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Management Control Systems for J.I.T.: An Empirical Comparison of Japan and the U.S.Author(s): Shirley J. Daniel and Wolf D. ReitspergerSource: Journal of International Business Studies, Vol. 22, No. 4 (4th Qtr., 1991), pp. 603-617Published by: Palgrave Macmillan JournalsStable URL: http://www.jstor.org/stable/154814 .

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MANAGEMENT CONTROLSYSTEMS FOR J.I.T.:AN EMPIRICAL COMPARISONOF JAPAN AND THE U.S.ShirleyJ. Daniel* and Wolf D. Reitsperger**

University of HawaiiAbstract. ust-in-TimemanufacturingJI.T.),an essential omponentof the Japanese manufacturing model, is increasinglyemulatedby western corporations.While J.I.T. has receivedconsiderableconceptualand empiricalattention,suitablemanagementcontrolsystems,which are essential to successful implementation,havebeen sorely neglected.This study provides large-scale empiricalevidencecomparing managementcontrolsystems as they relateto J.I.T. in the U.S. and Japan.

INTRODUCTIONScholarlyresearch ocusingon U.S. andJapanesemanufacturing as pinpointeddistinct differences between manufacturingpractices in these countries (e.g.,Hayes and Wheelwright [1984]; Kaplan [1983]). The differences have crys-tallized mainly in the areas of quality management (e.g., Juran [1978];Hayes [1981]; Garvin [1983]), inventory control (e.g., Abernathy, et al.[1981]; Wheelwright [1981]; Schonberger [1982]) and the vigorous pursuitof manufacturinglexibility (e.g., Cusumano[1988]; De Meyer, et al. [1987]).While these areas are recognized as competitive dimensions of manufactur-ing strategy (e.g., Buffa [1984]), issues dealing with their implementationhave been neglected by large-scale empirical studies. This is particularlyevident in the lack of empirical work concerning management control sys-tems supportingthe implementation of Japanese manufacturing strategies.

*Dr.Daniel receivedherPh.D. from OklahomaStateUniversity.She is AssociateProfessorof Accountancy t theUniversityof Hawaii.Presently, he is researchingto what extentmanagementaccountingcontrolsystems in Japan,the U.S. andEuropeareadaptedo supportmanufacturingtrategiesandimproveperformance.**Dr. Reitspergereceivedhis Ph.D. from the LondonSchoolof Economics.He isProfessorof International usinessat the Universityof Hawaii. Presently,he isinvolved in a large-scalestudyof operations trategies,accounting eedbackandperformancen theU.S., JapanandEurope.We would like to acknowledge all the Japaneseand American managers who participatedin this study.We are especially grateful to Mr. Yuichi Kuritaof FujitsuLimited, Mr. Isao Noishiki and Mr. MitsurohMatsumoto of Matsushita Electric IndustrialCo., Ltd., Mr. Kazuyuki Okunuki of Akiyama AiseikanCo., Ltd., and Dr. Sara Beckman of Hewlett Packard whose extensive help and gracious hospitalitywere invaluable during our factory visits. We would also like to thankthe University of Hawaii PacificAsian Management Institute and the KPMG Peat Marwick Foundation Research Opportunities inInternational Business Information program for their support.Received: September 1990; Revised: January 1991; Accepted: March 1991.

