Lean Manufacturing, Non-Financial Performance Measures, and Financial Performance

In the last 30 years, many U.S. firms have adopted lean manufacturing strategies. Despite evidence of variation in firms' success with lean strategies, few studies have examined firms' management accounting systems (MAS) as a potential source of the variation. This study uses structural equation modeling to examine whether one MAS component - the use of non-financial manufacturing performance (NFMP) measures - mediates the relationship between lean manufacturing and financial performance. Consistent with the view that firms' MAS must fit their operational strategies, the results indicate that lean strategies' financial performance effects are indeed mediated through the utilization of NFMP measures. The study also reports confirming results from regression-based tests examining the mediating role of the use of NFMP measures in the lean manufacturing/financial performance relationship.

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