Transformational leadership style, reward systems, management accounting system information and managerial performance the impact of ownership type in vietnamese enterprises

Introduction

Research Background

In a competitive landscape, managers need comprehensive information to make informed decisions, with accounting information being vital for this purpose (Demski, 2008) A modern management accounting system (MAS) effectively provides this critical information (Bromwich, 1990; Mia & Clarke, 1999) The MAS information encompasses both financial and non-financial data from various internal and external sources, covering historical and future events (Chenhall & Morris, 1986) However, the impact of MAS information on decision-making and performance improvement is influenced by various factors and contextual elements (Chenhall, 2007).

Previous research has explored various factors affecting managers' use of Management Accounting Systems (MAS) information, including environmental uncertainty, organizational structure, task uncertainty, market competition, information technology, span of control, organizational size, culture, corporate strategy, and industry However, there is a noticeable gap in studies examining the impact of leadership style, reward systems, and ownership type on this topic.

12 transitional economies Given that context is an important factor influencing the effectiveness of managers’ use of the MAS information for decision making (Chenhall,

This study explores how leadership style, reward systems, and ownership type affect managers' utilization of Management Accounting System (MAS) information for decision-making in Vietnam's transitional economy.

Vietnam is currently transitioning from a centrally planned economy to a market-oriented one, where the state previously controlled all means of production, resulting in a highly centralized economic system Dominated by state-owned and collective enterprises, this system saw state-owned enterprises holding the majority of national assets and contributing approximately 50% to the state budget before 1987 A uniform accounting system was implemented to manage funding, accounting, and cash-flow control, aligning with the characteristics of the centrally planned economy In this environment, managers relied on information from this accounting system to enhance their production functions, ensuring that products were produced and distributed in line with national central planning.

Since its inception in 1986, Vietnam's economic reform, known as Đổi mới, has transitioned the country from a centrally planned economy to a socialist-oriented market economy This ongoing transformation has led to significant developments, including economic liberalization, increased private consumption, diversification of ownership structures, a rise in foreign direct investment (FDI), the establishment of stock markets, and greater integration into the global economy.

Vietnam's economy has evolved with new laws and regulations aimed at fostering a conducive business environment (Farber, Nguyen & Vuong, 2006; Vietnam, 2001) As a result, Vietnamese organizations now face competition from both local and foreign direct investment (FDI) companies (Zhu, 2002) To navigate this competitive landscape and respond to the rapidly changing market, managers in Vietnamese enterprises need diverse and valuable management accounting system (MAS) information for timely and effective decision-making (Zhu, Collins, Webber & Benson, 2008).

Research on managers' use of Management Accounting System (MAS) information in Vietnam is essential due to the country's unique characteristics as a socialist nation with a socialist-oriented market economy, which differs from China's economic development stage Additionally, Vietnam's diverse cultural influences from China, France, and the USA may affect managerial practices Key factors such as leadership style, reward systems, and ownership type need further exploration as existing studies on their impact on MAS information usage are limited, and their effects may differ significantly from those observed in market economies Notably, the complexities of ownership type and the weaker connection between rewards, organizational efficiency, and individual efforts highlight the need for tailored research in the Vietnamese context.

(Zhu et al., 2008); and that leadership style is more bureaucratic and authoritarian than in market economies (Truong & Nguyen, 2002)

Vietnamese enterprises must recognize the importance of how managers utilize Management Accounting System (MAS) information for decision-making Additionally, it is crucial to understand the impact of leadership styles and reward systems on the effective use of MAS information, as these factors significantly influence managerial performance.

Understanding how different ownership types affect managerial influences can assist organizations in developing effective leadership styles and reward systems This insight allows companies to tailor ownership structures that encourage managers to utilize Management Accounting System (MAS) information in their decision-making processes.

This study aims to enhance the understanding of the advantages of utilizing Management Accounting System (MAS) information within Vietnamese enterprises By examining the influence of various factors on managers' use of MAS information, the research seeks to empower managers to leverage this information more effectively in decision-making, ultimately leading to improved performance The study addresses key research questions related to these dynamics.

RQ1 How leadership style, reward systems, managers’ use of the MAS information, and managerial performance associate with each other in organisations in Vietnam

RQ2 How ownership type affects the relationship between leadership style, reward systems, managers’ use of the MAS information, and managerial performance in organisations in Vietnam

Research Motivations

The present study is motivated by four issues as discussed in the following sections

1.2.1 The need to examine managers’ use of the MAS information in Vietnam

The utilization of Management Accounting System (MAS) information is crucial for managers in making informed decisions that align with planned targets, ultimately enhancing managerial performance (Chenhall & Langfield-Smith, 1998; Mia & Clarke, 1999) However, there is a notable lack of research on the application of MAS information by managers in developing economies like Vietnam Existing literature indicates that no studies have explored this topic within the Vietnamese context As Vietnam transitions from a centrally planned to a market-oriented economy, the government has implemented various new laws and regulations, necessitating that managers stay informed about external factors when formulating organizational strategies Consequently, it is essential for Vietnamese enterprises to recognize how the effective use of MAS information can aid managers in making strategic, non-routine decisions that enhance performance in the dynamic landscape of a transitional economy.

1.2.2 The need to examine the influence of related factors on managers’ use of the MAS information in Vietnam

Generalizing research findings on managers' use of Management Accounting Systems (MAS) across different countries poses challenges, as accounting systems must be tailored to their specific operational contexts (Chenhall, 2007; Horngren, Datar & Rajan).

Research findings from the MAS in one country may not be applicable to others, even within the same region, because of variations in cultural, economic, political, and legal contexts.

In the context of Vietnam's rapidly changing business environment, it is crucial for enterprises to comprehend how factors like leadership style, reward systems, and ownership type influence managers' utilization of Management Accounting System (MAS) information Therefore, there is a pressing need for studies that explore the relationship between these factors and managers' use of MAS information within Vietnamese organizations.

Vietnamese leadership styles are shaped by a complex blend of traditional values and influences from China, France, and America, resulting in a unique managerial approach (Hoang, 2008) These styles can range from bureaucratic and authoritarian to more supervisory and aggressive, differing from other Asian counterparts, while also incorporating communicative and familial elements from traditional culture (Hoang, 2008; Truong & Nguyen, 2002) Understanding these diverse leadership styles is crucial for Vietnamese enterprises, as they can significantly impact the effective use of Management Accounting Systems (MAS) information in making non-routine decisions and achieving high performance.

Reward systems In the Vietnamese centrally planned economy, the reward system was not directly related to organisational efficiency and individual efforts (Doanh & Tran,

Since 1998, the system of performance-based rewards has been prevalent in Vietnamese state-owned enterprises (SOEs) throughout the reform process, while gaining popularity in the private sector as well This shift highlights the growing importance of appropriate rewards in enhancing organizational performance.

On May 17, it was observed that performance-based rewards can positively influence employee efforts, whereas non-performance-based rewards may detract from motivation Consequently, Vietnamese companies must identify the most effective reward systems to encourage managers to utilize Management Accounting System (MAS) information for decision-making, ultimately driving high performance.

In a transitional economy, a diverse range of ownership types is prevalent, contrasting with market economies where private ownership is predominant The variations in ownership types are also influenced by the different phases of the reform process.

Ownership significantly influences the management and control of organizational operations, particularly in transitional economies like Vietnam Since the 1980s, Vietnam has shifted from state and collective ownership to a diverse range of ownership types, including foreign-invested, joint-venture, local private, and state-invested enterprises This variety affects organizational characteristics such as leadership styles, reward systems, and the use of information Understanding how ownership impacts these factors can guide companies in selecting ownership types that foster effective leadership and reward systems, ultimately enhancing managers' decision-making through improved use of management accounting system (MAS) information in a competitive business landscape.

