Measurement Variable Broad Scope MAS PJRI Managerial Performance
PJRI 0.184
Managerial Performance 0.132 0.425**
Strategy Type 0.216 0.284* 0.057
Note:** p < 0.01. *p < 0.05.
To test the effect of strategy type on the relationship between broad scope MAS and PJRI, and the relationship between PJRI and managerial performance, we divided the samples by median into two groups: differentiation strategy (n = 54) and low-cost strategy (n = 53). The correlation matrices of the two groups are presented in Table 6 and Table 7. We further conducted path analysis to estimate path coefficients pij. The results are shown in the fifth and sixth columns (differentiation strategy) and the seventh and eighth columns (low-cost strategy) of Table 4, and shown in Figure 4 and Figure 5.
Like for all samples, the direct link between broad scope MAS and managerial performance (p31) is insignificant for either group of different strategy.
This indicates that there is no correlation between broad scope MAS and
managerial performance no matter which strategy type is employed. On the other hand, the path coefficient between broad scope MAS and PJRI (p21) becomes extremely significant (0.474, p < 0.01) when an enterprise tends to employ the differentiation strategy. This result indicates that broad scope MAS is positively correlated with PJRI. If the enterprise tends to employ the low-cost strategy, p21
becomes insignificant (0.184, p > 0.1), meaning that there is no correlation between broad scope MAS and PJRI. It can be inferred that when an enterprise tends to adopt the differentiation strategy, there will be a stronger relationship between broad scope MAS and PJRI. The result of the general linear test7 (Neter
& Wasserman, 1974) shows a significant difference between path coefficients (p21) under the two strategy types (F*2,103 = 2.530 > F2,103,0.1 = 2.347). Therefore, H2b is supported. This finding is consistent with the argument of Williams and Seaman (2002) that when task difficulty is high, changes in management accounting and control system can induce a higher level of perception of managerial relevant information.
However, the analysis result does not support H2c. As shown in Table 4, the path coefficient between PJRI and managerial performance (p32) is greater under differentiation strategy (0.477, p < 0.01) than under low-cost strategy (0.415, p <
0.01). Under both strategies, PJRI is significantly correlated with managerial performance. Besides, the result of general linear test shows no significant difference between the two (F*3,101 = 0.593 < F3,101,0.1 = 2.130). This implies that the positive relationship between PJRI and managerial performance cannot be augmented through adoption of the differentiation strategy. As a result, H2c is not empirically supported. This finding is consistent with the conclusion of Kren (1992) that whether there will be a stronger relationship between PJRI and managerial performance under a high level of environmental uncertainty cannot
7 General linear test is usually applied to test the correlation between an independent variable and a dependent variable is significant different in two groups of data, one high and one low. In the test of the difference between the regression models of the two groups, the estimate (F*) derived under the numerator’s degree of freedom K+1 and denominator’s degree of freedom n+M-2(K+1) is compared with the test value (F) (where K denotes the number of regression coefficients to be estimated; n and M are respectively the sample size of the two groups). If F*
is greater than F, there is significant difference between the two regression models (Neter &
Wasserman, 1974).
be verified. Besides, Williams and Seaman (2002) also mentioned that whether the relationship between perception of managerial relevant information and departmental performance can be stronger under high task uncertainty cannot be validated.
The decomposition results of Equation (3) ~ (5) are shown in the fifth ~ seventh columns (differentiation strategy) and eighth ~ tenth columns (low-cost strategy) of Table 5. As indicated by the results of Equation (4), for both groups of enterprises, broad scope MAS has a stronger indirect effect (through PJRI) than direct effect on managerial performance. Besides, the indirect effect under the differentiation strategy (0.226) is greater than the indirect effect under low-cost strategy (0.076). This is the expected result of this study: when an enterprise tends to employ the differentiation strategy, a higher degree of use of broad scope MAS can lead to a higher level of PJRI and hence improved managerial performance.
The correlation matrix in Table 6 shows that under differentiation strategy, broad scope MAS has a significant effect on PJRI and also managerial performance. Hence, Conditions (1) and (2) of mediation proposed by Baron and Kenny (1986) are met. Besides, as shown in the fifth and sixth columns of Table 4, after managerial performance is regressed on both broad scope MAS and PJRI, PJRI has a significant effect on managerial performance (p32 = 0.477, p
< 0.01). The regression coefficient of broad scope MAS over managerial performance (p31 = 0.124, p > 0.1) is smaller than the regression coefficient in Condition (2) (0.350), and under the level of significant. According to Baron and Kenny (1986), PJRI has full mediating effect. Through a comparison between Figure 3 and Figure 4, we found that the path coefficient between broad scope MAS and PJRI (p21 = 0.474) and the path coefficient between PJRI and managerial performance (p32 = 0.477) obtained from enterprises using the differentiation strategy are greater than the path coefficients obtained from all samples (p21 = 0.310, p32 = 0.443). Therefore, when an enterprise tends to adopt the differentiation strategy, the full mediating effect of PJRI on the relationship between broad scope MSA and managerial performance will become more pronounced.
