Is it possible to achieve a "fit" of management control practices and strategies in Indonesia's reformed public hospitals?

Nurkholis Nurkholis, Endang Mardiati, Nurul Fachriyah, Made Aristia Prayudi, Nanda Widaninggar

Abstract


Research aims: This research aims to investigate the effectiveness of implementing management control practices (MPCs) and examine whether MPC is possible and how MPCs as a package "fit” with the strategic choices of Local Community Service Agency (BLUD) public hospitals (PHs) in Indonesia.
Design/Methodology/Approach: This study applied mixed-method research with a sequential explanatory strategy. Quantitative data were collected through self-administered questionnaires distributed to 29 top management team members of eight BLUD PHs in East Java and Bali, Indonesia. Meanwhile, qualitative data were generated by conducting a semi-structured interview with four selected top management team members of BLUD PHs. The data were then analyzed quantitatively and qualitatively by implementing profile deviation analysis, cluster analysis, ordinal regression analysis, and content analysis.
Research findings: Quantitatively, the researchers found a negative correlation, yet insignificant, between the “misfit” of MCPs and strategy and management control effectiveness. Thus, the “fit” hypothesis was not supported. Qualitatively, the researchers revealed that BLUD PHs extensively used MCPs and employed them in various ways, including cultural, administrative, and dominantly cybernetic controls. Finally, it can be concluded that using cybernetic controls as a dominant practice is unsuitable for the strategy chosen by BLUD PHs in Indonesia.
Practical and Theoretical contribution/Originality: This study expands upon what has already been explored in the management control literature concerning how MCPs might be configured to align with organizational strategy, especially in the context of public healthcare organizations. Practically, the reformed PHs in Indonesia are expected to understand better the structure and characteristics of the BLUD-based financial management environment. It is essential for organizations, as it helps them figure out exactly how their management control practices and organizational strategies fit together.
Research limitation: Due to the low questionnaire and interview participation, mixed-methods research was underutilized in this study.


Keywords


Contingency Fit; Management Control; Strategic Choice; Public Hospitals; Mixed-method Research

Full Text:

PDF

References


Abernethy, M. A., & Brownell, P. (1999). The Role of Budgets in Organizations Facing Strategic Change: An Exploratory Study. Accounting, Organizations and Society, 24(3), 189–204. https://doi.org/10.1016/S0361-3682(98)00059-2

Abernethy, M. A., & Chua, W. F. (1996). A Field Study of Control System “Redesign”: The Impact of Institutional Processes on Strategic Choice. Contemporary Accounting Research, 13(2), 569–606.

Ahlin, E. (2019). Semi-Structured Interviews With Expert Practitioners: Their Validity and Significant Contribution to Translational Research. Semi-Structured Interviews With Expert Practitioners: Their Validity and Significant Contribution to Translational Research, November. https://doi.org/10.4135/9781526466037

Akingbola, K. (2006). Strategic choices and change in non-profit organizations. Strategic Change, 15(6), 265–281. https://doi.org/10.1002/jsc.772

Anthony, R. . (1965). Planning and Control Systems: Framework for Analysis. Harvard University.

Arda, D. P. (2020). Management Technique, Governance, and Management Strategy for Performance and Business Ethics of Public Service Hospitals. International Journal of Contemporary Accounting, 2(1), 65–84. https://doi.org/10.25105/ijca.v2i1.7200

Bedford, D. S., Malmi, T., & Sandelin, M. (2016). Management Control Effectiveness and Strategy: An Empirical Analysis of Packages and Systems. Accounting, Organizations and Society, 51, 12–28. https://doi.org/10.1016/j.aos.2016.04.002

Burkert, M., Davila, A., Mehta, K., & Oyon, D. (2014). Relating alternative forms of contingency fit to the appropriate methods to test them. Management Accounting Research, 25(1), 6–29. https://doi.org/10.1016/j.mar.2013.07.008

Carenys, J. (2010). Management Control Systems: A Historical Perspective. International Bulletin of Business Administration, 10(7), 37–54.