1.2.3 The need to examine the effects of leadership style and reward systems on managers’ use of the MAS information

Research indicates that leadership styles significantly influence how managers utilize Management Accounting System (MAS) information (Abernethy et al., 2010; Abernethy & Brownell, 1999; Hopwood, 1974) Chenhall (2007) emphasizes the need for further exploration of this relationship across various contexts However, studies on the link between leadership style and MAS usage are limited and yield mixed results (Moores & Yuen, 2001; Naranjo-Gil & Rinsum, 2006; Patiar, 2005) The impact of leadership style on MAS information can vary—being positive, negative, or neutral—based on factors such as the alignment between leadership and MAS, the product life-cycle stage, or cultural influences (Naranjo-Gil & Rinsum, 2006; Moores & Yuen, 2001; Patiar, 2005) Ultimately, a specific leadership style plays a crucial role in guiding managers’ decisions in a competitive landscape (Naranjo-Gil & Rinsum, 2006; O’Connor, Chow).

Understanding the connection between leadership style and managers' utilization of Management Accounting Systems (MAS) is crucial for Vietnamese enterprises This knowledge can assist organizations in aligning leadership approaches with MAS, ultimately leading to enhanced performance.

Reward systems are crucial for motivating individual performance, as highlighted by Epstein (2008) Managers utilize relevant information to inform their decision-making processes to achieve specific objectives (Eldenburg & Krishnan, 2008; Henri, 2006) The management accounting system (MAS) information significantly influences the design of these reward schemes (Rankin & Sayre, 2011).

Recent studies have largely overlooked the connection between reward systems and managers' utilization of Management Accounting System (MAS) information These reward systems are influenced by various factors, including cultural and economic contexts Notably, during Vietnam's reform process, businesses have transitioned from a reward system that minimally considered performance to one that significantly enhances the correlation between rewards and individual contributions.

Research indicates that linking rewards to performance can motivate managers to utilize broad scope Management Accounting System (MAS) information for non-routine decision-making However, there is a lack of studies in Vietnam examining the relationship between this linkage and the use of MAS information by managers Identifying the rewards that positively influence managers' use of MAS information could assist Vietnamese enterprises in developing effective reward systems to enhance decision-making.

1.2.4 The need to examine the impact of ownership type on the relationship between leadership style, reward systems and managers’ use of the MAS information

In transitional economies, various ownership types exist, but private ownership is predominant in market economies, with differences observed throughout the reform phases (Claessens & Djankov, 1999; Tan, 2002) These diverse ownership structures can impact organizational characteristics, such as leadership styles and reward systems, which in turn affect the utilization of broad scope Management Accounting Systems (MAS) information However, there is a lack of research examining how ownership type influences the connections between leadership style, reward systems, and the use of MAS information, particularly in the context of Vietnam where ownership type plays a crucial role in these dynamics.

Research Objectives and Scope of the Research

Research on the connections between transformational leadership style, reward systems, and managers' utilization of Management Accounting Systems (MAS) information is limited Additionally, the influence of ownership types on these relationships remains underexplored There is also a scarcity of studies investigating how managers' use of MAS information correlates with organizational outcomes.

This study investigates the impact of leadership style, reward systems, and the use of Management Accounting Systems (MAS) information on managerial performance in Vietnam's transitional economy By analyzing both direct and indirect relationships, the research aims to enhance understanding of how these factors influence performance across various ownership types Additionally, the study examines the role of ownership type in relation to managerial effectiveness, providing valuable insights for enterprises seeking to optimize their management strategies.

1 The relationship between transformational leadership style and managers’ use of the MAS information;

2 The relationship between transformational leadership style and reward systems;

3 The relationship between reward systems and managers’ use of the MAS information;

4 The relationship between transformational leadership style and managerial performance;

5 The relationship between reward systems and managerial performance;

6 The relationship between managers’ use of the MAS information and managerial performance;

7 The effects of two mediators ─ the first mediator is managers’ use of the MAS information in two relationships: (i) between transformational leadership style and managerial performance and (ii) between reward systems and managerial performance; the second mediator is reward systems in two relationships: (i) between transformational leadership style and managerial performance and (ii)

22 between transformational leadership style and managers’ use of the MAS information;

8 The moderating effect of ownership type on the direct relationships between the constructs (examined in objectives 1 to 6); and

9 The moderating effect of ownership type on the indirect relationships between the constructs (examined in objective 7)

This study examines medium to large enterprises in Vietnam, encompassing various ownership types such as state-owned enterprises (SOEs), private-owned enterprises (POEs), and foreign-owned enterprises (FOEs) The research focuses on key economic regions in Vietnam, specifically the North, Centre, and South, while excluding small companies due to their insufficient management accounting systems.

Research Model

This study's theoretical model, depicted in Figure 1.1, explores three key effects: first, the direct impact of transformational leadership style on reward systems; second, the influence of both transformational leadership style and reward systems on managers' utilization of Management Accounting System (MAS) information; and third, the combined effect of transformational leadership style, reward systems, and managers' use of MAS information on managerial performance Additionally, it examines the mediating role of managers' use of MAS information in the relationship between transformational leadership style and performance outcomes.

This article explores the relationship between managerial performance and reward systems, highlighting their role in the dynamics between transformational leadership style and managers' utilization of Management Accounting System (MAS) information Additionally, it examines how ownership type moderates these direct and indirect effects, emphasizing the significance of reward systems in enhancing managerial effectiveness.

The variables in the research model are defined below

Performance can be assessed at various levels, including industry, organization, divisions, or managerial hierarchy (Langfield-Smith, Thorne & Hilton, 2006) This study focuses on evaluating managerial performance specifically at the department level To measure the effectiveness of department managers, eight key functions—planning, investigating, coordinating, evaluating, supervising, staffing, negotiating, and representing—were utilized, as identified by Mahoney et al (1965).

Intervening variable − Broad scope MAS information

Management Accounting Systems (MAS) information is characterized by four key attributes: scope, timeliness, aggregation, and integration The scope of MAS information encompasses three dimensions: focus, which includes both internal and external information; quantification, which refers to financial and non-financial data; and time horizon, which covers historical and future-oriented information This broad scope allows MAS information to draw from various internal and external sources, integrating both financial and non-financial insights about past and upcoming events This study specifically investigates how departmental managers utilize this comprehensive MAS information.

Employees are compensated through a combination of base salaries, performance-related pay, and both financial and non-financial rewards According to Langfield-Smith et al (2006), a reward system encompasses the processes and practices used to determine employee compensation and benefits Performance measures are crucial in assessing and rewarding employee performance, and organizations must implement diverse reward systems to motivate their workforce (Davila, 2008) This study explores how departmental managers perceive the connection between rewards and employee performance.

Independent variable – Transformational leadership style

Bass (1990) identified two key dimensions of leadership styles within organizations: the transactional leadership style, which emphasizes the exchanges between managers and employees, and the transformational leadership style, which prioritizes addressing social-emotional needs.

Transformational leadership, which evolves from transactional leadership, focuses on sharing the organizational vision and providing support and guidance to employees This study explores how departmental managers perceive the transformational leadership style of their superiors.

In transitional economies, ownership types are more varied compared to those in developed countries with established capital markets Research indicates that ownership in these economies is typically categorized by the nature of the owners, which includes state, private, and foreign entities.

2005) In this light, the present study examines ownership types in three groups: state- owned, privately owned, and foreign-owned enterprises.

Research Method

This study targets managers from sales, production, accounting, marketing, and operations to gather insights on their perceptions of transformational leadership, reward systems, and the use of Management Accounting Systems (MAS) information A convenience sampling method was employed, which may introduce bias, including potential under- or over-representation of the target group To mitigate this bias, the study incorporated strategies such as reviewing existing literature, sending multiple reminders to non-respondents, and conducting in-depth interviews with managers A cross-sectional survey utilized established measurement instruments, and a pilot-tested questionnaire facilitated data collection, resulting in 191 responses gathered through an online platform.

