The Relationship among Strategy, Competition and Management Accounting Systems on Organizational Performance

Abstract

This study examines the relationships among competition, strategy, management accounting system (MAS) and organizational performance. It follows a structural equation modeling (SEM) to propose that competition forces companies to modify their strategy and MAS and that these changes enhance performance. Change in strategy concerned in the model as change in competition causes change in strategy, and this in turn results in the change in MAS, along with improving performance directly. Data were collected by the means of questionnaires that were personally addressed to the managers or heads of accounting departments. The Data obtained from 120 manufacturing firms, were analyzed using a SEM estimated by partial least squares. The findings of the study led us to two results: (1) changes in competition cause enhancement in performance directly and indirectly through by changes in MAS and strategy, and (2) change in strategy leads to higher organizational performance through by the change in MAS. These findings contribute to the MAS literature by the means of supplying empirical evidence that the association between performance and competition is mediated through by change in strategy and changes in MAS of the firm.