Lean Manufacturing, Non-Financial Performance Measures, and Financial Performance

International Journal of Operations and Production Management, Forthcoming

51 Pages Posted: 22 Dec 2008

See all articles by Rosemary Fullerton

Rosemary Fullerton

Utah State University - School of Accountancy

William F. Wempe

Texas Christian University - M.J. Neeley School of Business

Date Written: December 19, 2008

Abstract

In the last 30 years, many U.S. firms have adopted lean manufacturing strategies. Despite evidence of variation in firms' success with lean strategies, few studies have examined firms' management accounting systems (MAS) as a potential source of the variation. This study uses structural equation modeling to examine whether one MAS component - the use of non-financial manufacturing performance (NFMP) measures - mediates the relationship between lean manufacturing and financial performance. Consistent with the view that firms' MAS must fit their operational strategies, the results indicate that lean strategies' financial performance effects are indeed mediated through the utilization of NFMP measures. The study also reports confirming results from regression-based tests examining the mediating role of the use of NFMP measures in the lean manufacturing/financial performance relationship.

Keywords: accounting/operations interface, lean manufacturing, financial performance, structural equation modeling

JEL Classification: M40

Suggested Citation

Fullerton, Rosemary and Wempe, William F., Lean Manufacturing, Non-Financial Performance Measures, and Financial Performance (December 19, 2008). International Journal of Operations and Production Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1318393

Rosemary Fullerton (Contact Author)

Utah State University - School of Accountancy ( email )

Jon M. Huntsman School of Business
Logan, UT 84322-3540
United States
435-797-2332 (Phone)
435-797-1475 (Fax)

William F. Wempe

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States
817-257-7614 (Phone)
817-257-7227 (Fax)

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