26 based survey were used for data analysis The SmartPLS 2.0 (M3) Beta software package (Ringle, Wende & Will, 2005) was used to test the hypotheses of the PLS-SEM model of the research.

Research Setting: Vietnam

Vietnam is transitioning from a centrally planned economy to a market-oriented one, following its reunification after the Vietnam War (1954-1975) The establishment of a centrally planned economy was implemented nationwide (Chaponnière, Cling & Bin, 2007) Significant economic reforms commenced in 1986, marking the beginning of Vietnam's integration into the global economy after a prolonged period of isolation from Western nations.

“market-oriented socialist economy under state guidance” (Beresford, 2008, p 221)

The reform process was very successful Rapid economic growth (in terms of increase in GDP) driven by first-generation renovation accelerated continuously from 8.1% in

Between 1993 and 1997, economic growth surged from 9.9% to an average of 6.9% per annum during the early 21st century, driven by market reform policies and the lifting of the American embargo in February 1994 Additionally, the nation's new memberships in key organizations such as ASEAN in 1995, APEC in 1998, AFTA in 2003, and WTO in 2007 significantly contributed to this growth.

Recent events have spurred economic growth in Vietnam by boosting trade and investment, resulting in sustained high growth rates The country has emerged as a leading destination for foreign direct investment (FDI) from Western nations, making it one of the most appealing options among emerging markets.

Between 2000 and 2010, foreign direct investment (FDI) in Vietnam surged from 1.4 billion USD to 11 billion USD, driven by the rapid equitisation and privatisation of state-owned enterprises (SOEs) To foster a multi-sector economy aligned with WTO standards, Vietnam has been urged to enhance its social, economic, and legal frameworks Prior to 2006, enterprises were governed by sector-specific laws; however, from that year onward, all businesses operate under the unified Law on Enterprises established by the National Assembly in November 2005 This legislation categorizes enterprises into four ownership types: limited liability companies, joint stock companies, partnerships, and sole traders, mandating that all economic sectors, including state-owned, non-state-owned, and foreign-invested entities, adhere to these structures.

Vietnamese enterprises need Management Accounting System (MAS) information to enhance their performance amidst rapid changes in the business landscape The effective utilization of MAS information by managers is crucial in a dynamic and competitive environment (Mia & Clarke, 1999) Consequently, there is a growing need for Vietnamese enterprises to leverage MAS information for informed decision-making The degree of MAS information usage may vary based on ownership types, leadership styles, and reward systems However, there has been a lack of research focusing on the use of MAS information by managers and the influencing factors in Vietnam.

28 may provide a better understanding of managers’ use of the MAS information in a transitional economy.

Structure of the Thesis

The rest of the thesis is as follows

Chapter 2 reviews the contingency theory and the contingency-based studies regarding the MAS information The contextual variables, such as leadership style and reward systems, and their relationship with managers’ use of the MAS information are discussed Subsequently, the relationships of these variables with managerial performance, the dependent variable, are also demonstrated The impact of ownership type in the relationships between variables of the model is then considered In each section, definition of the variable, previous studies on the relationships between the relevant variables, the limitations in previous studies, and the need to conduct the research in Vietnam are addressed

Chapter 3 utilizes the discussions on the limitations found in chapter 2 to develop hypotheses of the relationships among variables in the research model Detailed arguments for each direct, mediating, and moderating effect are discussed In particular, the discussion centres on the direct relationships between transformational leadership style, reward system, managers’ use of the MAS information, and managerial performance; on the mediating role of managers’ use of the MAS information and reward systems; on and the moderating effects of ownership types on the model

Chapter 4 discusses the research methods including the questionnaire and in-depth interviews The chapter reports procedures of the study, such as sampling process,

This article outlines the process of preparing a questionnaire, conducting a pilot study, and collecting data It details the characteristics of the data and the model employed, identifies reliable instruments for measuring study variables, and discusses the procedures and tools utilized for data analysis.

Chapter 5 provides research results for the study The evaluations of the PLS-SEM measurement model and the structural model for testing the proposed hypotheses are assessed The results of PLS-SEM analyses relating to path coefficients, R 2 values, mediating and moderating effects are highlighted

Chapter 6 discusses the results of hypothesis testing for three sets of relationships: direct, indirect, and moderating effects Contributions and limitations of the research and implications for future studies are also presented, followed by the conclusion of the study

Literature Review

Contingency Theory

Chenhall (2007) defines contingency as a truth that applies only under specific conditions, emphasizing that there is no universally suitable accounting system for all organizations (Otley, 1980) The contingency approach, as noted by Fisher (1995), exists between the situation-specific and universalistic approaches The situation-specific approach focuses on the unique characteristics of organizational systems, making generalizations impractical, while the universalistic approach suggests that an optimal system can be applied universally Ultimately, the contingency approach posits that the effectiveness of system design is contingent upon the business context, allowing for some generalizations across similar organizational settings.

Contingency theory has significantly influenced management accounting studies, highlighting that the effectiveness of a Management Accounting System (MAS) is contingent upon the specific organizational context in which it is applied (Chenhall, 2007; Otley, 1980) A review of 25 years of contingency-based research (1981-2006) underscores the importance of aligning MAS with organizational circumstances for optimal performance.

In 2006, Chenhall identified six key contextual variables related to Management Accounting Systems (MAS): (1) the external environment characterized by uncertainty; (2) technology, which includes complexity, task uncertainty (TU), interdependence, and advanced technologies; (3) organizational structure, encompassing decentralization, team-based structures, and functional differentiation; (4) the size of the organization; (5) strategy, which can be entrepreneurial or conservative and includes classifications such as prospectors, analyzers, defenders, and various strategic approaches like build, hold, harvest, or product differentiation versus cost leadership; and (6) national culture.

Environmental uncertainty significantly influences contingency-based research on broad scope Management Accounting Systems (MAS) information Studies indicate that in high uncertainty environments, managers tend to rely more on broad scope MAS information for decision-making (Agbejule & Burrowes, 2007; Chenhall & Morris, 1986; Chong & Chong, 1997; Gordon & Narayanan, 1984; Mia).

1993) Studies investigated the impact of technology on managers’ use of the MAS information in different contexts For example, Chong and Eggleton (2003) and Chong

Research by Mia and Winata (2004) indicates that the impact of Management Accounting Systems (MAS) information on manager performance varies with the level of managerial trust; high trust leads to positive effects, while low trust results in negative outcomes Additionally, earlier studies have explored the influence of advanced technologies, including total quality management, just-in-time manufacturing systems (JIT), and activity-based costing, on managerial effectiveness.

Research indicates that Just-In-Time (JIT) applications enhance managers' utilization of Management Accounting System (MAS) information, which subsequently boosts the adoption of information and communication technology However, the impact of organizational structure on the use of MAS information is context-dependent For instance, Gordon and Narayanan (1984) found no significant correlation between broad scope information and organizational structure in mid-western firms Additionally, Choe (1998) noted that less structured organizations tend to favor broad scope MAS information, while mechanistic organizations prefer narrow scope information The effectiveness of broad scope MAS information in decision-making can also fluctuate based on the alignment of organizational structure with the firm's life cycle stages or the specific functions of managers, as highlighted by Moores & Yuen (2001) and Mia & Chenhall (1994).

Researchers highlight that some contextual factors, such as leadership style (Chenhall,

Research on the impact of contextual factors such as reward systems and ownership types on managers' utilization of Management Accounting System (MAS) information remains limited Previous studies have explored the influence of leadership styles on performance and job satisfaction, as well as their effect on MAS design and departmental performance Notably, Riahi-Belkaoui highlighted how reward systems can affect budgeting techniques, while ownership type has been identified as a significant variable in the adoption of management accounting practices and implementation of management control systems Despite these insights, there is still a lack of comprehensive studies addressing how these contextual elements specifically influence managers' use of MAS information.

