A critical challenge facing organizations is the design of management control systems, which play a key role in evaluating the achievement of organizational and individual objectives. This thesis addresses the design of management control (performance management) systems in the current flexible business environment. The analysis focuses especially on the use of management control systems in relation to the production function. The empirical research consists of three case studies and a large-scale survey of a sample of 97 industrial companies in the Netherlands. The case studies provide insight into the relationship between elements of the production environment and the management control system. Drawing on the complementarity principle, a theoretical framework specifies the demands placed on management control system design in a flexible production environment. Particular attention is paid to characteristics of performance criteria, evaluation process, and reward system. The case findings indicate that the developed framework provides a good way to map, predict and analyze company practice. The survey research examines the impact of production flexibility on performance measurement and incentive system design. More specifically, the study aims to investigate the determinants of the use of customer/operational, financial and efficiency-based performance measures. The use of these three types of measures is investigated for both the periodic performance review of production managers and the determination of their variable compensation. The results indicate that the use of performance measures is related to the focus of the production strategy, the inventory management concept and the level of technological complexity. The results also show that the use of performance measures is related to decentralization, information asymmetry and controllability of performance measures. Overall, the study supports the notion that the use of performance measures is adapted to the flexibility and the organizational design of the production function.
|Qualification||Doctor of Philosophy|
|Award date||27 Sep 2002|
|Place of Publication||Tilburg|
|Publication status||Published - 2002|