The Moderating Effect of Management Control Systems on the Strategy-Performance Relationship in Indonesian Construction Companies
DOI:
https://doi.org/10.35134/jbe.v1i1.57Keywords:
Business Strategy, Management Control System, PerformanceAbstract
This study is aimed to explore the effect of Management Control System (MCS) on the relationship between
business strategy and construction company performance. Most of prior studies on business strategy and
management control system interaction have been done using non-construction companies. This study uses
seventy three (73) construction companies in Padang city (Indonesia). The data is gathered through survey
using questionaire. Moderated Regression Analysis (MRA) is employed using SPSS software. Furthermore,
this paper finds that when management control system include in the model, there is an increasing in model
feasibility and power. However, management control system does not play as moderating variable between
business strategy and construction company performance. This finding is inconsistent to prior studies
concluding that management control system strengthens the relationship between strategy and performance.
References
A. P. C. Chan, “Evaluation of Enhanced Design and Build System – a Case Study of a Hospital
Project”, Construction Management and Economics, volume 18, 863-871, 2000.
A. P. C. Chan, D. W. M. Chan, and K. Ho, “An Empirical Study of the Benefits of Construction
Partnering in Hong Kong”, Construction Management and Economics, volume 21, issue 5, 523-533,
B. Vandenbosch, An empirical Analysis of the Association between the Use of
ExecutiveSupportSystems and Perceived Organizational Competitiveness, Accounting,Organizations
and Society, volume 24, issue 1, 77-92, 1999.
D. Hughes, T. Williams, and Z. Ren, “The Role of Incentive in Partnering Projects –a Case Study of
South Wales”, Paper Presented at the Construction and Building Research Conference of the Royal
Institute of Chartered Surveyors Held at the University of Cape Town, 2009.
E. S. Mason, “Price and Production Policies of Large-Scale Enterprises”, American Economic Review,
volume 29, 61-74, 1939.
F. Abdullah, Construction Industry and Economic Development: The Malaysia Scene.
UniversitiTeknologi Malaysia, Malaysia, 2004.
F. T. T. Phua, “Predicting Construction Firm Performance: An Empirical Assessment of the
Differential Impact between Industry‐and Firm‐Specific Factors”, Construction Management and
Economics, volume 24, issue 123, 309-320, 2006.
F. T. T. Phua, and S.Rowlinson, “Cultural Differences as an Explanatory Variable for Adversarial
Attitude in the Construction Industry: the Case of Hong Kong”, Construction Management &
Economics, volume 21, 777-785, 2003.
GBG. Construction Firms Find Strong Growth in Indonesia, Global Business Guide-Indonesia,
Retrived from http://www.gbgindonesia.com/en/property/article/
/construction_firms_find_strong_growth_in_indonesia_11124.php, April 12nd, 2015.
G. G. Dess, and P. S. Davis, Porter‟sGeneric Strategies as Determinants of Strategic Group
Membership and Organizational Performance, Academy of ManagementJournal. Volume 27, issue 3,
-488, 1984.
Ghani and Jermias. The Effect of Strategy-Management Control System Misfits on Firm Performance,
Accounting Perspective/Perspective Compatible, volume 11, issue 3, 165-196, 2012.
J.A. Parnell.Strategic Clarity, Business Strategy and Performance, Journal of Strategy and
Management, volume 3, issue 4, 304-324, 2010.
J. B. Barney, Firm Resources and Sustained Competitive Advantage, Journal ofManagement, volume
, 99-120, 1991.
J. Bisbe, and D. Otley, The Effects of the Interactive Use of Management, Control Systems on Product
Innovation, Accounting, Organizations and Society, volume 29, 709-737, 2004.
J. B. Quinn, Strategies for Change: Logical Incrementalism, Irwin, Homewood, IL, 1980.
J. M. Utterback, and W. J. Abernathy, A Dynamic Model of Product and Process Innovation, Omega,
volume 3, 639-656, 1975.
K. S. Cameron, and D. A.Whetten, Organizational Effectiveness: A Comparison of Multiple Models,
Academic Press, New York, NY, 1983.
L. O. Oyewobi, A. O. Windapo, and R. O. B. James, An Empirical Analysis of Construction
Organizations‟ Competitive Strategies and Performance, Build Environment Project and Asset
Management, volume 5, issue 4, 417-431, 2015.
M. A. Luoma, Revisiting the Strategy-Performance Linkage: An Application of an Empirically
Derived Typology of Strategy Content Area, Management Decision, volume 53, issue 5, 1083-1106,
M.E. Porter. Competitive Advantage, Free Press, New York, NY, 1985.
