An Examination of the Relationship Among World-Class Manufacturing Practices, Non-Financial Performance Measures, and Firm Profitability

Posted: 27 Oct 2003

See all articles by Rosemary Fullerton

Rosemary Fullerton

Utah State University - School of Accountancy

Cheryl Susan McWatters

Telfer School of Management, University of Ottawa; University of Ottawa - Management

Abstract

World-class manufacturing (WCM) emphasizes excellence through lean production practices of continuous improvement and is incorporated within the broad definitions of just-in-time (JIT) and total quality management (TQM). Increased profitability from implementation of these practices is generally assumed, yet empirical studies examining WCM practices and firm profitability report mixed results. One reason suggested for the lack of reported improved firm performance is the deficiency of management accounting systems to reflect appropriately operational improvements. This research examines whether the use of JIT and TQM, in conjunction with the use of non-financial performance tools for evaluating these practices, affects firm profitability. The survey data provide empirical evidence that investments in WCM practices of JIT and TQM, coupled with the complementary use of non-financial performance measurement tools, such as benchmarking and tracking manufacturing efficiency, contribute to higher financial performance.

JEL Classification: M40, M41, M49, M11

Suggested Citation

Fullerton, Rosemary and McWatters, Cheryl Susan, An Examination of the Relationship Among World-Class Manufacturing Practices, Non-Financial Performance Measures, and Firm Profitability. Available at SSRN: https://ssrn.com/abstract=449880

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)

Cheryl Susan McWatters

Telfer School of Management, University of Ottawa ( email )

Ottawa, Ontario
Canada

University of Ottawa - Management ( email )

Ottawa, Ontario
Canada

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