The impact of manufacturing flexibility on management control system design

Abstract

Despite anecdotal evidence questioning the relevance of management accounting in firms pursuing "new" manufacturing strategies, the exact nature and role of accounting information for controlling manufacturing activities has received little empirical attention. This study examines the impact of manufacturing flexibility on the design of management control systems. In particular, we examine the implications of flexibility on the use of efficiency-based performance measurement systems and the use of integrative liaison devices. We collected data, through semi-structured interviews, from general managers in manufacturing firms in Melbourne, Australia. These interview data were used to develop measures for the constructs of interest. Exploratory analysis of the data indicates that integrative liaison devices are a critical form of control in managing the implementation of flexible manufacturing strategies. However, the role of accounting or other efficiency-based performance measures declines in those firms with a commitment to manufacturing flexibility.