As shown in Table 7, under the low-cost strategy, the effect of broad scope MAS on either PJRI or managerial performance is not significant. The conditions of mediation proposed by Baron and Kenny (1986) cannot be satisfied, so mediation of PJRI is not supported. This also indicates that when an enterprise tends to employ the low-cost strategy, high level of use of broad scope MAS cannot enhance PJRI and managerial performance.
Ru Rv
p31 = 0.124 PJRI (Z2) Broad Scope
MAS (Z1)
Managerial Performance (Z3)
Figure 4
Path Diagram for Samples of Differentiation Strategy
p21 =0.474**
p32 = 0.477**
Note:**p<0.01.
Ru Rv
p31 = 0.056 PJRI (Z2) Broad Scope
MAS (Z1)
Managerial Performance (Z3)
Figure 5
Path Diagram for Samples of Low-Cost Strategy
p21 =0.184
p32 = 0.415**
Note:**p<0.01.
In sum, for all samples or those inclined to employ the differentiation strategy, the mediation of PJRI is supported. However, the effect of strategy type on the relationships among variables is only partially supported. That is to say, for enterprises inclined to adopt the differentiation strategy, there is a stronger correlation between broad scope MAS and PJRI, but the level of using of broad scope MAS is not necessarily higher, and the correlation between PJRI and managerial performance is not stronger either. The reason may be the fact that in face of uncertainty of the external environment, managers need broad scope MAS to provide external, non-financial, and future-oriented information, so the level of using broad scope MAS is not affected by the strategy type adopted by enterprises.
However, when enterprises are inclined to take the differentiation strategy, they need broad scope management accounting information, including customer preference and technology development. Therefore, using broad scope MAS at a high level can lead to a high level of PJRI. In addition, the relationship between PJRI and managerial performance is extremely significant under either type of strategies, implying that managers consider job-relevant information as critical for accomplishing goals of their jobs. So, no matter which strategy is adopted, PJRI of managers has absolutely positive effect on their managerial performance.
5. Conclusions and Limitations
In this study, we probed into the relationship between broad scope MAS and managerial performance using PJRI as a mediator variable. Expected results were obtained. The relationship between broad scope MAS and managerial performance is indeed mediated by PJRI. That is to say the positive effect of broad scope MAS on managerial performance is attributed to an increased level of PJRI. Besides, PJRI has full mediating effect on this relationship, and this effect becomes more pronounced when enterprises are inclined to employ the differentiation strategy.
Theoretically, our inclusions of moderator and mediator variables in the discussion of the relationship between broad scope MAS and managerial performance better explained the relationship in a more complete model. In addition to the findings from the perspective of the contingency theory, there is full mediation of PJRI, which becomes stronger when the differentiation strategy is adopted. Practically, the following managerial implications were provided: The effect of broad scope MAS on managerial performance is supported only when managers’ PJRI can be induced. When enterprises are inclined to adopt the differentiation strategy, broad scope MAS should be adopted at the same time, so as to enhance managers’ PJRI and performance. If the low-cost strategy is adopted, managers are able to accomplish tasks without much additional information. In this case, it is not necessary to use broad scope MAS. Adoption of broad scope MAS may only cause information overload and waste of its cost. It has no positive effect on the managers’ PJRI and performance. In addition, the positive correlation between PJRI and managerial performance does not vary under different strategies. Whether the differentiation strategy or the low-cost strategy is adopted, efforts should be made to enhance managers’ PJRI to further improve their performance. All these findings can help enterprises make a better use of broad scope MAS.
Future researchers are suggested to explore whether the mediating effect of PJRI on the relationship between broad scope MAS and managerial performance would vary in different contexts (such as a decentralized organizational structure and different information processing abilities). In this study, the plant manager’s managerial performance was not evaluated by both the manager’s superior and subordinate. Possible inconsistency between the superior’s and the subordinate’s evaluations was not considered. Therefore, future researchers are advised to let a manager’s managerial performance evaluated by both the superior and subordinate when perception measurement is used.
Questionnaire survey method was adopted in this study, so there would be some general limitations of this method. Take the items designed to measure PJRI as an example. The variable’s composite reliability and Cronbach α exceeded the
0.7 standard, so the first item8 with a larger measurement error was not deleted.
This was one of the limitations of this study. Besides, the subjects of this research were plant managers and their subordinates of electronic firms in Taiwan. Thus, the research results cannot be generalized and applied to different departments, industries or companies in other nations.