نیروهای رقابتی و اهمیت سیستم های کنترل مدیریت در شرکت های اقتصادی در حال ظهور : اثر تعدیل جهت گیری بازار های بین المللی

Using survey and archival data from exchange-listed Chinese firms, we investigate the relationship between competitive forces (i.e., the threat of foreign entrants and buyers’ bargaining power) and the importance that the firms place on their management control systems (MCS), and whether the firms’ international market orientation moderates this relationship. We examine five MCS practices—formal procedures, strategic planning, budget targets, approval procedures, and participative budgeting—both as a package and separately. We predict and find a positive association between the threat of foreign entrants and the importance that the firms place on their MCS, but this association is larger for firms competing predominantly in the domestic market than for those competing predominantly in international markets. Further, we predict and find that the association between buyers’ bargaining power and the importance that the firms place on their MCS is larger for firms competing predominantly in international markets than for those competing in domestic markets. We probe deeper into our empirical findings using qualitative data collected from post hoc interviews with managers of Chinese firms and those of international firms operating in China. We discuss the implications of our findings and provide some directions for future research.

Accounting scholars have examined how emerging-economy state-owned enterprises have modernized their management control systems (MCS), owing in part to increasing market competition triggered by the opening of their domestic markets to global players.1,2 Despite considerable interest in MCS adoption by emerging-economy firms (Firth, 1996, Lin and Yu, 2002 and O’Connor et al., 2004), the literature has devoted little attention to emerging-economy firm strategy, particularly in relation to how firms configure their MCS in relation to their competitive forces (Porter, 1987, Porter, 1991 and Porter, 1998) and international market orientation (Dawar and Frost, 1999 and Luo and Tung, 2007). Thus, with one notable exception (Anderson & Lanen, 1999), extant research does not distinguish between firms that compete predominantly in the domestic market and those that compete in both the domestic and foreign markets. Anderson and Lanen’s (1999) small-sample study using 14 Indian firms provides preliminary evidence of an association between firms’ initial experience with and exposure to international markets and changes in their management accounting practices following the liberalization of the Indian economy. This study extends the empirical accounting literature by investigating the relationship between two competitive forces—the threat of foreign entrants and buyers’ bargaining power (Porter, 1991)—and the importance that firms place on their MCS, and whether the relationship is moderated by the firms’ international market orientation. The focus on MCS in emerging-economy firms is important for several reasons. First, in contrast to developed-nation firms, emerging-economy firms—particularly those from China (Hong & Sun, 2006)—have relied heavily on foreign direct investment (FDI) to accelerate their modernization, which is characterized by the adoption of Western management accounting practices (Firth, 1996 and O’Connor et al., 2004). Second, business transactions involving emerging-economy firms are such that social, political, and economic factors are likely to impact the importance placed on MCS (Warner, 2003, p. 4). Third, more emerging-economy firms are seeking global expansion in ways different from the approach taken by their developed-nation counterparts, which can provide new insights into how firms use their MCS to manage such expansion. For example, emerging-economy firms are using international mergers and acquisitions to leapfrog the technology innovation gap between developed-nation and emerging-economy firms (Luo & Tung, 2007).3 As the largest emerging market, China provides an ideal setting for this study for two important reasons. First, China’s entry into the World Trade Organization (WTO) in late 2001 opened the country to foreign investors (China Business Review, 2000), and provided impetus towards the global expansion of its firms. Second, the wide ranging and complex institutional changes accompanying China’s transition from a centrally planned to a market-driven economy have intensified domestic and foreign competition (e.g., for customers and distribution channels) for Chinese firms (Li, Poppo, & Zhou, 2008). We collected archival data from the annual reports of a sample of 154 Chinese firms drawn from the population of firms listed in the Shanghai and Shenzhen Stock Exchanges. In this study we assess the importance that firms place on their MCS based on a survey of senior-level managers from our sample firms (i.e., profit- and cost-center managers in various divisions, branches, and units) (Merchant & Otley, 2006). We examine five MCS practices—formal procedures, strategic planning, budget targets, approval procedures, and participative budgeting—both as a package (Chow, Kato, & Shields, 1994) and separately. To probe deeper into our empirical results, we also consider the results of ex-post interviews with the managers of thirteen exchange-listed Chinese manufacturing firms and eight international firms doing business in China. We predict and find that the importance emerging-economy firms place on their MCS is positively associated with the threat of foreign entrants. This association is larger for firms competing predominantly in the domestic market than for those competing predominantly in international markets. The former firms typically have fewer alternative markets and learning opportunities abroad, which limits their ability to sell products at higher margins. We also predict and find that the association between buyers’ bargaining power and the importance that emerging-economy firms place on their MCS is larger for firms competing predominantly in international markets than for those competing in the domestic market. Large international customers (e.g., manufacturers and retailers) are more likely than large domestic customers to impose contracting, monitoring, and cost demands on their emerging-economy suppliers (Kelly and Gosman, 2000 and Noll, 2005). The remainder of the study is organized as follows. The next section develops our hypotheses, after which we describe our data collection methods, the empirical model used to test our hypotheses, and the results. The final section summarizes our findings and their implications, discusses the study’s limitations, and provides directions for future research.