Chenhall (2007) suggests that insights from contingency-based studies can guide organizations in effectively utilizing broad scope Management Accounting Systems (MAS) in specific contexts This study aims to apply contingency theory to assess how managers in various Vietnamese enterprises utilize MAS information, considering the influence of contextual factors like leadership style, reward systems, and ownership type Understanding these associations can enhance the comprehension of managerial practices within Vietnam's transitional economy.

35 issue in the Vietnamese context Further discussion on this issue is presented in the next section.

Contingency-based Studies on Managers’ Use of the MAS Information

Management accounting systems (MAS) play a crucial role in organizational management information systems by facilitating planning, controlling operations, and measuring performance A MAS comprises four key components: costing systems, budgeting systems, performance measurement systems, and cost management systems According to Chenhall and Morris, MAS information is characterized by scope, timeliness, aggregation, and integration This study emphasizes the scope of MAS information, which encompasses three dimensions: focus on internal and external information, quantification of financial and non-financial data, and a time horizon that includes both historical and future-oriented insights Broad scope MAS information integrates various internal aspects such as operations, finance, marketing, and human resources, alongside external factors like economic conditions and customer preferences, while considering both historical data and future projections.

The utilization of broad scope Management Accounting Systems (MAS) in managerial decision-making is influenced by various contextual factors Contingency-based research has been conducted to explore the interplay between these contextual elements and MAS A review of existing studies in this area offers valuable insights into the propositions connecting MAS to effective decision-making.

36 contextual factors Table 2.1 provides a summary of these previous studies on broad scope MAS information and related variables

Previous research has explored Management Accounting Systems (MAS) through various lenses, including design, usefulness, and managerial usage Key contextual factors influencing MAS design include perceived environmental uncertainty (PEU), strategy, task uncertainty, decentralization, and organizational structure These factors also shape managers' perceptions of MAS's usefulness The effectiveness of MAS usage varies based on the alignment between the system and contextual elements, life cycle stages, managerial backgrounds, and organizational culture While numerous studies have investigated the impact of these contextual factors on MAS information usage, most have been conducted in developed countries like the United States.

& Ellis, 2001), Australia (Abernethy & Guthrie, 1994; Chenhall & Morris, 1986; Chong

& Eggleton, 2003; Mia & Chenhall, 1994; Mia & Winata, 2008), and Finland (Agbejule, 2005)

Table 2.1 Summary of Studies Relating to MAS

Author(s)/Year Country Related variable(s) Dependent variable(s) Perspectives of MAS Findings Sample

PEU Organisational structure Information characteristics

Three characteristics of information: external, non-financial and ex ante

Organisational information system was not significantly related to organisational structure

Decision makers are likely to use more broad scope information when PEU is greater

34 senior managers from profit-oriented, medium size, mid- western domiciled firms

Perceived usefulness of MAS information in four dimensions: scope, integration, aggregation and timeliness

DEC was related to aggregated and integrated information

PEU was related to broad scope and timely information Organisational interdependence was related to broad scope, aggregated and integrated information PEU was indirectly related to organisational interdependence through DEC

Performance MAS design The match between MAS task predictability and coordination modes and good performance as measured by user information satisfaction are significantly associated

Managerial performance MAS sophistication in four dimensions and available information

Sophisticated MAS had a positive (negative) effect on performance under high (low) levels of uncertainty

42 managers/owners of light engineering manufacturing firms

Span of control Perceived task interdependence

MAS Perceived MAS usefulness in four dimensions: scope, integration, aggregation and timeliness

Span of control was positively and directly related to broad scope MAS information

Span of control had an indirect positive relationship with four types of MAS information through the intervention of perceived task interdependence

Sub-unit supervisors from 21 public hospitals

Job satisfaction The use of MAS information

The relationship between Perceived Environmental Uncertainty (PEU) and Management Accounting Systems (MAS) directly influences managerial performance and job satisfaction As PEU rises, managers increasingly rely on MAS information to enhance their performance However, MAS information does not mediate the relationship between PEU and job satisfaction.

(SBU) strategy Management Information System (MIS)

SBU performance Quantification and time horizon of MIS (scope of the information system)

The fit between MIS and SBU strategy influences SBU effectiveness

A broad scope system is more effective in “Prospector” rather than “Defender” firms The involvement of management accountants in designing and implementing MAS is very useful

49 SBU managers from two large diversified corporations

Managerial performance Perceptions of the availability of MAS information characteristics of broad scope and aggregation

The interaction between DEC and the availability of MAS information had a positive (negative) effect on managerial performance under high (low) PEU

Australia Broad scope MAS information Functional differentiation and TU

Managerial performance The use of broad scope

Marketing managers used more broad scope MAS information to enhance their performance There was a negative relationship between the use of MAS information and the performance of production managers

29 marketing managers and 46 production managers chosen by their CEOs from 12 manufacturing firms

Managerial performance The perceived usefulness of MAS information characteristics (broad scope, aggregation, integration and timeliness)

The effect of the sophistication level of MAS information on managerial performance is significantly moderated by decentralisation

11 Chong (1996) Australia Broad scope MAS

There was a positive (negative) relationship between the use of broad scope MAS information and managerial performance under high (low) TU

MAS usefulness The perceived usefulness of information: timeliness and scope

There was a positive (negative) relationship between PEU and the perceived usefulness of information with managers who had an external (internal) locus of control

SBU performance The use of MAS information

SBU strategy and PEU played important roles in designing MAS; and the use of broad scope MAS information strongly affected SBU performance

62 SBU managers from manufacturing companies

14 Choe (1998) South Korea Use participation (UP)

Information characteristics and MAS performance

MAS performance: user satisfaction and system use

Information characteristics: scope, timeliness and aggregation

The study found that under low task uncertainty (TU), the use of UP did not influence the relationship between information characteristics and management accounting system (MAS) performance However, MAS performance improved significantly when there was high TU combined with aggregated and timely information, particularly when high UP was utilized.

(2) less structured organisation and broad scope, aggregated and timely information with high UP

(3) mechanistic organisation and narrow scope and disaggregated information with high UP

450 MAS users in 107 subunits (general management, finance, planning and cost management)

Managerial performance Use of broad scope

The interaction between the use of MAS information and tolerance for ambiguity impacts managerial performance

Managerial use of MAS information

There was an indirect relationship between the intensity of market competition and BU performance via MAS information use

MAS The importance of the dimensions of scope, integration, aggregation and timeliness

There was a tendency of an indirect relationship between customisation and MAS use through interdependencies, rather than a direct association between them

18 Mia (2000) Australia Adoption of JIT

Target and actual performance-related MAS information

Organisations that adopt JIT with a high (low) provision of information gain high (low) profit

Budgetary participation Budgetary emphasis MAS

Budgetary slack Broad scope MAS use PEU and budget emphasis significantly and positively affected budgetary slack Budget participation (BP) was not significantly associated with budget slack

No significant effects of MAS on the above relationships

Organisational life-cycle MAS, Strategy

Broad scope, integration, aggregation and timeliness

MAS formality changed to complement organizational characteristics across life-cycle stages

49 CEOs of business Field study: semi- structured interview 10 CEOs

MAS Budgetary participation National culture

Managerial performance Two dimensions of

MAS information: scope and timeliness

For high levels of BP, the relationship between MAS and managerial performance differed depending on cultures: negative with Chinese managers, positive with western managers

Under conditions of high TU, the use of broad scope Management Accounting Systems (MAS) information positively influenced the performance of internal managers Conversely, in situations of low TU, this same information negatively impacted internal managers' performance, while it did not significantly affect external managers at all.

MAS use Job-relevent information

High task uncertainty (TU) combined with extensive use of job-relevant information positively influences managerial performance when utilizing broad scope management accounting systems (MAS) information Conversely, low TU paired with minimal use of job-relevant information results in a negative impact on managerial performance when relying on broad scope MAS information.

