Management accounting systems are viewed as a central feature of the larger management control structure found in contemporary organizations

We extend the model developed by Williams and Seaman [Williams, J. J. & Seaman, A. E. (2001). Predicting change in management accounting systems: national culture and industry effects. Accounting, Organizations and Society, 26, 443–460] and utilize the same sample of 93 Chinese family owned businesses to test the multivariate relationship between a set of operational effectiveness measures and a set of changes in management accounting and control systems components under the contingency effects of size, organizational capacity, intensity of competition and centralization. Significant relationships emerge for high intensity of competition, high centralization, and low and high levels of organizational capacity. Variables of major importance in these relationships converge to form two larger patterns of a structural and environmental nature, which are consonant with the core national cultural values of Singapore documented in the contemporary cross-cultural management control literature. anagement accounting and control systems (MACSs) consist of dynamic components overarching planning, controlling, decision making and reward systems (Otley, 1980; Flamholtz et al., 1985; Merchant, 1989) that are thought to collectively support firms’ operational effectiveness (Cooper, Sinha & Sullivan, 1995; Porter, 1996; Granlund, 1997; Granlund & Lukka, 1998). Casual observation and new practices reveal that these components are not static in nature but the literature is remarkably silent about the phenomena of MACSs change in general. Libby and Waterhouse (1996) explore several organizational and economic determinants of MACS changes for a sample of Canadian manufacturing firms. Williams & Seaman (2001) replicate their study, using a sample of Singaporean firms, and demonstrate the importance of the power distance value emanating from Hofstede’s (1980, 1982, 1991) national culture framework. However, neither study examines the important linkage between MACS changes and operational effectiveness, which is addressed in this paper. Recent literature on antecedents and consequences of management accounting controls is pressing for more empirically complex nomological frameworks (e.g., Shields & Shields, 1998). For some time, researchers have been urged to consider a range of effectiveness measures to understand the appropriateness of particular accounting control systems (Hopwood, 1978; Otley, 1980; Merchant, 1985). In a similar vein, Harrison & McKinnon (1999) champion a more “gestalt approach” to uncovering the relative importance of cultural and non-cultural variables in explaining control phenomena. They even call for more sequential work from individual researchers and believe that a central focus on “ingroups . in modern Chinese organizations” (p. 503) is of interest. Building on the works of Parsons (1964), Rokeach (1973) and Schein (1985), it appears as though Lachman, Nedd & Hinings (1994) support this type of emphasis and suggest that “efforts should be directed at identifying the core values of particular cultural settings, and examining their wider impact on organizational practices” (p. 42). _________________________ Readers with comments or questions are encouraged to contact the authors via email. M The Review of Business Information Systems Volume 7, Number 3 84 Some of this complexity might be captured by invoking a multidimensional design strategy whereby a set of changes in MACS components is analyzed in unison with a set of operational effectiveness measures. In this paper we test this relationship utilizing the same MACS components that Williams & Seaman (2001) examine and assess whether their independent variables moderate this relationship. The identical sample of 93 Chinese familyowned businesses constitutes the database. While a multivariate approach may mitigate some of the underspecification issue, knowledge of the larger pattern of important MACSs components could be traced through shifting environmental disturbances, such as national industrial policies or globalization effects. Other benefits could include more synergistic clarity in mapping MACS changes on to possible behavioral responses in the firm, or directing the import of cross-national control systems to areas of organizational strength rather than confronting conflict and tension where differences exist. First, we draw inferences from past literature to suggest that: (1) control systems, including MACSs, contain multiple elements that should be assessed collectively; (2) performance outcomes are not adequately captured by a singular measure, even if aggregated; and (3) elements in both sets are inextricably linked, implying simultaneous and not sequential analysis. Theoretically, these characteristics appear to advocate a research problem that “almost demand(s) canonical analysis” (Kerlinger, 1973, p. 652). Secondly, we assess the moderating effects of the same