Using survey and archival data from exchange-listed Chinese firms, we investigate the relationship between two of Porter’s (1991, 1998) competitive forces—the threat of foreign entrants and buyers’ bargaining power—and the importance that firms place on their MCS, and whether this relationship is moderated by the firms’ international mar- ket orientation. We predict and find a positive association between the threat of foreign entrants and the importance that firms place on their MCS, and this association is larger for firms that compete predominantly in the domestic market than for those competing predominantly in inter- national markets. Further, we predict and find that the firms’ international market orientation moderates the association between the buyers’ bargaining power and the importance the firms place on their MCS. Specifically, we find that the impact of the buyers’ bargaining power is larger for firms competing predominantly in interna- tional markets than for those competing in domestic mar- kets. When we examine the MCS practices separately, the results are qualitatively similar to the results concerning the aggregate MCS. From a practical standpoint, our results point to the need for emerging-economy firms to focus on MCS practices that support their goals of accessing and exploiting global market opportunities and resources more rapidly and efficientlyAnalyses of post hoc interviews with managers of Chi- nese firms show that several other factors are also likely to play a role in the importance that firms place on their MCS, such as the ‘‘Chinese’’ way of doing business, passive compliance with MCS practices instead of using them as management tools, senior management leadership, and the risks associated with high-power customers. The in- sights gleamed from the post hoc interviews suggest that the inclusion of these additional factors can sharpen the findings, in part by capturing their role in the importance that firms place on their MCS. As mentioned earlier, this study followed best practices, both in the development and pre-test of the survey instru- ments, as well as in the process used to invite potential survey participants. For example, we elicited responses from two senior managers per firm to reduce common method bias, and found that the mean responses between each pair of managers are not significantly different. Nev- ertheless, this study is subject to the typical limitations of survey-based research, including the validity and reli- ability of items and tests. In particular, the findings on the focal variable (the importance of MCS or MCS prac- tices) are primarily based on survey questions that elicit managers’ perceptions of the ‘‘extent’’ of use (e.g., Widener, 2007 )—as opposed to the ‘‘importance’’ of use—of the MCS practices in the firms. This divergence between the theo- retical construct and the operational measure weakens the operationalization of our dependent variable, and thus, represents an internal validity threat to this study. Other limitations of this study point to several direc- tions for future research. First, the measure that uses the percentage of a firm’s sales to its top five customers as a proxy for buyers’ bargaining power may not fully capture buyers’ bargaining power, which can partly depend on the range of alternatives available to buyers. Similarly, we relied on the international economics literature to con- struct a continuous measure to proxy for the firms’ inter- national market orientation. Future research should endeavor to build on this and previous studies to construct a more nuanced measure of international market orienta- tion that includes other factors, such as overseas subsidiar- ies and assets. Second, we focus on traditional MCS practices used by emerging-economy firms. Future re- search should examine other management accounting practices, such as strategic performance measurement sys- tems and activity-based costing (e.g., see Chow et al., 2007 ). Third, this study focuses only on exchange-listed firms, which presumably have advanced further in their transi- tion to a market-driven economy than their non-listed counterparts. Future research could examine whether non-listed emerging-economy firms take a different path towards internationalization. For example, international business studies show that some firms begin their lives with a high degree of born-globalness ( Filatotchev, Liu, Buck, & Wright, 2009; Kuivalainen et al., 2007; Sapienza, Autio, George, & Zahra, 2006 ). As such, these firms create sustainable competitive advantages based on unique tech- nologies and innovation, which they leverage worldwide ( Filatotchev et al., 2009 ). Future research could build on the international business research and the results of thisstudy to provide further insights into the internationaliza- tion of emerging-economy firms and its role in the impor- tance that the firms place on their MCS. Fourth, this study focuses on two of Porter’s (1991, 1998) five competitive forces. As discussed earlier, we con- trol for the suppliers’ bargaining power and our regression results show no evidence of an association between this variable and our dependent variable. Furthermore, we report preliminary results of robustness tests that control for the intensity of competition (using the Herfindahl index) and our regression results show no evidence of an association between this variable and our dependent vari- able. However, our analysis is limited by the fact that we could only capture intensity of competition in the domes- tic industries represented in our sample. This is because of the inherent measurement challenges of capturing the intensity of competition on the international markets. Expanding the investigation to include other forces in Porter’s industry analysis could provide further insights into the multi-dimensional nature of these forces and their potential relationship to the importance that firms place on their MCS. In addressing these research questions, accounting scholars stand to benefit from insights pro- vided by the emerging body of studies on buyer–supplier relationships (e.g., Cai & Yang, 2008; Parmigiani & Mitchell, 2010 ), the threat of substitute products ( Atsmon et al., 2010 ), and the intensity of rivalry among core competitors ( Adams et al., 2006 ). A final theme for future research points to the role of other external factors, such as the role of government own- ership as either facilitator or inhibitor of the modernization process in emerging economies (e.g., Erdener & Shapiro, 2005 ). Little is known about which of these two roles gov- ernment would play if it were a dominant shareholder of newly listed firms. In analyses that examine the moderat- ing effect of international market orientation on the associ- ation between government ownership and the importance that the firms place on their MCS, we find preliminary evi- dence (not reported here) that government ownership plays the role of a ‘‘soft budget constraint’’ for internation- ally oriented firms, while it plays the role of facilitator for domestically oriented firms. Thus, more research is needed to examine how the different roles of government owner- ship may affect the importance that emerging-economy firms place on their MCS.