Management accounting system design in manufacturing departments: an empirical investigation using a multiple contingencies approach

Contingency Factors Influencing MAS Design of Manufacturing Firms in Malaysia

“…Thus, H1 is rejected. The insignificant findings could be explained by Gerdin (2005), who noted that firms that decentralize adopt more traditional MAS design than sophisticated MAS design. One of the plausible explanations could be that manufacturing firms in Malaysia adopt a company-wide management accounting system (MAS) design; whereby the MAS design is implemented on the firm as a whole instead of according to a particular context faced by individual departments (Gerdin 2005).…”

“…The insignificant findings could be explained by Gerdin (2005), who noted that firms that decentralize adopt more traditional MAS design than sophisticated MAS design. One of the plausible explanations could be that manufacturing firms in Malaysia adopt a company-wide management accounting system (MAS) design; whereby the MAS design is implemented on the firm as a whole instead of according to a particular context faced by individual departments (Gerdin 2005). When the firm implements a companywide MAS system, the frequency and details of the firm's financial plans and measurement system, such as the development and pricing of new products, the hiring and firing of managerial personnel, budgeting decisions and the selection of large investments, are imposed by the top management on subunits; while only the operational information is subjected to the subunit's discretion.…”

“…As a result, behavior formalization occurs and this in itself is an efficient means of control for the company (Waterhouse and Tiessen 1978). Thus, they do not require sophisticated MAS design to act as a control mechanism (Gerdin 2005). This is known as the substitution effect (Gerdin 2005).…”

“…Lastly, timeliness concerns with the frequency and speed of the reporting. These four dimensions are used to assist firms to adopt the appropriate MAS design in order to obtain relevant information that is needed by managers to make decisions and to achieve organization's goals (Chenhall & Morris 1986;Gerdin 2005). The four dimensions will also be used to measure the MAS variable in this research; whereby the higher the mean score of the four dimension, the higher the adoption of sophisticated MAS design is.…”

“…However, according to Tillema (2005), sophisticated MAS might not guarantee enhanced performance unless the MAS design could provide the needed information that adds value to the business. As a result, past studies have indicated that the appropriateness of a MAS design is often contingent on the business context and the environment that the company operated in (Gerdin 2005;Tillema 2005;Adbel Kader & Luther 2008;Zakaria 2015). This paper extends the empirical research on MAS design by investigating whether the adoption of sophisticated MAS is significantly influenced by decentralization, the changes in the adoption of advanced manufacturing technology and the intensity of market competition.…”