et al, 2010;Hoque, 2011;Ismail and Isa, 2011;Rasid et al, 2011). Relating to different MAS characteristics, the findings of the relationship between scope and performance (H2a), between timeliness and performance (H2b), and between aggregation and performance (H2d) provide further support for Hypothesis 2.…”

“…In other words, a conditional association presumes that useful information helps managers in making effective decisions, which improves managerial performance (Baines and Langfield-Smith, 2003;Chenhall, 2003;Hammad et al, 2010). Therefore, the use of MAS information by managers can assist them in making more accurate decision, which will lead to improvement in performance (Ismail and Isa, 2011).…”

Market Competition, Lean Manufacturing Practices and The Role of Management Accounting Systems (MAS) Information

“…Fullerton and Wempe (2009) also demonstrated that the use of broad scope MAS information that provides non-financial information on manufacturing performance assists firms to improve financial performance in lean manufacturing environment. Using a sample of Malaysian manufacturing firms, Ismail and Isa (2011) demonstrated that the use of broad scope MAS information mediates the relationship between Advanced Manufacturing Technology (AMT) and performance. In addition, Fullerton, Kennedy and Widener (2014) documented that lean manufacturing practices also indirectly affect operations performance through lean management accounting practices (MAP).…”

“…In addition, Fullerton, Kennedy and Widener (2014) documented that lean manufacturing practices also indirectly affect operations performance through lean management accounting practices (MAP). More recently, Ismail, Isa and Mia (2018) showed that MAS information helps manufacturing firms in Malaysia that adopt Integrated Manufacturing Practices to improve performance.…”

Theoretical Framework Measures Management Accounting Systems and Credit Risk Management Policies and Practices towards Organizational Performance in Palestinian Commercial Banks

“…Great design of MAS helps managers to be more efficacious in decision making, thereby aiding organization improving their efficiency and become more competitive toward any challenging environment. This definitely improves the performance of organizations (Ismail and Isa, 2011 (Winter, 2007). We can observe that there is a growing body of literature that examines the effect of MAS and performance as well as RM and organizational performance, the knowledge of linkage method MAS and RM that can reinforce the banks performance remains a gap.…”