131 senior managers from manufacturing companies

Managerial performance Use of MAS in five dimensions

The use of MAS had a positive (negative) effect on performance under high (low) PEU

The interaction between PEU and different dimensions of MAS impacted performance

SBU performance Fit between MAS and contexts

The level of fit between context and MAS use was positively associated with the level of performance

Sweden Department interdependencies Organisational structure

MAS design MAS design at level of detail and frequency of reporting

MAS were designed to adapt to the control requirements of certain circumstances

Market competition Transformational leadership MAS National culture

The use of broad scope MAS information

Positive interactions were observed between market competition, transformational leadership, and the use of broad scope Management Accounting System (MAS) information, all of which influenced departmental performance Specifically, transformational leadership and broad scope MAS information had a direct and favorable impact on departmental performance, whereas market competition negatively affected it.

164 department managers from 4-5 star hotels and resorts (132 from Australia and 32 from India)

Strategy Characteristics and purpose of MAS use

The use of MAS and its effects on strategy implementation were different between professional and administrative top management teams

MAS design with four dimensions: scope, integration, aggregation and timeliness

The alignment between MAS and management style had a positive effect on organisational performance

Managerial control Job relevant information

Linking broad scope Management Accounting Systems (MAS) with professional control enhances decision-making more effectively than relying on administrative control Additionally, managerial control plays a moderating role in the relationship between broad scope MAS and job-relevant information, although it does not impact managerial performance.

56 senior managers of 3 large food companies

Broad scope MAS The use of broad scope

PEU had a direct effect on supplier development, which in turn, affected the use of broad scope MAS information

Strategic change The use of broad scope

Top management team heterogeneity has a significant and direct impact on the extent and direction of strategic change Additionally, the implementation of broad scope management accounting systems serves as a partial mediator in the relationship between top management team heterogeneity and strategic change.

Managers in companies that adopt differentiation strategies or produce products in the early stages of their life cycle require comprehensive Management Accounting System (MAS) information, which significantly enhances organizational performance.

51 general managers from the electronics industry, and 57 general managers from food processing

Germany Strategy sensemaking MAS effectiveness MAS use in four dimensions: scope, integration, aggregation and timeliness

MAS dimensions have a positive effect on observation, interpretation and communication processes in strategic sensemaking

30 interviews with top and middle managers from 1 large companies

JIT application had a positive effect on the use of broad scope MAS information, which in turn positively affected the use of information and communication technology

76 BU general managers from manufacturers

The interplay between market competition and the utilization of broad scope management accounting system (MAS) information has a significant impact on non-financial performance Additionally, variations in demographic variables do not alter the outcomes regarding non-financial and financial performance.

112 departmental managers from 4-5 star hotels and resorts

Managerial performance The perceived usefulness of MAS dimensions (broad scope, aggregation, integration, and timeliness)

MAS characteristics had a significant positive effect on managerial performance

The availability of MAS played an important mediating role in the relationship between DEC and managerial performance (but not significant for the association between TU and managerial performance)

Managerial performance Broad scope and timeliness MAS information

The interaction between BP and MAS information had a positive effect on managerial performance

The use of MAS information positively affected managerial performance

150 subordinates in accounting and finance departments

Managerial performance Broad scope and timeliness

The interaction of independent variables significantly influences managerial performance, with variations observed based on the cultural backgrounds of managers Furthermore, the application of Western management accounting practices (MAPs) in Iran has proven to be less effective than in Western countries.

Level of sophistication in MAS design

Under high PEU, there was a positive relationship between MAS design and organisational performance

Slovenia Effectiveness of advertising and marketing Selling prices Reservation system and marketing strategy

The use of MAS information in two dimensions: timeliness and adequacy

General managers and departmental managers differ in their reliance on Management Accounting System (MAS) information for decision-making, as well as in their satisfaction and frequency of usage Additionally, these managers do not utilize financial and non-financial performance indicators at the same rate.

26 general managers and departmental managers from middle to large hotels

Indonesia MAS usefulness market competition

The usefulness of broad scope and timeliness MAS information characteristics

Market competition has a positive effect on the relationship between the usefulness of timeliness MAS information characteristic, SBU performance and job satisfaction

56 SBU managers from manufacturing industry

Performance The interactive and diagnotic types of MAS use

A highly interactive and low diagnostic MAS use facilitated flexible value firms achieving highest performance

Both highly interactive and diagnostic MAS use had a positive impact on performance in control value firms

MAS use Use of broad scope

MAS information differentiation strategy at the early stage of product life cycle has a positive effect on the use of broad scope MAS information

108 general managers in companies within food-processing and electronics industries

Bangladesh Corporate cultural dissonance MAS information

The MAS information adequacy gap

Decentralised MAPs, improved gathering and sharing information system, and enhanced transparency in information flow could improve managerial effectiveness

Malaysia Types of financial institutions

MAS use Use of MAS information in four dimensions: scope, integration, aggregation and timeliness

Managers from Islamic financial institutions (FIs) use more MAS information than their counterparts from conventional FIs

Use of broad scope MAS

Under high (low) BP the correlation between perceived usefulness of broad scope MAS information is high (low)

Portugal MAS use Intellectual capital

Perceived usefulness of MAS in four dimensions: scope, integration, aggregation and timeliness

MAS use has a positive effect on intellectual capital in three dimensions, which in turn improves performance

Research on managers' use of Management Accounting Systems (MAS) information in developing countries is limited (Bangchokdee et al., 2011; Patiar & Mia, 2008), particularly in transitional economies, where findings often diverge from those in developed nations (Ivankovic & Jerman, 2010; Tsui, 2001) Notably, Tsui (2001) identified that the relationship between broad scope MAS information usage and budgetary participation on managerial performance is influenced by cultural backgrounds, suggesting that Western management accounting theories may not be relevant in the context of transitional economies like China.

Reward Systems

A reward system is a crucial component of organizational management that enhances managerial performance (Davila, 2008) As defined by Langfield-Smith, Thorne, and Hilton (2006), it comprises the processes and practices used to determine employee compensation and benefits (p 627) Gross and Friedman (2004) expand this definition, stating that a reward system represents the overall value proposition an employer offers to employees (p 8) This system includes three key elements: compensation, which encompasses base pay and both short-term and long-term incentives; benefits, which cover health insurance, retirement plans, and work/life balance; and career development, which involves training, development, and advancement opportunities.

Rewards can be categorized into extrinsic and intrinsic types Extrinsic rewards come from external sources and include financial incentives like competitive salaries and bonuses, as well as non-financial benefits such as improved office conditions, travel opportunities, and recognition from senior management Intrinsic rewards, on the other hand, stem from within the individual and are driven by personal satisfaction and fulfillment.

Employees are motivated by a variety of rewards derived from their work experiences, including both tangible and intangible aspects such as the ability to choose suitable activities and the satisfaction of performing well (Chenhall & Langfield-Smith, 2003; Langfield-Smith et al., 2006) They can receive financial rewards like bonuses and benefit packages, as well as non-financial rewards that enhance their job satisfaction (Langfield-Smith et al., 2006) Tangible rewards, particularly compensation through bonuses, stock options, and pension plans, serve as powerful motivators for managers to achieve better performance (Mullins, 2010).

An effective reward system should focus on two primary objectives: recognizing employees for their past performance and motivating them to enhance their future contributions This involves careful consideration of performance metrics, including their definition, assessment, and the provision of feedback According to Kerr and Slocum (1987), reward systems can be categorized into two types: hierarchy-based systems, where managers assess their subordinates’ performance, and performance-based systems, which objectively define and evaluate performance while directly linking it to rewards.

Performance-based reward systems connect rewards to specific performance targets, motivating managers to enhance their performance Managers' roles are clearly defined to foster this performance, creating a direct relationship between achieving budgetary goals and receiving rewards By linking rewards to both meeting and exceeding budget targets, organizations can effectively drive higher managerial performance.