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MANAGEMENTCONTROLSYSTEMSWriters on strategy have frequently argued that budgetarycontrol systemsthat focus on the accomplishments of short-termbudgetarytargets may becounterproductive to a strategic focus serving the long-term competitiveviability of a company (e.g., Lorange,et al. [1986]; Richards [1978]; Roush,et al. [1980]). Among the most forceful critics of short-termfinancial con-trol is Hayes [1981], who sees the sole use of such measures as an abdicationof strategic responsibilities and a sellout of U.S. technological superiorityas a competitive weapon. Similarly, Donaldson and Lorsch [1983] point toan incompatible time frame between achieving strategic objectives and thecustomary financial planning cycle. It is, therefore, not surprising thatKaplan [1983, 1984] and Howell and Soucy [1987] find traditional U.S.management accounting practices unsuitable to meet the needs of modeminnovative manufacturing.In contrast, Hiromoto [1988] finds that Japanesemanagement control systems have been modified to reflect and promotestrategic objectives. It follows that innovative Japanese manufacturingstrategies such as Just-in-Time (J.I.T.) have been implemented by suitablyadjusting management control systems. Specific goals and performancefeedbackare the core elementsof such a system (e.g., Bimberg and Snodgrass[1988:447]; Goold and Quinn [1990:43]). Some competitive dimensions ofmanufacturingstrategy, such as quality (e.g., Juran[1978]; Hayes [1981];Reitsperger and Daniel [1990]), flexibility and inventory control (e.g.,Schonberger [1982]; De Meyer, et al. [1987]; Cusumano [1988]) have beensubjected to considerable empirical scrutiny, while management controlsystems, especially those that are crucial to the implementation of J.I.T.,have received very little attention. The seriousness of this omission is am-plified by the conceptual adoption of the Japanesemanufacturingmodel bylarge proportionsof U.S. manufacturingmanagers [Reitspergerand Daniel1990; De Meyer, et al. 1987]. Empirical studies focusing on managementcontrol systems associated with the Japanese manufacturing model cantherefore make a major contribution to the understandingand successfulimplementation of Japanesemanufacturingstrategies.Some pioneeringresearchprovidesan appropriatebackdropfor our analysis.Daley, et al. [1985] empirically examined attitudinaldifferences betweenline managers and controllers in the U.S. and Japanin regardto budgetingand control systems. Their findings revealed that common notions aboutJapan,such as participationof workers in the budgeting process, or prefer-ences forunitquantitiesovercost information,were notsupportedby empiricalevidence (e.g., see Dilworth [1985]). Similarly, Birnberg and Snodgrass[1988] found only limited support for some common cultural stereotypeswhen analyzing the effect of culture on the informal and explicit nature ofcontrol systems in twenty-two Japaneseand U.S. firms. Thus, empiricaldatahardlyreflectthe common cultural tereotypesaboutJapanesemanagementandtheir imprinton managementcontrolsystems. On the contrary management

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J.I.T. MANAGEMENT CONTROL SYSTEMS 605

controlsystems in Japan eem to be matched o innovativemanufacturingstrategies.Daniel and Reitsperger 1992] found,for example,that qualitygoals and feedbackare providedmore frequently n Japan hanin the U.S.This indicates hatcontrolsystemshave beenadapted o support he incre-mentalquality mprovementshatare a prerequisiteor J.I.T. mplementation.Ourstudy expands heempiricaldatabase vailableon this topicby explor-ing the use of management ontrolsystemsassociatedwiththe implemen-tationof J.I.T.In thefollowingsectionwe presenta theoreticalrameworkand hypothesesrelated o this importantssue.

THEORETICALFRAMEWORKAND HYPOTHESESJust-in-TimeProductionSeveralmodels are relevant n analyzing trategic nformation rovision nmanufacturing..I.T.hasbeen creditedas a key strategiccomponentof thesuccessful Japanesemanufacturingmodel. The essence of J.I.T. manufac-turing s the timely provisionof materials,componentsand subassembliesas the need arises in the manufacturing rocess. Thus,each stage of pro-ductionprovidesonlywhat s neededatthe nextstageof themanufacturingchain.Suppliesfromoutside the plant,for example,arrive ust in time tobe used at the rightwork station, supporting he system's major goal ofcontinually mprovingasset andlaborutilizationby minimizing nvestmentin plantandinventory.At the sametime, inventory eductions xpose qual-ity problemswhichmayhavelingeredundiscoveredn a traditionalystemwhere buffer inventoriesconcealthese problems; hus,J.I.T.also plays amajor nteractive ole in quality mprovement Schonberger 982].Conse-quently, nventory eductions,he benchmark f J.I.T. mplementation,m-pose a high degreeof exposure o uncertaintyrom withinand outsidetheorganization, ecause J.I.T.by definitionaimsto decreaseslackresources,therebyfostering increasing nterdependencies mongworkstations, sup-pliersof production nputs,andassemblersand markets.Uncertainties e-latingto qualityconformance,upply interruptions,aborstrikesand otherunforeseencontingenciesalso contribute o the high risk of productioninterruptionsn a J.I.T.environment.The Just-in-Case J.I.C.)strategy,in contrast,utilizes large inventories,surplusmanpower nd capacity o dealwithunforeseen ontingencies romwithinandwithoutthe organization.This approach ontrasts harplywiththe asset and labor minimizingapproachwhich is characteristic f J.I.T.While J.I.C.is at the core of the competitivedisadvantagen quality andcost performancessociatedwith the traditionalU.S. modelof high volumerepetitive manufacturing, .I.T. is characteristic f the highly successfulJapaneseapproach.

