Business Strategy, Management Control And Performance Evaluation Of Contingency Analysis

This study reviews the literature of contingency-based research on strategy, management control system and performance measures. Contingency theory suggests that the management control system is influenced by -or contingent upon -certain factors to the firm. This research is framed on relationship among competitive strategies, management control and performance measures of the companies. That follows the research paradigm of "strategy-management control-performance evaluation". As a result, the paradigm is referred to this research by analyzing empirical data collected from the sample in 38 State-owned enterprises in the electrical and electronics industry.This dissertation is divided into four parts. The first part is an introduction which outlines the motives of this research including understanding the competition pressure of today's business environment. We introduce the area of contingency-based management control system research and provide an overview of findings over the past 30 years.The second part consists of literature reviews and theory studies. For the reason of validity to our research, we review the previous literatures and theories in different chapters. In chapter 2 and 3, we introduce the main issues of contingency theory and overview the literatures of management accounting system and management control system which based on contingency theory. In chapter 4, we review the literatures of contingency-based research on certain factors which influenced management control system. These factors include competitive strategy, technology, structure, size and national culture. Finally, we offer a framework of management control model. In chapter 5. we review the literatures of contingency-based research on competitive strategies. We emphasize particularly on Miles& Snow's issues about strategic archetypes ( prospector, defender and analyzer). In chapter 6, on the base of reviewing the literatures of contingency-based research on performance evaluation, we analysis the shortcoming of traditional performance evaluation system. We suggest to build astrategy-based integrated performance evaluation system. Performance measures should be matched with the competitive strategy. Chapter 6 and chapter 7 is a main part of this research.In the third part (Chapter 7 ), we use empirical data to analyze the adequacy of research framework. The empirical data collected from the sample in 38 State-owned enterprises in the electrical and electronics industry. We examine the relationship between strategy and the reporting of nonfinancial performance measures on senior manager's actions/decisions. Contingency theory suggests that the design of a management control system depends upon the circumstances affecting an organization. Prior research has found that strategy is an important factor affecting the design of a firm including its performance measurement and evaluation system. Moreover, recent literature in management accounting strongly argues the performance measures must be linked to the strategies and actions of a firm.The survey finds there is no difference between the two strategic types ( prospector, defender) of firms with respect their ratings of the relative importance of financial versus nonfinancial measures for the purposes of decision making. More than half firms rated financial and nonfinancial measures as equally important for short and /or long-term decision making. There is no relationship between strategic archetypes and nonfinancial measures. This result appears to be somewhat inconsistent with the literature which appears to suggest that prospector firms are likely to focus more on nonfinancial rather than financial measures.The fourth part presents our conclusions, suggestions and future research. Meanwhile we point out some limitations of this research.The main conclusions of this research are: competitive strategies must fit for the context. The management control system is influenced by -or contingent upon -certain factors to the firm. The performance measures must matched...