M. T. Bashir,Factors Influencing Construction Delays, Master thesis, UniversitiSains Malaysia,
Malaysia, 2000.
M. W. Sakal, “Project Alliancing: A Relational Contracting Mechanism for Dynamic Projects”,
Journal of Lean Construction, volume 2, issue 1, 67-79, 2005.
N. D. K. Arachchilage, and M. Smith, The Effect of the Diagnostic and Interactive Use of Management
Control Systems on the Strategy-Performance Relationship, JAMAR, volume 11, issue 1, 9-28, 2013.
O. I. Aje, K. T. Odusami, and D. R. Ogunsemi, The Impact of Contractors‟ Management Capability on
Cost and Time Performance of Construction Projects in Negeria, Journal of Financial Management of
Property and Construction, volume 14, issue 2, 171-187, 2009.
P. J. Richard, T. M. Devinney, G. S. Yip, and G. Johnson, “Measuring Organizational Performance:
Towards Methodological Best Practice”, Journal of Management, volume 35, issue 3, 718-804, 2009.
R. Allen, and M. M. Helms, Linking Strategic Practices and Organizational Performance to Porter‟s
Generic Strategies, Business Process Management Journal, volume 12, issue 4, 433-454, 2006.
R. B. Robinson, and J. A. Pearce, Planned patterns of strategic behaviour and theirrelationship to
business-unit performance, Strategic Management Journal, volume 9, issue 1, 43-60, 1988.
R. D. Buzzell, B. T. Gale,and R. G. M. Sultan, Market Share – a Key to Profitability,Harvard Business
Review, volume 53, issue 1, 97-106, 1975.
R. E. Miles, and C. C. Snow, Organizational Strategy, Structure, and Process, West,New York, NY,
R. H. Chenhall, Management Control SystemDesign Within its Organizational Context: Findings from
Contingency-based Research and Directions for the Future”,Accounting, Organizations and Society,
volume 28 issue 2-3, 127-168, 2003.
R. N. Anthony, Planning and ControlSystems: A Framework for Analysis, HarvardUniversity, Boston,
USA, 1965.
R. N. Lussier, and S. Pfeifer. „A Cross-National Prediction Model for Business Success‟, Journal of
Small Business Managementvolume 39, issue 3, 228–239, 2001.
R. S. Kaplan, and D. P. Norton, The Balanced Scorecard: Translating Strategy into Action, Harvard
Business School Press, Boston, MA, 1996.
R. S. Kaplan, and D. P. Norton, The Balanced Scorecard – Measures that Drive Performance, Harvard
Business Review, January/February, 71-79, 1992.
R.Simons, The Role of Management Control Systems in CreatingCompetitive Advantage: New
perspectives”, AccountingOrganizations and Society, volume 15, issue 6, 127-143, 1990.
R. Simons, Levers of Control: HowManagers Use Innovative Control Systems toDrive Strategic
Renewal, Harvard BusinessSchool Press, Boston. USA, 1995.
S. Kotha, and B. L. Vadlamani, Assessing Generic Strategies: An Empirical Investigation of Two
CompetingTypologies in DiscreetManufacturingIndustries, StrategicManagement Journal, volume 16,
issue1, 75-83, 1995.
S. Li, and F. Y. Y. Ling, “Critical Strategies for Chinese Architectural, Engineering and Construction
Firms to Achieve Profitability”, Engineering, Construction and Architectural Management, volume 19,
issue 125, 495-511, 2012.
U. Sekaran, Research Method for Business: A Skill Building Approach, 4th edition, John Wiley &
Sons, 2003.
V. Govindarajan, and A. K. Gupta, “Linking Control Systems to Business UnitStrategy: impact on
performance”, Accounting,Organizations and Society, volume 10, issue 1, 51–66, 1985.
Yao-Sheng. Liao, Business Strategy and Performance: the Role of Human Resources Management
Control, Personnel Review, volume34, issue 3, 294-309, 2005.
Z. Hoque, and W. James, Linking BalancedScorecardMeasures to Size and Market Factors: Impact on
Organizational Performance, Journal of ManagementAccounting Research, volume 12, issue 1, 1-17,
Z. Shehu, R. I. Endut, and A. Akintoye, Factors Contributing to Project Time and Hence Cost Overrun
in the Malaysian Construction Industry, Journal of Financial Management of Property and
Construction, volume 19, issue 1, 55-75, 2014.
Journal of Business and Economics (JBE) UPI YPTK