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J.I. T. and the Information-ProcessingModelHaving drawn attention to some key characteristics differentiating J.I.T.,which is representative of the Japanese model, and its contrasting J.I.C.counterpart,which characterizes the traditional American approach (e.g.,Schonberger 1982]; Abernathy 1981];Aoki [1990]), we are now in a positionto discuss how these models shape information provision. Galbraith's[1974] information-processing model is eminently suited to explore thisissue, since the relevant aspects of the model, as they apply to J.I.T. andJ.I.C., are related to compensatory measures that counterbalance uncer-tainty. The model proposes that there are two approaches to dealing withvolatile environments. The first approachassures continuity in the produc-tion process by the plannedprovision of slack resources like inventories andmanpower to decrease uncertaintyand the need for coordination betweeninternalas well as externalorganizationalunits. The second approachrelieson informationas the key to adaptingto uncertainty, ince broadand frequentinformationprovision across functions facilitates the timely adaptationandcoordinationamong decisionmakers [Galbraith 1974]. One can infer that ina J.I.T. environment,where slack resources are drasticallyreduced, increas-ing informationflows are of critical importanceto make successful coordi-nation possible and to allow effective implementation of the strategy. Theneed for more infornation under J.I.T. production is not only the result ofthe lack of buffer and safety inventories but is also a consequence of thecontinuouspush to decrease all existing slack resources [Hayes, et. al 1988],which in turn increases the risk of production interruptions.J.I.C., in con-trast to J.I.T., promotes the use of slack resources to offset unforeseencontingencies, making informationprovision less critical. We would there-fore expect more extensive informationprovision in Japan,since J.I.T. is acomponent of the Japanesemanufacturingmodel.Goal Settingand Feedback or J.I.T.In addition to Galbraith's information-processingmodel, the literatureonstrategiccontrols and goal setting and feedback is of relevance. The strategicmanagement literatureadvocates systems of control to monitorprogressandto assure strategy implementation (e.g., Govindarajanand Gupta [1985];Hrebiniak and Joyce [1984]; Lorange, et al. [1986]). Strategiccontrols con-sist of long-term objectives and budgetarycontrol systems, which must beoperationalized by specific and consistent subobjectives. The control ofperformanceandprogressis accomplished by monitoring performancefeed-back, providingsubobjectivesreflectingthefirmsstrategicthrust,andfocusingmanagerialdecisions to provide the basis for coordinationof various groupswithin an organization (e.g., Barnard [1938]; Sloan [1963]; Anthony[1965]). The desired objectives should be precise and measurable to avoida lack of substance and specificity. In reference to this subject, Roush andBall [1980:6] note that a strategy that cannot be evaluated is not a viable

