Management control systems, cooperation and performance in strategic supply relationships: A survey in the mines

Abstract

This study investigates the relationships between two management control systems (performance measurement systems and socialisation processes) and cooperation and how that translates into relationship performance in strategic supply relationships. Drawing on the existing literature, we develop a theoretical model that shows the predicted relationships between our theoretical constructs. We test the theoretical model using partial least squares (PLS) on survey data collected from the Australian mining and resources sector. The results show direct relationships between performance measurement systems (PMS) and three dimensions of cooperation (information sharing, problem solving and willingness to adapt to changes) and an indirect relationship between PMS and restraint from use of power. Also, PMS is found to have a facilitating role in socialisation processes. The predicted association between socialisation processes and cooperation was partially supported. Also, three dimensions of cooperation (problem solving, willingness to adapt to changes and restraint from use of power) were found to be directly associated with relationship performance while information sharing had indirect relationship with performance. The results show a positive association between PMS and relationship performance. Finally, the results indicate that socialisation processes are indirectly related to performance. The results have important implications for both management control research and management control systems design.