The Effects of the Strategy and Goal on Business Performance as Mediated by Management Accounting Systems

Abstract

Previous research in the literature often investigated the associations between management accounting systems and the success of organizations. However, little has been done in regard to the association of business strategies, goals, and firms’ performance while having management accounting tools as mediators. Management accounting systems are classified as traditional and strategic management accounting themes. Each theme, of course, implements different accounting tools. This article explores the degree to which, as mediated by management accounting systems, the business strategies and business goals of large Thai manufacturing companies influence their financial and non-financial performance. To gather the data, a survey questionnaire was developed. Of the 1500 companies selected for inclusion in the survey, 205 provided completed and usable responses for a response rate of 13.67%. Structural equation modeling (SEM) was used to analyze the relationships among the variables. The findings shed some light on what the management of a firm could expect concerning organizational performance from their business strategies, business goals, and the implementation of specific management accounting systems. Corporate strategies and corporate goals had a statistical influence on both the financial and non-financial performance of the large corporations in Thailand when mediated via strategic management accounting systems, while there was no influence when mediated by traditional management accounting systems. A greater understanding of the relationships and effects of which mediators should have been employed in organizations to bring forth business strategies and business goals and generate productive results for organizational performance is provided by this research. Choosing the appropriate performance mediators can help achieve corporate strategies and goals.

Strategic Management Accounting and Performance Measurement Systems: A Loose Coupling?

“…The challenge of improving organizational performance is considered an appropriate variable for management accounting (Rashid et al, 2020). The models and methods of traditional management accounting were designed on the assumptions of the stability of the organizational environment, and that the two elements of uncertainty and fixed costs are considered external factors for those models (Visedsun and Terdpaopong, 2021). It has been proven that these hypotheses are unrealistic, as managers find themselves responsible for significantly interfering in production processes to improve quality, reduce delivery and preparation time, and increase the flexibility of industrial operations (Nguyen and Nguyen, 2021).…”

Model of Fit Perceived Environment Uncertainty (PEU) and Budgetary Characteristics on Managerial Performance: A Residual Approach

“…Better fit between the control system and contingency variables, as hypothesized in several studies, results in improved organizational performance (Zhang et al, 2022). The use of the fit concept in contingency theory indicates the level of alignment between contextual factors (contingencies) and management accounting systems (such as accounting design and budgeting systems), enabling managers to enhance company performance Visedsun & Terdpaopong (2021) explains that organizations adapt to contingency conditions by arranging controllable factors (those owned by the company) to create a suitable configuration or match, with the expectation of achieving organizational effectiveness.…”

The Impact of Environmental Uncertainty on Accounting Information Relevance and Performance: A Contingency Approach

“…In this context, accounting information becomes relevant, namely non-financial, external, and future-oriented information, to support organizational change and decision-making. For an organization to survive and operate with success, it is critical that managers have access to useful and timely information so they can act and make the best decisions (Al-Mawali and Am 2016; Alves 2017; Oyewo 2021; Thuan et al 2022;Visedsun and Terdpaopong 2021).…”

“…Additionally, despite non-financial information having gained growing relevance (Czaja-Cieszy ńska et al 2021), it does not substitute for financial information, which is considered of little relevance in uncertain decision-making contexts, because it is too aggregated and available too late (Chenhall and Langfield-Smith 1998b;Johnson and Kaplan 1987), even if in some cases, financial information continues to have the confidence of managers in decision-making (Bhimani and Langfield-Smith 2007;Chow and Van der Stede 2006;Hyvönen 2007). Nonfinancial information is, therefore, complementary to financial information and these two types of information can be used simultaneously in different situations or for different purposes (Chenhall and Langfield-Smith 2007;Chow and Van der Stede 2006;Lau and Sholihin 2005;Massicotte and Henri 2021;Monteiro et al 2021;Visedsun and Terdpaopong 2021).…”