Shields & Wu, 1999), or achieving comprehensive performance measures (Schulz, Wu

& Chow, 2010) This study characterises reward systems in terms of the departmental managers’ perception of a link between rewards and performance targets/measures (hereafter reward systems)

Research indicates that the impact of reward systems is influenced by cultural and economic contexts (Ji, Lu & Aiken, 2007; Vance et al., 1992) A study by Vance et al (1992) revealed notable differences in the use of intrinsic and extrinsic rewards between Western firms, particularly in the United States, and those in the Asia Pacific region, including Indonesia, Malaysia, and Thailand Additionally, Ji et al (2007) emphasize that the rapidly changing business environment in China, a transitional economy, introduces greater uncertainty in the factors influencing evaluation and reward systems compared to Western countries.

In Vietnam, reward systems in state-owned enterprises (SOEs) are primarily dictated by government regulations, often lacking a direct connection to organizational efficiency and employee performance Conversely, private sector companies have the flexibility to design reward systems that closely align with individual and team achievements While reward systems in Vietnam have evolved, significant disparities among enterprises persist, influenced by various factors such as leadership style and ownership type The impact of these contextual elements on reward systems and their effectiveness in enhancing performance remains ambiguous, particularly in the face of a rapidly changing business landscape.

Despite numerous studies on reward systems in Vietnam primarily focusing on human resource management, there is a notable gap in research examining the relationship between reward systems and managers' use of Management Accounting System (MAS) information To enhance the understanding of rewards in various contexts, particularly within Vietnam's transitional economy, further investigation is essential Additionally, Vietnamese enterprises must recognize the interplay between reward systems and contextual factors to effectively implement suitable reward strategies within their organizations.

Reward systems and managers’ use of the MAS information

Reward systems play a crucial role in management accounting, with over 16% of studies at the Fourth Conference on Performance Measurement and Management Control focusing on the link between rewards and performance (Davila, 2008) Effective reward systems incorporate diverse performance measures to motivate employees, as highlighted by Nohria, Groysberg, and Lee (2008), who note that these systems help distinguish between high and low performers, clearly connect rewards to performance, and ensure competitive compensation Additionally, to effectively motivate managers, it is essential to regularly update rewards and clarify their purpose (Lawson & Samson, 2001).

Managers often rely on relevant information to make decisions that help achieve performance targets, such as production and cost goals, which in turn influences their use of Management Accounting Systems (MAS) information like budgets and standards (Eldenburg & Krishnan, 2008; Henri, 2006; Sprinkle & Williamson, 2007) While there is a recognized potential impact of reward systems on the utilization of MAS information, existing literature lacks comprehensive studies exploring this relationship Therefore, further research in this area can enhance the understanding of MAS and its integration with reward systems.

Leadership Style

A manager's leadership style significantly influences the development of organizational systems and the motivation of subordinates Different leadership styles impact how managers utilize Management Accounting System (MAS) information for decision-making, ultimately affecting managerial performance Additionally, the effectiveness of these leadership styles in utilizing MAS information varies based on the specific context in which they are applied.

Over the decades, researchers have explored diverse definitions of leadership style, typically centering on the leader's persona, behavior, and the dynamics of interactions with subordinates (Bass, 1985, 1990; Bass & Bass, 2008) Yukl (2012) defines leadership style as the method of influencing others to comprehend and engage with a leader's vision.

51 agree about what needs to be done and how to do it” and “facilitating individual and collective efforts to accomplish shared objectives” (Yukl, 2012, p 8)

Leadership styles can be assessed through various dimensions, including participative, democratic, autocratic, and more, as identified by Bass and others Larson et al (1986) categorize leadership into three main styles based on managerial roles: proactive managers who initiate contact, reactive managers who respond to others, and discretion managers who handle responsibilities like strategy and innovation Stogdill et al (1963) further classify leadership styles into two scales: the consideration scale, which focuses on respect for group members, and the initiation of structure scale, which emphasizes clear role definitions and expectations Additionally, Downton's (1973) classification, later developed by Burns and Bass, aligns with these roles and scales.

According to Bass (1990), leadership styles can be categorized into two types: transactional and transformational The transactional leadership style, akin to the structural initiation outlined by Stogdill et al (1963), is characterized by exchanges between managers and employees, such as rewards for good performance and consequences for poor performance In contrast, transformational leadership fosters interpersonal relationships and encourages employees to prioritize group goals over personal interests, generating awareness and acceptance of the group’s mission (Bass, 1990) Additionally, transactional leadership is reactive, while transformational leadership is proactive A comparison of the characteristics of both leadership styles is provided in Table 2.2.

Table 2.2 Characteristics of Leadership Styles

Transformational leader Charisma Provides vision and sense of mission, instills pride, gains respect and trust

Inspiration Communicates high expectations, uses symbols to focus efforts, expresses important purposes in simple ways

Intellectual Stimulation Promotes intelligence, rationality, and careful problem solving Individualized Consideration Gives personal attention, treats each employee individually, coaches, advises

Transactional leader Contingent Reward Contracts exchange of rewards for effort, promises rewards for good performance, recognizes accomplishments

Watches and searches for deviations from rules and standards, takes corrective action

Intervenes only if standards are not met

Laissez-Faire Abdicates responsibilities, avoids making decisions

Avolio, Bass, and Jung (1999) redefined leadership styles, presenting a hierarchical model that includes three key factors: transformational leadership, which encompasses charismatic/inspirational and intellectual stimulation; transactional leadership, characterized by individualized consideration and contingent rewards; and corrective avoidant leadership, which consists of management-by-exception and laissez-faire approaches This model, identified as the best fit, is detailed in Table 2.3.

Table 2.3 Re-examining the Components of Leadership Styles

Bass (1985) Bass (1990) Avolio, Bass and Jung (1999)

Active constructive (CH, IS, IC, CR)

Note CH = Charisma; IS = Intellectual stimulation; IC = Individualized consideration; CR = Contingent reward; ME = Management-by-Exception Adapted from Avolio, Bass and Jung (1999)

Avolio (2011) posits that a single manager can demonstrate both transactional and transformational leadership styles, with the former being essential for cultivating the latter (Ardichvili, 2001; Avolio, 2011) Moreover, a transactional leadership approach is particularly effective in stable business environments (Bass).

In stable markets, transactional leaders effectively motivate their subordinates through clear promises, rewards, and established rules However, in dynamic environments, organizations require senior managers with a transformational leadership style (TLS) who can adapt swiftly to rapid changes and uncertainty.

This study explores transformational leadership, as defined by Bass (1990) and Yukl (1999), emphasizing its role in enhancing subordinates' awareness of their significance and the anticipated outcomes It highlights how this leadership style motivates individuals by addressing their needs for recognition and personal growth within the organization's collective vision To assess transformational leadership, the research utilizes questions from the Multi-factor Leadership Questionnaire (MLQ), originally developed by Bass and later expanded by Avolio et al This analysis focuses on departmental managers' perceptions of their superiors’ transformational leadership, specifically examining the dimensions of charisma/inspiration and intellectual stimulation.

The effectiveness of a specific leadership style is influenced by the context in which it is applied, as highlighted by Naranjo-Gil & Rinsum (2006) and O’Connor et al (2004) Leadership styles yield varying effects across different countries and organizations, shaped by the unique business environments they operate within This suggests that the applicability of leadership theories may be limited when transferred to different contexts Therefore, it is essential to investigate how leadership styles impact managers' utilization of Management Accounting Systems (MAS) information in diverse settings However, the existing literature reveals a significant gap in research regarding this relationship, particularly within transitional economies.

In Vietnam's transitional economy, leadership styles vary significantly based on factors like location and enterprise ownership Ralston et al (1999) note that northern managers tend to adopt a more Western-oriented and individualistic approach compared to their southern counterparts Additionally, Truong and Nguyen (2002) emphasize that leadership in state-owned companies is characterized by bureaucratic, familial, conservative, and authoritarian styles, while private enterprises often reflect a familial leadership approach In contrast, joint venture (JV) companies are more inclined towards participative or transformational leadership styles.