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J.I.T. MANAGEMENT CONTROLSYSTEMS 607

strategy to begin with. Thus, goal setting and feedback information are keysto strategy implementation, and have been widely recognized in Westernorganizational literaturesas effective tools to achieve performance improve-ment [Locke, et al. 1981].Strategic controls are not only critical in the strategic planning process[Lorange 1980], but are also relevant to motivation. Hofstede [1967], forexample, sees budgeting as a game to be won by managers, and recognizesthe importanceof budgets as motivational ools. Similarly,Goold and Campbell[1987] refer to "goal stretching" as a stimulant of performance improve-ment. The motivationalvalue of strategiccontrols is consistent withDynamicManufacturing.This philosophy, which is a characteristicof the Japanesemanufacturing model [Hayes, et al. 1988] triggers continuous improvementand learning. Learning and performance improvement have also been asso-ciated in empirical studies with the use of goal setting and feedback inJapanese companies (e.g., Cole [1983]; Reitsperger [1986]).HypothesesThe prevalence of J.I.T. strategies in Japanese manufacturingversus J.I.C.strategies in U.S. manufacturingshould be reflected in distinctly differentpatternsof infornation provision. The reductionof slack resources, a bench-mark of J.I.T., increases uncertaintyand makes the coordinationof activitiesmore critical and difficult when such a strategyis pursued. Strategic controlsystems designed to implement J.I.T. strategies must consequently provideincreased infornation regardingraw materials, work-in-process, buffer andfinished goods inventories and about other factors critical to coordination.In contrast, slack resources like safety and buffer inventories in a J.I.C.environment counterbalanceuncertaintyand decrease the need for coordi-nation and information. These propositions are solidly grounded in thestrategy literature which recognizes that different strategies are charac-terized by varying degrees of uncertainty (e.g., Miles and Snow [1987];Thompson [1967]), requiring different and matching management controlsystems for effective implementation [Govindarajan 1985; Hirst 1983].J.I.T. and J.I.C. strategies, the core elements of the Japanese and U.S.manufacturing models, should therefore be reflected in significantly differ-ent patternsof informationprovision. Specifically:Hi: Informationrelating to inventories should be more widely dis-

seminated in Japan than the U.S. since such information is crucialto reducing inventories, and accommodating the increased coordi-nation needed in a J.I.T. environment.H2: Informationshould be provided more frequently in Japanthanthe U.S., to avoid production interruptions n the absence of safetyinventories.

Similarly, goal setting with the aim of decreasing slack resources and im-proving flexibility should accompany information provision to reinforce the

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focus on continuous nventory eductions.Goal setting also motivatesandfocuses the effortsof managerson the subobjectives ritical to the imple-mentationof a J.I.T.strategy.Hence,the followinghypothesis:H3:A larger roportionf JapanesehanU.S. managerseceive pecificperformance oals related o inventory eductionsand flexibility.

Finally, in Japan'sdynamicmanufacturingnvironmentwe expect strongcorrelations etweengoal andfeedbackprovision ince combinedgoalsandfeedback nteract n a beneficialway to stimulate mprovementrocessesbymotivatingheworkforceLocke,et al. 1981].Thusthe followinghypothesis:H4: There will be a strongercorrelation etween the provisionofJ.I.T.-related erformance oals and feedback n Japan han in theU.S., reflectinghe dynamics f working or perfectionn production.

RESEARCH METHODAND SAMPLE DESCRIPTIONInstrumentand MeasuresThe questionnairewas designed o gather nformationoncerninggoal set-ting and performanceeedbackpractices elated o inventory eductions ndflexibility improvements,he essence of J.I.Tproduction.J.I.T.production trives for the timely provisionof materials, omponentsandsubassemblies t each stageof production nly as they are needed.Asslack resourcesare reduced, increased informationabout the remaininginventories s requiredo coordinateactivities.To address he issue of in-creased nformation rovision, he questionnairepecificallysolicitedinfor-mationaboutgoal settingand feedback orrawmaterials,work-in-process,buffer (safety)inventoriesandfinishedgoods inventories.Besides nventoryeductions,everaltherubobjectivesrecrucialoimplementinga J.I.T.strategy.Set-up ime,machinedowntimeandlot size were includedas variableshatareparticularlynstrumentalnachieving nventoryeductionsandimprovingmanufacturinglexibility.Reductionsn set-uptimemakeiteconomicallyeasible o producencreasinglymaller otsizes,thusdecreasinginventoryevels,whileatthesametimeallowing lexibleresponseso marketchanges e.g.,Schonberger1982];De Meyer, t al. [1987]).Machinedowntime s also an importantactoraffectingJ.I.T. mplementa-tion, sincemachinebreakdowns rset-ups n the absenceof bufferorsafetyinventorieswill cause productionnterruptions. educingmachine down-time, consequently,s essentialto avoidinghalts in the production rocessandin eliminating afetyandbuffer nventories.Finally, J.I.T.promotesreductions n lot sizes by decreasing n-processinventoriesand improvingmanufacturinglexibility. Recognitionof theimportance f lot size reduction o J.I.T. mplementationequirescontinu-ous monitoring f this variable.

