The performance effects of complementary management control mechanisms

Purpose: The purpose of this paper is to study management control mechanisms (social, behavioral, and output control mechanisms) and their complementary effects on firm performance in lean manufacturing firms. Design/methodology/approach: The study uses second-order structural equation modeling to analyze survey data from 368 different lean manufacturing facilities. Findings: The paper finds that the complementary effects of management control mechanisms in lean manufacturing firms outweigh their additive effects on firm performance. Research limitations/implications: Applying isolated lean management control mechanisms leads to inferior performance, as these management control mechanisms are complementary. Thus, to realize the full potential of lean manufacturing, this paper suggests that lean management control mechanisms should be implemented as an integrated control system. Practical implications: Firms seeking to benefit from the implementation of lean manufacturing should understand the complementarity among the management control mechanisms, as the performance effects of lean management control mechanisms when applied together are greater than their isolated additive effects. Originality/value: This paper is the first to provide empirical evidence of the superior firm performance effects of complementary lean management control mechanisms compared with their additive effects. This paper also expands the understanding of how to conceptualize lean management control mechanisms. Specifically, this is the first paper to distinguish between social cultural control and social visual control mechanisms as well as between non-financial and financial control mechanisms. This paper is also the first to use a second-order structural equation model to properly test and account for the complementary effects on firm performance that stem from multiple control mechanisms.