Management Control Systems and Contextual Variables in the Hospitality Industry
33 Pages Posted: 15 Oct 2009
Date Written: October 16, 2009
Purpose – The paper examined management control systems (MCS) in Indonesian hospitality sector. This study examines the impact of six contextual factors at one time to determine the importance of each factor on the design of MCS.
Design/methodology/approach - The paper is based upon data collected through a survey sent to “star” hotels in Central Java, Indonesia. Using Chenhall (2003) design, a regression equation is run to examine the relationship between MCS and the contextual variables of environment, technology, structure, size, strategy and culture.
Findings - The paper finds that higher levels of the contextual variables of technology, structure, and culture are related to more sophisticated MCS while size is related to more traditional MCS.
Research limitations/implications - These findings are related to the hospitality industry in Indonesia. Future research could examine different settings (i.e. country, industry, etc) and investigate the effect of each contextual variable on the relationships between MCS and firm performance.
Originality/value - The present study extends the scope of MCS system in accounting literature by testing Chenhall (2003) works on the relationship between contextual variables and MCS. It attempts to fill the gap in contingency-based studies that have previously focused on one aspect of contingency by considering six contextual factors. Furthermore, this paper also contributes to a fuller understanding of MCS practices in Indonesia and the hospitality industry and helps management in determining its most effective design.
Keywords: Hospitality management, Management Control Systems, Indonesia, Contextual
JEL Classification: M40, M49
Suggested Citation: Suggested Citation