The management accounting and operations management literatures argue that the adoption of advanced manufacturing practices, such as just-in-time (JIT), necessitates complementary changes in a firm's management accounting and control systems. This study uses a sample of JIT and non-JIT plants operating in the Canadian automotive parts manufacturing industry to study the interaction among performance outcomes, intensity of JIT practices, and productivity measurement. This study provides evidence that productivity measurement mediates the relationship between performance outcomes and intensity of JIT practices. Specifically, both JIT and non-JIT plants that use a broader range of productivity measures are more efficient and profitable than other plants. Also, plants that employ industry-driven productivity measures are more profitable and efficient than plants that employ idiosyncratic productivity measures, especially if the former are more JIT-intensive than the latter. Furthermore, plants that employ quality productivity measures are less efficient and less profitable than those that do not, especially if they use more intensive JIT practices. The latter result is consistent with JIT-intensive plants overinvesting in quality. This study also finds that plants that invest more in buffer stock are less efficient and less profitable, especially if they use more intensive JIT practices. Despite the fact that plant profitability and efficiency are highly correlated, JIT-intensive plants are more profitable but less efficient than plants that are not JIT-intensive, after controlling for productivity measures, plant size, and buffer stock. This result suggests that despite wasting resources, JIT-intensive plants are still able to generate relatively higher profits than plants that are not JIT-intensive.
- Management accounting systems
- Plant efficiency
- Productivity measures
ASJC Scopus subject areas
- Economics and Econometrics