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J.I.T. MANAGEMENTCONTROLSYSTEMS 609

For each informationvariable,the respondentswere asked to indicatewhetherthey received targetson a regularbasis and how frequentlyper-formance igureswere provided.Most items were listed in both unit andcost terms.Particular oncernwas shown for the problemsof communicatinghe in-strument o the Japaneserespondents.The instrumentwas first written nEnglishand then translatedntoJapaneseby a translatoramiliarwith boththe languageand the researcharea.A translation ack into English fromJapanesewas perfornedbeforethe instrumentwas used. A comparisonofthe English version and the reversetranslation evealedno significantdif-ferences.The instrumentwas then reviewedfor clarity by two English-speakingJapanesemanagersbefore it was used.Sampk SekectionThe Japanese ompanieswere selected from the FirstandSecond Sectionsof the Tokyo, Osakaand Nagoya stock exchangesand over-the-countertraded nd unlisted ompanies.U.S. companieswereselected rom Standardand Poor's Corporation Directory. A packet of twenty questionnaires wasmailedto each selectedcompanywith a cover letterexplainingthe studyand requesting hat the questionnaires e distributed o variouslevels ofmanufacturingmanagers.Manufacturingmanagerswere definedas fore-men,sectionmanagers,department eads,productionmanagersandfactorymanagers.Top managers, uch as factory managers,company presidentsandvice-presidents,were also included n the survey.A total of 1,468 responses rommanagersnelectronicsmanufacturing erereceived,679 from Japanand 789 from the U.S. The fifty Japaneseandsixty-fourU.S. firns participating epresent 24% responserate for Japananda 9% responseratefor the U.S.FactoryInterviewsPlanttoursand interviewsof cost accountants nd manufacturingmanagerswereconducted tJapaneseactoriesnthegreaterTokyo,OsakaandSapporoareas.Factory ours n the U.S. were conducted n the westernand easternstates. The interviews ncluded actorycost accountants nd manufacturingmanagers n orderto providethe on-site experiencenecessaryfor properinterpretationf the data.

FINDINGSInventoryand Flexibility-Related erformanceFeedbackReducingslackresourcesrequires ncreasingnformation o facilitatecoor-dinationbetweenvarious unctions.Hi predictshat nventory ndflexibilityfeedbackinformationwill be morewidely disseminated n Japan han theU.S.

