THE EFFECTS OF PERFORMANCE MEASURES AND INCENTIVE SYSTEMS ON THE DEGREE OF JIT IMPLEMENTATION (An Empirical Study at Manufacturing Firms in Central Java)

Abstract

As organizations adapt to technological change, globalization, and customer demand, they must ensure that the management accounting systems (MAS) are design congruent with decision making and control requirements (Fullerton & McWatters, 2002). This research empirically examines the impact of performance measures and incentive systems that are incorporated in the firms’ MAS on the degree of JIT implementation by Central Java manufacturing firms. The model draws on Fullerton & McWatters (2002) to develop a theoretical argument concerning the impact of performance measures and incentive systems on the degree of JIT implemented. Data for the research were collected through survey question administered to production managers of 453 firms located in Central Java. The ANOVA comparison of the means were constructed to determine if differences in the degree of JIT implementation exist between firms which use job order production system and firms which use mass production system. Multiple Linear Regression is used to test the statistical effect of the 5 performance measures variables (frequency quality results reported, use of bottom-up measures, use of benchmarking techniques, performance measures of waste, and vendor reliability) and 3 incentive systems variables (compensation for quality and throughput, compensation for variances and budgets, and compensation for non-financial measures) on the use of JIT practices. The results of the research show that the items represented by the factors used to explain the degree of JIT implementation are adopted more fully by job order firms. Performance measures of waste have weak effects on the degree of JIT implementation. Moreover, the use of non-traditional performance measures such as frequency quality results reported, bottom-up measures, and vendor reliability as well as incentive systems of compensation rewards for quality production and budgets have insignificant impact on the degree of JIT practices implemented. The use of benchmarking techniques and compensation for non-financial measures have unexpected negative effects on the degree of JIT implemented. Saat organisasi dihadapkan pada perubahan tehnologi, globalisasi, dan permintaan pelanggan, organisasi harus memastikan bahwa sistem akuntansi manajemen didisain sesuai dengan kebutuhan pengambilan keputusan dan pengendalian (Fullerton dan McWatters, 2002). Riset ini menguji secara empiris pengaruh ukuran kinerja dan sistem insentif yang terdapat dalam sistem akuntansi manajemen perusahaan terhadap tingkat implementasi JIT pada perusahaan manufaktur di Jawa Tengah. Model diadopsi dari Fullerton dan McWatters (2002) untuk mengembangkan suatu argumentasi teoritis mengenai pengaruh ukuran kinerja dan sistem insentif terhadap tingkat implementasi JIT. Data penelitian dikumpulkan melalui instrumen penelitian yang dikirimkan kepada 453 manajer produksi perusahaan-perusahaan yang berlokasi di Jawa Tengah. ANOVA digunakan untuk menentukan apakah terdapat perbedaan dalam tingkat implementasi JIT antara perusahaan yang menggunakan metode pesanan dan perusahaan yang melakukan produksi massa. Regresi linear berganda digunakan untuk menguji pengaruh statistik dari 5 variabel ukuran kinerja (frekuensi pelaporan kualitas, ukuran bottom-up, penggunaan tehnik benchmarking, ukuran kinerja produksi, dan reliabilitas pemasok) dan 3 variabel sistem insentif (kompensasi untuk kualitas produksi, kompensasi untuk varians dan anggaran, dan kompensasi untuk ukuran non keuangan) terhadap penggunaan praktek-praktek JIT. Hasil penelitian menunjukkan bahwa item-item yang digunakan untuk menjelaskan tingkat implementasi JIT lebih banyak diadopsi oleh perusahaan yang melakukan produksi berdasar pesanan. Ukuran kinerja produksi memiliki pengaruh lemah terhadap tingkat impmentasi JIT. Penggunaan ukuran kinerja seperti frekuensi pelaporan kualitas, ukuran bottom-up, dan reliabilitas pemasok serta sistem insentif yang memberikan kompensasi untuk produksi yang berkualitas dan kompensasi terhadap anggaran tidak berpengaruh signifikan terhadap tingkat implementasi JIT. Penggunaan tehnik benchmarking dan kompensasi untuk ukuran non keuangan ternyata berpengaruh negatif terhadap tingkat implementasi JIT. Ka