Chenhall, R. . (2003). Management control systems design within its organizational context: findings from contingency-based research and directions for the future. Accounting, Organizations and Society, 28, 127–168.

Collier, P. M., & Agyei-Ampomah, S. (2006). Management Accounting-Risk and Control Strategy. CIMA Publishing.

Cresswell, J. W. (2009). Research Design Pendekatan Kuantitatif, Kualitatif, dan Mixed (Third Edit). SAGE Publications.

Cross, D. A., Nong, P., Harris-Lemak, C., Cohen, G. R., Linden, A., & Adler-Milstein, J. (2019). Practice strategies to improve primary care for chronic disease patients under a pay-for-value program. Healthcare, 7(1), 30–37. https://doi.org/10.1016/j.hjdsi.2018.08.004

de Harlez, Y., & Malagueño, R. (2015). Examining the joint effects of strategic priorities, use of management control systems, and personal background on hospital performance. Management Accounting Research, 30, 1–16. https://doi.org/10.1016/j.mar.2015.07.001

Dolnicar, S. (2002). A review of unquestioned standards in using cluster analysis for data-driven market segmentation. Faculty of Commerce-Papers, 273(March 2016), 1–9. http://ro.uow.edu.au/commpapers/273/

DPPK-BLU. (2009). Implementasi pembiayaan Badan Layanan Umum. Direktorat Pembinaan Pengelolaan Keuangan.

Ebrahimi, B. P. (2000). Environmental complexity, importance, variability and scanning behavior of Hong Kong executives. International Business Review, 9(2), 253–270. https://doi.org/10.1016/s0969-5931(99)00039-6

Everitt, B. S., Landau, S., Leese, M., & Stahl, D. (2011). Cluster analysis (Fifth). John Wiley and Sons, Ltd.

Fahlevi, H. (2016). Understanding Why the Role of Accounting is Unchanged in Indonesian Public Hospitals. Journal of Accounting and Organizational Change, 12(2), 203–222. https://doi.org/10.1108/JAOC-03-2014-0020

Fahlevi, H., Irsyadillah, I., Indriani, M., & Oktari, R. S. (2021). DRG-based Payment System and Management Accounting Changes in an Indonesian Public Hospital: Exploring Potential Roles of Big Data Analytics. Journal of Accounting and Organizational Change. https://doi.org/10.1108/JAOC-10-2020-0179

Ferreira-Da-Silva, A., Fernandez-Feijoo, B., & Rodriguez, S. G. (2012). Accounting Information System and Clinical Decision-making. In D. Vrontis, Y. Weber, R. Kaufmann, & S. Tarba (Eds.), 5th Annual EuroMed Conference of the EuroMed Academy of Business: Building New Business Models For Success Through Competitiveness and Responsibility (pp. 581–589). EuroMed Press.

Fitzpatrick, R., & Boulton, M. (1996). Qualitative research in health care: I. The scope and validity of methods. Journal of Evaluation in Clinical Practice, 2(2), 123–130. https://doi.org/10.1111/j.1365-2753.1996.tb00036.x

Gerdin, J., & Greve, J. (2004). Forms of Contingency Fit in Management Accounting Research - A Critical Review. Accounting, Organizations and Society, 29, 303–326. https://doi.org/10.1016/S0361-3682(02)00096-X

Grabner, I., & Moers, F. (2013). Management control as a system or a package? Conceptual and empirical issues. Accounting, Organizations and Society, 38(6–7), 407–419. https://doi.org/10.1016/j.aos.2013.09.002

Hammad, S. A., Jusoh, R., & Oon, E. Y. N. (2010). Management Accounting System for Hospitals: A Research Framework. Industrial Management and Data Systems, 110(5), 762–784. https://doi.org/10.1108/02635571011044777

Harmadi, S., & Irwandy, I. (2018). Technical Efficiency of Public Service Hospitals in Indonesia: A Data Envelopment Analysis (DEA). Asian Social Science, 14(6), 81. https://doi.org/10.5539/ass.v14n6p81

