Management control systems (MCS) have been widely suggested as a key framework with which organizations can increase the probability that people make decisions and take actions congruent with the entire goals of the organizations. Most of the previous studies have mainly focused on efficiency performance, and we have little knowledge of the impact of MCS on both quality and productivity performance. In this study, we use both non-parametric data envelopment analysis (DEA) and parametric stochastic frontier analysis (SFA) to examine how MCS affects efficiency and quality performance in correctional institutions. Our results show that correctional institutions in Taiwan have considerable technical inefficiency, which is attributable to their unfavorable resource usage. We also find that correctional institutions with tight MCS have higher efficiency and quality performance. Our overall results support the argument that tight control systems can be used to achieve efficiency and quality performance.
Asia-Pacific Journal of Accounting & Economics, Vol.18, No.1, pp.77-94