MAS sophistication and decision making performance: evidence from foods exporting businesses in Thailand.

Author:Chitmun, Suphansa

    Management Accounting System (MAS) is important and necessary to the success of the organization. The role for the MAS is the preparation of accounting information management to enable management decisions easier (Chong and Eggleton, 2003) to be applied to improve organizational performance (Mia and Clarke, 1999).In addition, management strategies increase the value of economic sustainability for the business (Chenhall and Morris, 1995). However, what happened in the past was that the awareness of the role of accounting manage traditional and may provide information that is not enough to demand for the information of the current (Isa, 2007) which may result in the errors in executive decision making in competitive strategy of the business (Kenned and Affleck-Graves, 2001) as well as the decrease in efficiency in the overall operation of the business. Moreover, the current severe market competition and economic volatility make to various businesses need to find ways or methods to plan and manage problems. Consequently, these business situations have led to the demands to make MAS sophistication. Sophistication refers to the capability of MAS to provide a broad spectrum of information relevant for planning, controlling and decision making all in the aim of creating value (Abdel-Kader and Luther, 2008). Previous empirical study has supported MAS sophistication that provides the detail in an increasing effect on making the decision correctly, and also contributes to the coordination between the agencies (Bouwens and Abernethy, 2000). Also, MAS sophistication allows the management is well within the business (Tillema, 2005). In addition, itadds value to the organization and creates a competitive advantage over competitors (Ajibolade et al., 2010).

    Interestingly, MAS sophistication has played a significant role in explaining and determining decision making performance. It is a tool management decision making (Moores and Yuen, 2001). MAS sophistication consists of four dimensions: scope, timeliness, aggregation, and integration (Chenhall and Morris, 1986, cited in Tillema, 2005, p.106). First, scope is the continuum with narrow scope at one end and broad scope at the other (Bouwens and Abernethy, 2000). Second, timeliness is the frequency of reporting and speed of reporting (Bouwens and Abernethy, 2000). Third, aggregation is the summary information by functional area, by time period or through decision models (Bouwens and Abernethy, 2000). Last, integration consists of information about the activities of other departments within the firm as well as information as to how the decisions made in one department may influence the performance of the others (Bouwens and Abernethy, 2000).

    This study is conducted in Thailand one of the fast growing countries in Asia that has faced the problem of improving the status of economic and social development improved by developing the manufacturing industry within the country. It is regarded as the roles and tools crucial for economic and social development in developing countries (Ajibolade et al., 2010). Hence, the desire to lead this evolution with the participation of the manufacturing sector should focus on motivation interest in research related to the MAS. It makes recommendations about how to or guide for business in order to improve and develop MAS to make the business successful and competitive with the competitors. It also makes business can operate sustainably in the future. Moreover, the research relates to the MAS which are important and essential for doing business especially in developing countries. Moreover, the research also has been studied little in developing countries (Ajibolade et al., 2010). Therefore, the gap makes it interesting to study the MAS sophistication and decision making performance in the production of food exporting companies in Thailand. Mainly, this will provide the evidence on the relationship between MAS sophistication and operational decisions that will help improve the performance of manufacturing exports in office Thailand. In addition it adds to the literature of those conducted in developing countries on the issues related to the MAS sophistication.

    The key research questions are: (1) How does MAS sophistication have a significant effect on information quality, information advantage and information value?, (2) How do information quality and information value have an important influence on information advantage?, (3) How do Information quality, information advantage and information value have an important influence on decision making performance?, (4) Whether information quality, information advantage and information value are the mediators of these relationships, (5) How does organization learning moderate the relationships between MAS sophistication; and a) information quality, b) information advantage, c) information value and d) decision making performance?, and (6) How does environmental turbulence moderate the relationships between a) information quality, b) information advantage, c) information value, and d) MAS sophistication and decision making performance?

    The study proceeds in the following steps. The first section reviews existing significant literature in the areas and streams of MAS sophistication, Information quality, information advantage, information value, decision making performance, organization learning and environmental turbulence, links between the concepts of the aforementioned variables, and develops the hypotheses of those relationships. The next addresses research methods, including data collection, measurements, and statistics. The third shows the results of the analysis and the corresponding discussion. The final summarizes the findings of the study, provides both theoretical and managerial implication. Limitations and suggestions for further research of the paper are also presented.


    In this study, MAS sophistication is the main determinant of driving decision making performance through mediating functions of information quality, information advantage and information value. In addition, organization learning and environmental turbulence are treated as the moderators. Thus, the conceptual, linkage, and research model presents the associations between MAS sophistication and decision making performance as shown in Figure 1 below.


    2.1 Scope of MAS Sophistication

    As for the first dimension, scope of MAS sophistication refers to continuum with narrow scope at one end and broad scope at the other. With narrow scope, information has been associated with traditional accounting systems in that these systems typically are limited to providing information, that is, internally focused, financial, and historically-based information while broad-scope information is information that is also externally focused, non-financial, and future-orientated (Bouwens and Abernethy, 2000). Information has expanded the scope of what it makes a variety of information and can respond to the demand for information management today as well (Ajibolade et al., 2010).MAS is extended to make the data of the business to gain more advantages in accordance with the desire to use the information for strategic decisions (Heidmann et al., 2008). Especially, the scope of information is increasing, whether the link from information to external, non-financial information, including relevant information in the future, firms have received information to be used in decision making and affected the performance of the business of the executive management to plan and manage the risk issues. The scope of MAS will impact positively on the data quality, data value and create competitive advantage for the decision of the administrative decisions related to the management. For example, the business environment has changed over time. MAS with a scope increase will provide more information to help executives make decisions properly. And also, it will facilitate in order to make the data useful for decision making about the participatory budgeting (Tsui, 2001). Moreover, business can operate to survive in the current competitive situation. Hence, the scope of MAS sophistication is likely to influence firms to enhance their information quality, information advantage, and information value. Therefore, the aforementioned relationships are hypothesized as shown below.

    Hypothesis 1a: The greater the scope of MAS sophistication is, the more likely that firms will achieve higher information quality.

    Hypothesis 1b: The greater the scope of MAS sophistication is, the more likely that firms will achieve higher information advantage.

    Hypothesis 1c: The greater the scope of MAS sophistication is, the more likely that firms will achieve higher information value.

    2.2 Timeliness of MAS Sophistication

    Timeliness is the second dimension of MAS sophistication. It refers to the frequency of reporting and speed of reporting. Frequency is defined as how often information is provided to managers while speed pertains to the time lag between the time when a manager requests information and the time when it is made available (Bouwens and Abernethy, 2000). Speed and frequency of reporting of management accounting that executive get the information up to date (Ajibolade et al., 2010). Moreover, the MAS with a frequency of presentation of data often result administrators to be able to quickly get feedback which can be considered that such information will be useful and valuable. Likewise, the speed and frequency of reporting make the information available to date that the information will be correlated with the probability of future events which may affect significantly the ability to compete of the business(Chong and Eggleton, 2003).

    MAS that provides a quick and timely manner will result in a positive way as being the nature of quality information. The information is...

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