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Moderating Effects of Management Control Systems and Innovation on Performance. Simple Methods for Correcting the Effects of Measurement Error for Interaction Effects in Small Samples

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  • Coenders, Germà

    ()

  • Bisbe, Josep
  • Saris, Willem E.
  • Batista-Foguet, Joan M.

Abstract

In the accounting literature, interaction or moderating effects are usually assessed by means of OLS regression and summated rating scales are constructed to reduce measurement error bias. Structural equation models and two-stage least squares regression could be used to completely eliminate this bias, but large samples are needed. Partial Least Squares are appropriate for small samples but do not correct measurement error bias. In this article, disattenuated regression is discussed as a small sample alternative and is illustrated on data of Bisbe and Otley (in press) that examine the interaction effect of innovation and style of use of budgets on performance. Sizeable differences emerge between OLS and disattenuated regression.

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Bibliographic Info

Paper provided by Department of Economics, University of Girona in its series Working Papers of the Department of Economics, University of Girona with number 7.

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Date of creation: Jun 2003
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Handle: RePEc:udg:wpeudg:007

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Keywords: measurement error; interaction effects; disattenuation; small samples; moderated regression; reliability; Chronbach’s alpha;

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  1. Shields, J. F. & Shields, M. D., 1998. "Antecedents of participative budgeting," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 49-76, January.
  2. Davila, Tony, 2000. "An empirical study on the drivers of management control systems' design in new product development," Accounting, Organizations and Society, Elsevier, vol. 25(4-5), pages 383-409, May.
  3. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer, vol. 16(3), pages 297-334, September.
  4. Simons, Robert, 1990. "The role of management control systems in creating competitive advantage: New perspectives," Accounting, Organizations and Society, Elsevier, vol. 15(1-2), pages 127-143.
  5. Abernethy, Margaret A. & Brownell, Peter, 1999. "The role of budgets in organizations facing strategic change: an exploratory study," Accounting, Organizations and Society, Elsevier, vol. 24(3), pages 189-204, April.
  6. Dijkstra, Theo, 1983. "Some comments on maximum likelihood and partial least squares methods," Journal of Econometrics, Elsevier, vol. 22(1-2), pages 67-90.
  7. Lal, Mohan & Hassel, Lars, 1998. "The joint impact of environmental uncertainty and tolerance of ambiguity on top managers' perceptions of the usefulness of non-conventional management accounting information," Scandinavian Journal of Management, Elsevier, vol. 14(3), pages 259-271, March.
  8. Govindarajan, V. & Gupta, Anil K., 1985. "Linking control systems to business unit strategy: impact on performance," Accounting, Organizations and Society, Elsevier, vol. 10(1), pages 51-66, January.
  9. O'Loughlin, Christina & Coenders, Germà, 2002. "Application of the European Customer Satisfaction Index to Postal Services. Structural Equation Models versus Partial Least Squares," Working Papers of the Department of Economics, University of Girona 4, Department of Economics, University of Girona.
  10. Scott, Thomas W. & Tiessen, P., 1999. "Performance measurement and managerial teams," Accounting, Organizations and Society, Elsevier, vol. 24(3), pages 263-285, April.
  11. Abernethy, Margaret A. & Stoelwinder, Johannes U., 1995. "The role of professional control in the management of complex organizations," Accounting, Organizations and Society, Elsevier, vol. 20(1), pages 1-17, January.
  12. Noel Capon & John U. Farley & Donald R. Lehmann & James M. Hulbert, 1992. "Profiles of Product Innovators Among Large U.S. Manufacturers," Management Science, INFORMS, vol. 38(2), pages 157-169, February.
  13. Hartmann, Frank G. H. & Moers, Frank, 1999. "Testing contingency hypotheses in budgetary research: an evaluation of the use of moderated regression analysis," Accounting, Organizations and Society, Elsevier, vol. 24(4), pages 291-315, May.
  14. Chenhall, R. H. & Langfield-Smith, K., 1998. "The relationship between strategic priorities, management techniques and management accounting: an empirical investigation using a systems approach," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 243-264, April.
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Cited by:
  1. Mònica González & Ferran Casas & Germà Coenders, 2007. "A Complexity Approach to Psychological Well-Being in Adolescence: Major Strengths and Methodological Issues," Social Indicators Research, Springer, vol. 80(2), pages 267-295, January.
  2. Mònica González & Germà Coenders & Ferran Casas, 2008. "Using Non-linear Models for a Complexity Approach to Psychological Well-being," Quality & Quantity: International Journal of Methodology, Springer, vol. 42(1), pages 1-21, February.

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