Financial Consequences from Implementing Lean Manufacturing with the Support of Non-Financial Management Accounting Practices

48 Pages Posted: 1 Aug 2005

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: November 1, 2005

Abstract

In the last 30 years, many U.S. firms have adopted lean manufacturing strategies. Despite evidence of substantial variation in firms' success with JIT, TQM, and other lean strategies, relatively few studies have examined management accounting practices as a potential source of such variation. Using structural equation modeling, this study examines two advanced management accounting practices - benchmarking and the use of non-financial manufacturing performance measures - as potential mediators of financial performance in lean manufacturing environments. Consistent with the view that firms' management accounting systems must fit their operational strategies, our structural model indicates that lean strategies' financial performance effects are enhanced when non-financial manufacturing performance measures and benchmarking are included in a firm's management accounting system.

Keywords: Non-financial management accounting practices, Lean manufacturing, Structural equation modeling, Financial performance

Suggested Citation

Fullerton, Rosemary and Wempe, William F., Financial Consequences from Implementing Lean Manufacturing with the Support of Non-Financial Management Accounting Practices (November 1, 2005). AAA Management Accounting Section 2006 Meeting Paper, Available at SSRN: https://ssrn.com/abstract=773645 or http://dx.doi.org/10.2139/ssrn.773645

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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