Helmig, B., Hinz, V., & Ingerfurth, S. (2014). Extending Miles & Snow’s strategy choice typology to the German hospital sector. Health Policy, 118(3), 363–376. https://doi.org/10.1016/j.healthpol.2014.06.006

Hofstede, G. (1981). Management Control of Public and Not-for-Profit Activities. Accounting, Organizations and Society, 6(3), 193–211. https://consortium.uchicago.edu/sites/default/files/publications/Suspending Chicago's Students.pdf

King, R., & Clarkson, P. (2015). Management Control System Design, Ownership, and Performance in Professional Service Organisations. Accounting, Organizations and Society, 45, 24–39. https://doi.org/10.1016/j.aos.2015.06.002

Kirchhoff, R., Vik, E., & Aarseth, T. (2019). Management and Reforms in the Nordic Hospital Landscape. Journal of Health Organization and Management, 33(5), 588–604. https://doi.org/10.1108/JHOM-07-2018-0183

Kloot, L. (1997). Organizational learning and management control systems: Responding to environmental change. Management Accounting Research, 8(1), 47–73. https://doi.org/10.1006/mare.1996.0033

Li, I. (Chenchen). (2021). The Role of Boundary Objects in Management Control Systems Change : a Study of Casemix Implementation in Healthcare. The University of Auckland.

Lueg, R., & Radlach, R. (2016). Managing sustainable development with management control systems: A literature review. European Management Journal, 34(2), 158–171. https://doi.org/10.1016/j.emj.2015.11.005

Lunkes, R. J., Naranjo-Gil, D., & Lopez-Valeiras, E. (2018). Management Control Systems and Clinical Experience of Managers in Public Hospitals. International Journal of Environmental Research and Public Health, 15(4), 1–9. https://doi.org/10.3390/ijerph15040776

Macinati, M. S. (2010). NPM Reforms and the Perception of Budget by Hospital Clinicians: Lessons from Two Case-Studies. Financial Accountability &Management, 26(4), 422–442.

Mahendradhata, Y., Trisnantoro, L., Listyadewi, S., Soewondo, P., Marthias, T., Harimurti, P., & Prawira, J. (2017). The Republic of Indonesia Health System Review (Vol. 7, Issue 1).

Malmi, T., & Brown, D. A. (2008). Management Control Systems as a Package--Opportunities, Challenges and Research Directions. Management Accounting Research, 19(4), 287–300. https://doi.org/10.1016/j.mar.2008.09.003

Mei, J., & Kirkpatrick, I. (2019). Public Hospital Reforms in China: Towards a Model of New Public Management? International Journal of Public Sector Management, 32(4), 352–366. https://doi.org/10.1108/IJPSM-03-2018-0063

Merchant, K. A., & Otley, D. T. (2007). A Review of the Literature on Control and Accountability. In C. S. Chapman, A. G. Hopwood, & M. D. Shields (Eds.), Handbooks of Management Accounting Research, 2, 785–802. Elsevier Ltd. https://doi.org/10.1016/S1751-3243(06)02013-X

Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J. (1978). Organizational Strategy, Structure, and Process. 3(3), 546–562.

Mintzberg, H. (1978). Patterns in Strategy Formation. Management Science, 24(9), 934–948. https://doi.org/10.1287/mnsc.24.9.934

Naranjo-Gil, D. (2015). The role of top management teams in hospitals facing strategic change: Effects on performance. International Journal of Healthcare Management, 8(1), 34–41. https://doi.org/10.1179/2047971914Y.0000000078

Naranjo-Gil, D., & Hartmann, F. (2007). Management Accounting Systems, Top Management Team Heterogeneity and Strategic Change. Accounting, Organization and Society, 32, 735–756.