independent variables used by Libby & Waterhouse (1996) and Williams & Seaman (2001) (i.e., concentration of authority, size, learning capacity and competition) to uncover any potential convergence in the dominant patterns that may emerge in the canonical analyses. Past contingency literature (Hopwood, 1972; Bruns & Waterhouse, 1975; Merchant, 1981; Otley & Wilkinson, 1988; Hofstede, 1991; Chow, Shields & Wu, 1999) raises the expectation that contextual and/or structural variables could influence the canonical relationship and the emergent patterns as a whole. Unfortunately, specificity concerning the issue of MACSs change and operational effectiveness at the macro level is largely absent. Thirdly, we hold cultural ethnicity and the corresponding national value structure constant through the sample choice for methodological reasons and to facilitate interpretation of the results. The literature criticizes the omission of value dimensions or the failure to recognize the differential intensity of cultural norms, yielding empirical results that are difficult to interpret and compare (Harrison & McKinnon, 1999). Other cultural literature questions the unbundling of interrelated and omnipresent values in an individual’s host social setting (Chow et al., 1999). Rather, it is the relative importance of values in a given culture that is expected to influence the organizational setting and related control processes (Lachman et al., 1994). 1.0 Developing testable relationships 1.1 Linkage between MACSs and operational effectiveness Formal management accounting systems are pervasive within an organization, designed to supply information that is congruent with the organization’s goals (Hopwood, 1972; Horngren, 1972). Changes made to these systems, however, function in reciprocity with intended objectives or purposes (Otley, 1978; Merchant, 1981, 1985), akin to a scissors blades. Design specifications in the accounting literature typically treat MACS components, such as budgeting or controllability systems, as independent variables that affect performance outcomes. However, Otley (1978) concludes that the latter are, de facto, independent variables and Merchant (1985, p. 71) observes that this is an appropriate stance for all control-related studies. These views augment the proposition that realized MACS changes, which are no longer a priori design considerations, occur in concert with the preferred operational performance goals chosen by the decision-making authority. Our concern is not to engage in the cause-effect debate but, rather, to analyze the significant conjuncture of the two for significant patterns of important variables. Other literature pertaining to cross-national cultural research underscores the complexity of this basic interrelatedness. Chow, Shields & Chan (1991) maintain that control system components operate simultaneously, and the functioning of a management control system “include(s) tradeoffs across both control components and objectives (Chow, Kato & Shields, 1994, p. 387). The latter suggest a solution: develop “multidimensional representations . of individual’s preference for sets of management control” (p. 397). Harrison & McKinnon (1999) advocate the The Review of Business Information Systems Volume 7, Number 3 85 need to comprehend how MACS are “constituted holistically” in different cultural settings and how their “measured dynamics” operate (p. 500). Thus, a methodological strategy that deals simultaneously with composite sets of MACS changes and performance outcomes appears to be endorsed in the literature. It is consistent as well with the theoretical framework developed by Lachman et al. (1994) whereby patterns of core versus peripheral values affect congruent patterns of organizational structure and effectiveness in particular cultural settings. Our approach to analyzing the interconnectedness of MACS changes and operational effectiveness assumes that multiple elements of the latter are antecedent to the more intractable consequent variable of organizational effectiveness (Steers, 1975; Campbell, 1977). However, even at the operational level there is not a general consensus, but there is sufficient literature to support a multidimensional perspective that encompasses outcomes, processes and commitment that are commensurate with the dominant organization coalition under specific situations (Steers, 1977; Cameron & Whetten, 1981; Quinn & Cameron, 1983). For example, building on Perrow’s (1961, 1970) differentiation of official versus operative goals, Daft (1986, pp. 86-7) identifies five types of operative goals applicable to the organization level. Briefly stated, environmental goals reflect reputation and secure legitimacy; output goals pertain to goal attainment in terms of defining the business and identifying consumer needs; systems goals maintain morale; product goals relate to quantity and quality in terms of physical attributes and service; and, “means-end” processes in technical operations manifest efficiency and innovation. These performance criteri