This study aims to investigate the relative weight of financial and non-financial performance measures used to evaluate production managers (such as shop floor managers or foremen) in a modern manufacturing setting.
Using survey data from Japanese factories, the paper examines the association between the choice of profit, cost, and non-financial performance measures with two characteristics of manufacturing systems: interdependence and multi-tasking.
The results indicate that interdependence has a significant and positive association with the importance of profit information, while multi-tasking is associated negatively with the importance of profit information, and positively with non-financial information for performance evaluation.
In recent years, a significant shift has been observed in Japanese production management with many companies now focusing on profit information instead of cost information. For example, the past studies show that large Japanese manufacturing companies are now using micro-profit centres and include profit information when evaluating factories. However, little empirical evidence is available on performance measurement at the shop floor foreman level, and even less is known about the importance of profit information in the evaluation of these lower level managers.
This paper is based partly on the Kohei Arai's PhD thesis at Kobe University. The authors wish to thank Yutaka Kato (the guest editor of this issue), Tetsuo Kobayashi, Takeyuki Tani, Katsuhiko Kokubu, Hiroshi Miya, Takami Matsuo, Takehisa Kajiwara, Eisuke Yoshida, Shinji Horiguchi and seminar participants at Kobe University and the 2010 EAA conference in Istanbul, Turkey for beneficial comments on an early draft of this paper. The authors also thank Chris Akroyd (the guest editor of this issue) for his outstanding help and support and two anonymous reviewers for excellent and insightful comments. This article is dedicated to Professor Yutaka Kato on the occasion of his Kanreki celebration.
Arai, K., Kitada, H. and Oura, K. (2013), "Using profit information for production management: evidence from Japanese factories", Journal of Accounting & Organizational Change, Vol. 9 No. 4, pp. 408-426. https://doi.org/10.1108/JAOC-07-2010-0020
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