In Vietnamese enterprises, a blend of leadership styles can significantly impact organizational characteristics, particularly in a dynamic business environment Transformational leadership, as proposed by Bass (1990), may effectively encourage managers to utilize Management Accounting System (MAS) information for enhanced decision-making and performance Given the lack of prior research on this topic in Vietnam, this study aims to explore the relationship between transformational leadership and the use of MAS information by managers, as well as its effect on managerial performance The findings are expected to shed light on how this leadership style can motivate subordinates to leverage MAS information to achieve superior performance.

Transformational leadership style and managers’ use of the MAS information

Researchers have conducted a large number of studies related to leadership style throughout the world in several fields, such as business, psychology, government, and

Research indicates that transformational leadership significantly influences organizational culture and employee motivation (Bass & Bass, 2008; Bass & Avolio, 1994; Lee) Most studies have concentrated on this leadership style, highlighting its importance in fostering a positive work environment and inspiring team members.

The literature indicates a scarcity of studies exploring the connection between transformational leadership style, managers' utilization of Management Accounting Systems (MAS) information, and managerial performance Hopwood (1974) emphasizes that leadership style influences how accounting information affects decision-making behavior Furthermore, Moores and Yuen (2001) reveal that this relationship varies across different stages of the organizational life cycle Patiar (2005) demonstrates a positive impact of transformational leadership on the correlation between managers' use of MAS information and departmental performance.

Various studies assess leadership styles using different instruments, such as the Leader Behavior Description Questionnaire (LBDQ) utilized by Hopwood (1974) and Moores and Yuen (2001), and the MLQ employed by Patiar (2005) This variation complicates the comparison of findings across studies To ensure consistency in research outcomes, this study adopts the classification and measurement tools established by Bass (1990) and Bass and Avolio (1997) to analyze transformational leadership styles in relation to managers' use of Management Accounting Systems (MAS) information and their managerial performance.

Leaders actively seek and share information to enhance group interactions and task completion; however, an overload of information can hinder their effectiveness in leading the group.

Managerial Performance

Definitions and evaluations of managerial performance

Managerial performance has been defined in various ways across studies, reflecting differing concepts of management According to Campbell, Dunnette, Lawler, and Weick (1970), it encompasses a range of managerial actions deemed optimal for effectively identifying, assimilating, and utilizing both internal and external resources This approach aims to sustain the long-term functionality of the organizational unit for which a manager is responsible (Campbell et al., 1970, p 105).

Managerial performance is defined as the extent to which successful role achievement is realized, as noted by Ferris (1977), who applied this concept to test the expectancy theory of motivation within the accounting sector In a more contemporary perspective, Spreitzer (1995) characterizes managerial performance as the degree to which a manager meets or surpasses work role expectations, focusing on managerial effectiveness in the context of psychological empowerment.

The cumulative satisfaction of all relevant stakeholders based on mutually established criteria aligns with the 360-degree performance measurement system highlighted by Fraser and Zarkada-Fraser (2001) Additionally, Dafna (2008) characterizes managerial performance as the effective application of management expertise.

1 A 360 o method is a combination of evaluations from superior, peer, subordinate and self to improve the reliability, validity, and accuracy of measurement of managers’ performance (Fletcher & Baldry, 2000)

Dafna (2008) defines management-specific skills and knowledge as applicable across various business types, emphasizing the versatility of managerial functions This definition is particularly relevant for this study, as it facilitates the analysis of diverse managerial roles within different enterprises.

Performance evaluation is a crucial component of an organizational planning and control system, aiding managers in tracking their progress toward targets (Langfield-Smith et al., 2006) It can be assessed at various levels, including industry, organization, divisions, and managerial hierarchy (Langfield-Smith et al., 2006) The performance of departmental managers is particularly significant, as they greatly influence the organization's culture and productivity (Young, Arthur & Finch, 2000) These managers are essential in coordinating, mediating, and interpreting information among different vertical groups within the organization (Floyd).

& Wooldridge, 1997) Measuring performance at departmental level can provide

“valuable feedback on the effectiveness of various resources and processes” in planning and control systems (Patiar, 2005, p 24) Consequently, this study focuses on examining managerial performance at departmental level

Managers' performance can be assessed through various criteria, including both financial outputs like sales, profits, and market share, as well as non-financial metrics (Kaplan & Norton, 1992) Additionally, key managerial abilities such as leadership, communication, problem-solving, and the capacity to work under pressure play a crucial role in evaluating performance (Neelankavil, Mathur & Zhang, 2000) Furthermore, the effectiveness of managers can also be measured by their behaviors in managing information, people, and actions.

(Mintzberg, 1994); or the managers’ skills, such as verbal communication, managing time and personal stress, motivating others, and managing conflict (Shipper & Davy, 2002; Whetten & Cameron, 2011)

Financial metrics such as profit, return on investment, return on assets, and earnings per share are essential for assessing managerial performance (Gerdin, 2005b; Kaplan & Mackey, 1992; van der Veeken & Wouters, 2002) With advancements in accounting systems, the evaluation of managerial performance has become more diverse and nuanced Both environmental and organizational factors significantly influence management accounting, necessitating detailed performance insights for specific units like product groups or sales regions, which represent environmental aspects, and departments or divisions that reflect organizational characteristics (Chia, 1995; Haldma & Lọọts, 2002) Additionally, Otley (1980) highlighted that the effectiveness of budgetary information in measuring managerial performance varies across different operating environments, with unit managers facing greater challenges in reporting accounting profits in more stringent conditions compared to liberal ones.

A functional approach is a key method for assessing managerial performance, as highlighted by Kotter (1996) and Mahoney et al (1963, 1965) This evaluation method, focusing on managerial functions, has been widely utilized in contemporary research on management accounting systems (Agbejule, 2005; Chong, 2004; Sharma et al., 2006; Soobaroyen & Poorundersing, 2008; Tsui, 2001) It measures essential aspects of managerial performance across eight functional dimensions: planning, investigating, and coordinating.

62 evaluating, supervising, staffing, negotiating, and representing These dimensions, provide a convenient framework for measuring managerial performance in this study to facilitate comparability of research results with previous studies

Managerial performance in previous studies

Previous research on management accounting systems has examined how various contextual factors, including perceived environmental uncertainty, task uncertainty, and budget participation, impact managerial performance Studies by Agbejule (2005), Gul (1991), and Mia (1993) highlight the influence of environmental uncertainty, while Chong (1996, 2004) and others focus on task uncertainty Additionally, the role of budget participation has been explored in works by Eker (2009) and Tsui, emphasizing its significance in enhancing managerial effectiveness.

2001), decentralisation (Chia, 1995; Gul & Chia, 1994), functional differentiation (Mia

This study explores the impact of various factors, including leadership style, reward systems, and ownership types, on managerial performance and the utilization of Management Accounting System (MAS) information While previous research has addressed ambiguity and job-relevant information, the role of ownership type remains under-examined By providing empirical evidence, this research highlights how these elements significantly influence performance within organizations.

Managerial performance plays a crucial role in influencing overall organizational performance, as highlighted by Herciu (2010) Effective decision-making regarding the firm's objectives, stakeholders, and customers can significantly enhance enterprise performance Additionally, variations in managerial performance can be observed across different countries and firms, largely due to factors such as cultural differences and ownership structures.

Vietnamese enterprises operate in a rapidly changing and uncertain transitional economy, necessitating enhanced managerial performance for survival and growth High-performing middle managers play a crucial role in interpreting and implementing new policies across departments, fostering an appropriate organizational culture, and boosting productivity Therefore, analyzing managerial performance in relation to contextual variables within Vietnamese enterprises can offer valuable insights into how these factors influence managers' effectiveness in Vietnam.