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Table 1 shows the proportion of Japanese and U.S. managers receivingperformance feedback at least monthly. The data provide convincing evi-dence supporting Hi, since the chi-square statistics for all thirteenfeedbackmeasures show significant differences between the U.S. and Japanese man-agers, with more Japanese than U.S. managers receiving performance feed-back for inventory and flexibility. Unit information is provided to moremanagers in both countries than cost information. However, significantlymore Japanese than U.S. managers receive cost feedback for inventory andflexibility. This is contraryto common propositions in the literature (e.g.,Dilworth [1985]) suggesting that cost infornation is less important n Japanthan the U.S.A. Ourresults give credence to Daley, et al. [1985], who foundmore favorable attitudes among Japanese than U.S. managers in regard toexpressing budgets in monetary ratherthan unit terms. These authors offeramong several possible explanations that "the assertions in priorstudies aresimply not valid" [Daley, et al. 1985:06]. Our study adds evidence that thismay indeed be the case.Frequency of FeedbackProvisionWhile H1 focuses on the proportions of Japanese and U.S. managers receiv-ing performancefeedback, H2 is concerned with the frequency with whichsuch feedback is provided, predicting more frequent feedback provision toJapanese than U.S. managers.Table 2 shows the means for each feedback item for the U.S. and Japan;higher means indicate higher frequency of feedback. The data indicate thatfor all thirteeninventoryandflexibility measures feedback is providedmorefrequently to Japanesethan to U.S. managers.Ten of the thirteenmeasuresare significantly different, providingbroad supportfor H2.The data in Table 2 again contradict the common assertions of the literaturethat cost accounting is not as important in Japan as in the U.S., sinceJapanese managers receive not only operational unit information,but alsocost feedback more frequently than U.S. managers.Inventoryand Flexibility-RelatedTargetsand GoalsTable 3 shows each of the inventory and flexibility measures and the per-centage of managers from each countryregularly receiving goals or targetsfor them. Over twice as many Japanesethan U.S. managersreceive regulartargets or goals for raw materials,work-in-process, and buffer and finishedgoods inventories. In Japan,45% to 55% of the operating managersreceivetargets for both inventory units and costs, versus 15% to 25% in the U.S.These results indicate a Japanese focus on inventory reductions. Again,goals are often given in monetary as well as in unit terms.Goal setting to improve flexibility also appears to be more prevalent inJapan than in the U.S. This is indicated by the two to four times greater

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J.I.T.MANAGEMENT CONTROLSYSTEMS 611

TABLE 1Proportions of U.S. and Japanese ManagersReceiving Inventory and Flexibility FeedbackChi-square (Prob.)

COSTOFSET-UP/CHG-OVER 17 31.91 (0.001)SET-UP/CHG-OVERIME 33 45.63 (0.001)

8COSTOF MACH. OWNTIME 15 21.59 (0.001)MACH. OWNTIME 36 23.33 (0.001)

AVERAGEOT IZE 50 110.19 (0.001)COSTOF FIN.GOODS NV. 54 75.74 (0.001)

FIN.GOODS NV.UNITS 59 31.52 (0.001)COSTOF BUFFERNV. 33.44 (0.001)

BUFFERNV.UNITS 13.53 (0.001)COSTOFW.I.P. NV. 60 148.32 (0.001)43W.I.P. NV.UNITS 60 41.53 (0.001)

COSTOF RAWMAT.NV. 52 73.94 (0.001)RAWMAT.NV.UNITS 49 62.47 (0.001)

0% 20% 40% 60% 80%* U.S.* JAPAN

percentageof Japanese managersthat receive targetsfor lot size, set-up timeand downtime. The finding is consistent with De Meyer, et al. [1987] whofound that flexibility is a higher strategic priority among Japanesethan U.S.manufacturers.Goal-setting practices throughout the management controlsystem reflect and support this strategic focus.The chi-square statistics show significant differences at the .001 level foreach J.I.T.- flexibility goal-setting measure. We find, therefore, strong con-firmation for H3.Correlationof Goal SettingwithFeedback ProvisionH4, the last of the hypotheses, deals with the correlationof goal setting withfeedback provision. Goal setting combined with performance feedback hasbeen widely recognized as an effective method for improving performance[Locke, et al. 1981]. H4 predicted a strongercorrelation between goal andfeedback provision in Japanthan the U.S., reflecting an emphasis on organ-izationalimprovementandlearning,a hallmarkof the Japanesemanufacturingmodel.

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TABLE 2Frequency of Inventory and FlexibilityFeedback Provided to U.S. and Japanese ManagersT-StatisticVariables Japan* U.S.* (Prob.)