Naranjo-Gil, D., Hartmann, F., & Maas, V. S. (2008). Top Management Team Heterogeneity, Strategic Change and Operational Performance. British Journal of Management, 19, 222–234. https://doi.org/10.1111/j.1467-8551.2007.00545.x

Nyland, K., & Pettersen, I. J. (2004). The Control Gap: The Role of Budgets, Accounting Information and (Non-) Decisions in Hospital Settings. Financial Accountability and Management, 20(1), 77–102. https://doi.org/10.1111/j.1468-0408.2004.00187.x

Nyland, K., & Pettersen, I. J. (2015). Hybrid Controls and Accountabilities in Public Sector Management: Three Case Studies in a Reforming Hospital Sector. International Journal of Public Sector Management, 28(2), 90–104. https://doi.org/10.1108/IJPSM-07-2014-0085

Nyland, K., Pettersen, I. J., & Stergren, K. O. (2009). Same Reform – Different Practices? How Regional Health Enterprises Adjust to Management Control Reforms. Journal of Accounting & Organizational Change, 5(1), 35–61. https://doi.org/10.1108/18325910910932205

Otley, D. T., & Berry, A. J. (1980). Control, Organisation and Accounting. Management Control Theory, 5(2), 231–244. https://doi.org/10.1007/978-1-4899-7138-8_2

Øygarden, O., Olsen, E., & Mikkelsen, A. (2020). Changing to improve? Organizational change and change-oriented leadership in hospitals. Journal of Health Organization and Management, 34(6), 687–706. https://doi.org/10.1108/JHOM-09-2019-0280

Panner, S. (2015). Delivering Health Services under New Public Management: Is it a Good Model for Emerging Economies? Indian Journal of Public Administration, 61(1), 160–168. https://doi.org/10.1177/0019556120150111

Pettersen, I. J., & Nyland, K. (2011). Reforms and accounting system changes: A study on the implementation of accrual accounting in Norwegian hospitals. Journal of Accounting and Organizational Change, 7(3), 237–258. https://doi.org/10.1108/18325911111164196

Shortell, S. M., & Zajac, E. J. (1990). Perceptual and Archival Measures of Miles and Snow’s Strategic Types: A Comprehensive Assessment of Reliability and Validity. The Academy of Management Journal, 33(4), 817–832. https://doi.org/https://doi.org/10.2307/256292

Siddiqui, K. (2013). Heuristics for sample size determination in multivariate statistical techniques. World Applied Sciences Journal, 27(2), 285–287. https://doi.org/10.5829/idosi.wasj.2013.27.02.889

Simons, R. (1991). Strategic Orientation and Top Management Attention to Control Systems. Strategic Management Journal, 12, 49–62.

Simons, R. (1995). Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal. Harvard Business School Press.

Van Der Stede, W. A. (2000). The relationship between two consequences of budgetary controls: Budgetary slack creation and managerial short-term orientation. Accounting, Organizations and Society, 25(6), 609–622. https://doi.org/10.1016/S0361-3682(99)00058-6

Visser, M. (2016). Management Control, Accountability, and Learning in Public Sector Organizations: A Critical Analysis. Governance and Performance in Public and Non-Profit Organizations, 5, 75–93. https://doi.org/10.1108/s2051-663020160000005017

World Bank. (2020). Transition to Diagnosis-Related Group (DRG) Payments for Health: Lessons from Case Studies (C. Bredenkamp, S. Bales, & K. Kahur (eds.)). International Bank for Reconstruction and Development. https://doi.org/10.1596/978-1-4648-1521-8

World Health Organization. (2015). Case-based payment systems for hospital funding in Asia: an investigation of current status and future directions (P. L. Annear & D. Huntington (eds.); Comparative). WHO Press.




DOI: https://doi.org/10.18196/jai.v24i2.16949

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Office:
Ruang Jurnal Fakultas Ekonomi dan Bisnis UMY
Gedung Ki Bagus Hadikusuma (E4) Lantai 2, Kampus Terpadu Universitas Muhammadiyah Yogyakarta,
Jalan Brawijaya (Lingkar Selatan), Tamantirto, Kasihan, Bantul, Daerah Istimewa Yogyakarta, Indonesia, 55183
Website: journal.umy.ac.id/index.php/ai - E-mail: jai@umy.ac.id

Journal of Accounting and Investment is licensed under Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License

View My Stats