2.5.1 Managers’ use of the MAS information and managerial performance

Management Accounting Systems (MAS) play a crucial role in assisting top management with decision control and supporting lower-level managers in their decision-making processes By incorporating a wide range of information, MAS enhances the effectiveness of managerial decisions, particularly in dynamic environments where non-routine choices are frequent Research indicates that managers who utilize comprehensive MAS information are better equipped to establish appropriate targets and assess performance, ultimately leading to improved managerial effectiveness.

While numerous studies have explored the connection between Management Accounting Systems (MAS) and overall performance, research specifically addressing how managers utilize MAS information to enhance their performance remains scarce Notably, as highlighted in Table 2.1, there are various studies focused on the application of broad-scope MAS.

Research has shown that out of 48 studies, only 17 have focused on the use of Management Accounting System (MAS) information, and just 9 have explored its impact on managerial performance Various factors influencing this relationship have also been investigated, including Perceived Environmental Uncertainty (PEU), functional differentiation, team unity (TU), budget participation, managerial control, and organizational culture.

Ownership Type

In transitional economies, ownership types are often categorized based on the nature of the owners, including state, foreign, employee, former employee, manager, and domestic outsider Some research, particularly in countries like China and Vietnam, classifies ownership according to the host country's specific context For instance, Kato and Long (2004) and Wen (2010) condensed the six categories of corporate controllers in China into three ownership types: government (state-owned and state-owned legal-persons), private (local private individuals or firms), and foreign (foreign individuals or firms) Similarly, Le and Truong (2005b) explored ownership structures in Vietnam, highlighting the importance of understanding local dynamics in ownership classification.

The landscape of ownership in Vietnam encompasses 69 types, categorized into foreign-invested, “equitised” (partial privatization), local private companies, and state-owned enterprises Pham and Mohnen (2005) streamlined these into five classifications: state-central-owned, state-local-owned, 100% domestically privately owned, joint ventures (JVs), and 100% foreign-owned entities This study builds on prior research to analyze ownership within three primary groups: state-owned enterprises (SOEs), where the state is the largest shareholder; privately owned enterprises (POEs), which are fully domestically owned; and foreign-owned enterprises (FOEs), encompassing both partial and 100% foreign investments.

Previous studies on the impact of ownership type

Ownership significantly influences how companies manage operations in transitional economies, as highlighted by Tan (2002) and Wang & Judge (2012) Different ownership structures can lead to varying impacts on organizational activities, including leadership styles, reward systems, and information usage For instance, Wong et al (2006) found that employees in Chinese state-owned enterprises (SOEs) exhibited lower intrinsic motivation and future orientation compared to those in joint ventures (JVs) Furthermore, the transformation of SOEs into listed firms necessitated the adoption of modern leadership styles, granting managers greater authority to make decisions, as noted by Ding et al (2010) This increased authority requires managers to access more accounting information to effectively fulfill their roles.

According to the Law on Investment established by the Vietnamese National Assembly in 2005, enterprises with foreign-owned capital include those set up by foreign investors for investment activities in Vietnam, as well as Vietnamese enterprises in which foreign investors acquire shares, merge, or take over.

70 decisions for new agency relationships in a highly competitive business environment (Macias, 2002)

The type of ownership can significantly affect an organization's leadership style, reward systems, and information systems Recognizing how these factors relate to managerial performance is crucial for businesses in transitional economies Given the scarcity of research on how ownership type influences these dynamics, this study aims to explore the impact of ownership on the interplay between leadership styles, reward systems, the use of Management Accounting Systems (MAS), and overall managerial performance.

Ownership reform is a critical issue in Vietnam, particularly following the economic reforms of 1986 that transitioned the country from a system dominated by state-owned and collective enterprises to a multi-sector economy with diverse ownership types This shift has seen most state-owned enterprises (SOEs) privatized through “equitisation,” leading to the establishment of new enterprises backed by both domestic and foreign investors Each ownership type influences organizational characteristics differently; for instance, SOEs often reward employees based on seniority and hierarchy, reflecting a military and bureaucratic leadership style that fosters dependence on superiors and adherence to strict regulations In contrast, private-owned enterprises (POEs) tend to have more supportive management practices that encourage individual contributions.

71 understanding of the business environment than their counterparts in SOEs Rewards in POEs are more flexible, based on employees’ performance (Nguyen, 2008)

The contrasting leadership styles and reward systems between State-Owned Enterprises (SOEs) and Private-Owned Enterprises (POEs) can significantly impact how managers utilize Management Accounting System (MAS) information and their overall performance Recent empirical studies are beginning to explore the effects of ownership type on these leadership dynamics and reward mechanisms in Vietnam (Bartram, Stanton & Thomas, 2009; Kamoche, 2001).

Research on the influence of ownership type on the relationship between management accounting system (MAS) information usage and managerial performance remains limited Investigating how different ownership types affect variables such as leadership style, reward systems, and managerial performance could provide valuable insights for Vietnamese enterprises This understanding may guide organizations in selecting the most suitable ownership structure to improve overall performance.

Chapter 2 presents a review of the studies on MAS and the relationships among variables of the research model Although performance, MAS and relevant variables have been examined in several studies, little research has been conducted in a developing and transitional economy; in particular, no study has been carried out in Vietnam

Section 2.1 and Section 2.2 provide an overview of contingency theory and its application in management accounting systems (MAS) The influence of managerial utilization of MAS information on performance can vary significantly based on the specific context Prior research has explored these effects, highlighting the dual potential for positive or negative impacts on performance.

Few studies have explored the impact of reward systems, leadership styles, and ownership types, particularly in transitional economies like Vietnam Vietnam's unique context presents distinct characteristics in leadership and ownership, as well as in the implementation of reward systems This uniqueness suggests the potential for different outcomes compared to existing research, prompting the present study to specifically examine these factors within the Vietnamese context.

Section 2.3 highlights that the impact of reward systems on performance varies based on specific circumstances There is insufficient research exploring the connection between reward systems and how managers utilize Management Accounting System (MAS) information This study aims to investigate the relationship between reward systems, the usage of MAS information by managers, and overall managerial performance to enhance understanding of this topic.

Section 2.4 examines the relationship between leadership style and various influencing factors, highlighting multiple definitions, classifications, and measurement tools for leadership styles Leadership behavior differs across countries, economies, and organizations, indicating the need for further research Notably, Moores and Yuen (2001) explored the impact of leadership style on managers' utilization of Management Accounting System (MAS) information during different company life cycle stages, while Naranjo-Gil and Rinsum also contributed to this discourse.

In 2006, a study explored the alignment between leadership style and Management Accounting System (MAS) design, while Patiar (2005) analyzed how transformational leadership impacts the connection between managers' utilization of MAS information and the performance of their departments.

Therefore, the current study contributes to the literature by examining this relationship under the influence of ownership type

The discussion in Section 2.5 indicates that the definition of managerial performance varies throughout the studies; however, the instrument developed by Mahoney et al

The use of managerial accounting systems (MAS) to assess managerial performance has been a consistent focus in research since the 1960s While previous studies have explored the link between MAS information utilization and managerial performance, findings have been inconsistent, revealing positive, negative, or neutral relationships influenced by factors like environmental uncertainty, technological uncertainty, and cultural context Therefore, further contingency-based research is essential This study specifically investigates how ownership type affects this relationship within the Vietnamese context.

Hypothesis Development

Research Methods

Results

Discussion and Conclusion

Tiêu đề	Transformational Leadership Style, Reward Systems, Management Accounting System Information and Managerial Performance: The Impact of Ownership Type in Vietnamese Enterprises
Tác giả	Thi Thu Nguyen
Trường học	Griffith University
Chuyên ngành	Accounting, Finance and Economics
Thể loại	thesis
Năm xuất bản	2014
Thành phố	Griffith

Định dạng
Số trang	320
Dung lượng	2,13 MB