COST OF SET-UP/CHG-OVER 1.65 1.28 7.91(0.0001)

SET-UPICHG-OVER IME 2.11 1.71 5.91(0.0001)

COST OF MACHINEDOWNTIME 1.6 1.3 6.04(0.0001)

MACHINEDOWNTIME 2.23 1.93 3.81(0.0001)AVERAGELOTSIZE 2.37 1.89 6.87

(0.0001)COST OF FINISHEDGOODS INVENTORY 2.29 1.86 7.91

(0.0001)FINISHEDGOODS INVENTORYUNITS 2.46 2.4 0.92

(0.3583)COST OF BUFFERINVENTORY 1.7 1.42 5.89

(0.0001)BUFFER INVENTORYUNITS 1.83 1.73 1.59(0.1124)COST OF W.I.P. INVENTORY 2.39 1.82 10.66(0.0001)W.I.P. INVENTORY 2.48 2.44 0.62

(0.5358)COST OF RAW MATERIALNVENTORY 2.22 1.83 7.32(0.0001)RAW MATERIALNVENTORYUNITS 2.22 1.9 5.19(0.0001)*Highermeans indicate more frequentfeedback.

A glance at Table 4 confirms that goal provision is significantly correlatedwith perfonnance feedback in both Japanandthe U.S. on all of the measuresemployed. The Spearmancorrelationsare substantially higher in Japanthanin the U.S., however. This indicates that goals are more often combinedwith feedback information in Japan, supportinghypothesis four (H4).In summary, we find strong evidence of goal and performance feedbackprovision to a significantly larger proportionof Japanesemanagers,a higherfrequency of performance feedback to Japanese managers, and strongercorrelations between goals and performancefeedback in Japanthan in theU.S. This provides support for all of our hypotheses.

CONCLUSIONOur analysis indicates that Japanesemanufacturershave designed manage-ment accounting and control systems that reflect the requirementsof J.I.T.

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J.I.T. MANAGEMENT CONTROLSYSTEMS 613

TABLE3Proportionsof U.S. and Japanese ManagersReceiving Inventoryand FlexibilityGoalsChi-square (Prob.)

COSTOF SET-UPICHG-OVER 73.96 (0.001)3SET-UP/CHG-OVERIME 10 83.13 (0.001)27COSTOF MACH. OWNTIME 37.28 (0.001)12MACH. OWNTIME 12 80.34 (0.001)

30AVERAGEQT IZE 14 46 198.29 (0.001)COSTOF FIN.GOODS NV. 47 176.29 (0.001)

FIN.GOODS NV.UNITS = _ 51 117.06 (0.001)COSTOFBUFFERNV. 20 67.40 (0.001)

BUFFERNV.UNITS 25 52.38 (0.001)COSTOFW.I.P. NV. 57 253.08 (0.001)

W.I.P. NV.UNITS 25 54 138.92 (0.001)COSTOF RAWMAT. NV. 47 146.34 (0.001)RAWMAT. NV.UNITS 44 144.37 (0.001)

0 20 40 60 80* U.S.* JAPAN

and flexibility strategies.This should come as no surprise,since these strate-gies have been pioneered in Japanand widely accepted as core elements ofthe Japanese manufacturing model (e.g., Schonberger [1982]). Our dataprovide importantempirical support or previous case-specilficevidence of theadaptationof managementcontrolsystems in Japan o suit thenewly emergingmanufacturing strategies (e.g., Hiromoto [1988]; Cusumano [1988]).The comparative U.S. and Japanese data show that management controlsystems in the U.S. have not been adaptedto ad;equately eflect the adoptionof the Japanese manufacturing model, even though many elements of thismodel were found to have a widespread conceptual following in the UnitedStates[Reitsperger nd Daniel 1990]. Conceptualadoption s only a preliminarystep to implementationand strategic intentionsneed to be designed into themanagement control systems that are instruments of implementation. Ourfactoryvisits in the United States reveal that the new manufacturing trategiesthatare often vigorously pursued by innovative line managersare frequentlyconstrained by a lack of interdisciplinarycoordination or competence andan unwillingness to adapt planning and control systems to the new needs

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TABLE4U.S. and Japan Electronics ManagersCorrelationof Provision of Goals with InventoryFeedbackSpearman Correlations(Prob.)

Variables U.S. JapanCOSTOF SET-UP/CHG-OVER 0.41042 0.59527

(0.0001) (0.0001)SET-UPICHG-OVERIME 0.45816 0.70659(0.0001) (0.0001)COSTOF MACHINEOWNTIME 0.4417 0.56382

(0.0001) (0.0001)MACHINEOWNTIME 0.50521 0.70181(0.0001) (0.0001)AVERAGEOT IZE 0.56189 0.73951

(0.0001) (0.0001)COSTOFFINISHEDOODS NVENTORY 0.52974 0.74514

(0.0001) (0.0001)FINISHED OODS NVENTORYNITS 0.54452 0.69511

(0.0001) (0.0001)COSTOF BUFFERNVENTORY 0.48833 0.72216(0.0001) (0.0001)BUFFERNVENTORYNITS 0.54313 0.73701

(0.0001) (0.0001)COSTOF W.I.P. NVENTORY 0.55665 0.79536

(0.0001) (0.0001)W.I.P. NVENTORY 0.53147 0.74406

(0.0001) (0.0001)COSTOF RAWMATERIALNVENTORY 0.58168 0.80717

(0.0001) (0.0001)RAWMATERIALNVENTORYNITS 0.57304 0.79328

(0.0001) (0.0001)

created by adoption of the Japanese manufacturingmodel. Especially theskill-specific isolation of management accountantsseems to be a signiflcantconstraint n adjustingmanagementcontrolsystems in the U.S. Our evidenceshows thatprogressive managementaccountantsare scramblingfor a "newpurpose" in a rapidly changing manufacturingenvironment,while tradition-alists in the professiondesperately eek to maintainsystems that are incompat-ible with the dynamism of the new manufacturingenvironment.While U.S. professional isolationism inhibits the adjustmentof managementcontrolsystems it also raises broaderquestionsaboutthe capacityof organiza-tions to cope with change. An emerging theory of the Japanesefirm argues,for example, thatthe provisionand "participativeprocessing" of informationis crucially related to broaderskill development and organizational adapt-ability to change [Aoki 1986; 1990]. Broad skills (e.g., see Cole [1983];Koike [1987]; Itoh [1987]), and information-processing capacities, whencombined with decentralized decision authority,are hallmarks of Japanese

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management t its best. Our studyshows empirically hatinformation, heessential prerequisite o learning and coordination, s provided to largerproportions f Japanesemanagersand in shorter ime intervals han in theU.S. Thus we find empirical upportor Aoki's "emergingmode" as beingprevalent n Japan,while there are indicationsof a propensity o maintainthe "traditionalmode" in the U.S.This implies thatthe full implementationf the Japanesemodel in the U.S.may pose a formidable hallenge.First, hespecialistorientation f workersand managersmay act as a structural arrier o the flexible coordinationrequiredn thesystem. Secondly, heinformation-processingapabilitiesofthe workforcemay need to be developed by initialtraining.And last butnot least, infornationprovision tself will need substantial estructuringomatchthe new strategiespursued.

LIMITATIONS AND SUGGESTIONSFOR FUTURE RESEARCHOur research results arebased on datafrom large U.S. and Japanese samplesof electronicsmanufacturers sing high volume repetitive assembly processes.The findings and conclusions of our research consequently need to be con-sidered as industry and process specific. Future studies are needed to testthe general applicability of the presented results, by comparing managementcontrolsystemsin a widerspectrum f industries.Studiesshouldalso focuson the question of why intended strategic changes are not implemented inthe U.S. Especially the effects of specialist orientations,traditionalmanage-mentaccountingpractices,and attitudesneed much more esearchattentionsince they seem to be significant barriers to implementation of Japanesemanufacturing strategies such as J.I.T.Our study assumed that Japanese manufacturershave adopted J.I.T. strate-gies while U.S. manufacturerspplyJ.I.C.managementmethods.This hasnot yet been established by broad empirical support,and requires appropri-ate caution in interpretingthe data. Futurestudies that specifically measuremanufacturingtrategiesandtheir link with controlsystemsareneededtoconfirm thatthe patternsof informationprovisionfoundin this studyareindeeda consequenceof the strategiesemployed.

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