Improving the Managerial Performance in the Context of Financial Autonomy: An empirical investigation in public education sector45286

Improving the Managerial Performance in the Context of Financial Autonomy: An empirical investigation in public education sector Pham Quang Huy(1)(*), Vu Kien Phuc(2) University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam Vinh Long College of Economics and Finance, Vinh Long, Vietnam *Correspondence: pquanghuy@ueh.edu.vn Abstract: With the purpose to contribute to a greater awareness of Managerial Performance (MP) in public education sector (PES), we hypothesize that the way in which the MP in PES are being affected by its determinants, identify the relationships between the parameters affecting MP and to analyze multiple interactions between them through construction of structural equation model (SEM) based on a sample of 412 accountants working in PES in Vinh Long province The results indicate that the MP in PES depends significantly on Effective Management Accountant (EMA), Strategic Leadership (SL), Management stakeholder (MS) and is controlled by Financial Autonomy (FA) These findings also provide important implications, both for practice and for policymaker Keywords: managerial performance; financial autonomy; management accountant; public education sector Introduction Managerial Performance (MP) was acknowledged as one of the most outstanding keys which was claimed to be improved all the time as it is an indicator of the accomplishment of managers to identify target (Zenita et al 2015) There is a growing large body of literature which has addressed the type of subject on variegated aspects Previous studies has indicated the impact of cost management knowledge on the relationship between budgetary participation, and MP (Agbejule & Saarikoski 2006), the understanding of responses of individual managers to the application of the controllability principle, and especially the potential negative effect of non-application on MP (Burkert et al 2011), core competencies were more critical for top managers and less important for middle managers and line managers in determining MP (Bucur 2013) Besides, MP was still influenced by the behavior of the individuals related to budgeting preparation and self-efficacy in strategic management accounting information use (Zenita et al 2015) In exploration the determinants of MP, Rodan (2010) concludes that innovativeness plays a key role in linking network structure and network content to performance in these five theoretical causal motors namely autonomy, competition, information brokering, opportunity recognition, and innovativeness Surprisingly, there has been lack of research conducted on MP in public sector, especially in PES although education plays a basic role in future of nations (Jalaliyoon & Taherdoost 2012) and public schools have long been acknowledged as important sectors for the economic stability and global employment In addition, with the aim at ameliorating the effectiveness and efficiency of schooling, enhanced autonomy for school sites was supposed motility for school improvement The perspectives of enhanced school autonomy, assessment and accountability inaugurate in the 1990s, have created a new method to school governance (van Amelsvoort & Scheerens 1997) Therefore, educational research has become increasingly aware of measures of school governance, especially in the context of school autonomy Nevertheless, much of the recent literature still keeps on exploring on institutional structures (Overman et al 2014) or human resources autonomy (i.e Bach 2014) Numerous studies have focused on FA in the contexts of western countries (Verhoest et al 2010), while the practices of FA in organizations from developing regions have dealt with the limitation of the number of studies In response to the requirement for more research investigation on the MP of PES, this study intends to present a better understanding on the determinants of MP in the context of FA Our contributions lie in construction of SEM based on a sample of 412 accountants working in PES in Vinh Long province Besides, through empirical testing results, the determinants, which were proved to have significant impact on MP, also made a remarkable contribution to the practitioners and policymakers as reference basis Therefore, in this study, we attempt to bridge these above mentioned gaps through addressing following formulated research questions: RQ1 What factors will significantly impact to MP of Vinh Long public schools under the control of FA? How far they impact? RQ2 Is there any difference about the impact of factors to MP of Vinh Long public schools under different levels of FA? Does the level of FA change the impact of factors to MP? RQ3 How to improve the MP of Vinh Long public schools in the context of FA? Based on these aforementioned discussions, the remainder of this research is structured as follows In Section 2, we provide insights into the primary theoretical inputs underpinning the research The next section highlights the main constructs and presents a set of hypotheses A discussion about the methods employed in this study is then described in detail Our main episode emphasizing the result of SEM for MP is provided in section The last section is ended with summarizing some concluding remarks, comments on limitations, and directions for future research Theoretical background 2.1 Public school In Vietnam, the management and regulation of the educational system are the responsibility of Government The national education system encompasses education from pre-school to higher education Nursery, Primary, Secondary, and High schools depend on local governments With the diversity of level in education systems and numerous schools, most of the regions in the country are caused a much more constrains to the Government budget In addition, the Ministry of Education conducts the centralized administrative system whose structure is divided into various hierarchical levels Therefore, managing the performance of educational institutions like schools is not an easily to undertake due to the involvement stakeholders at different levels and with diverse interests and priorities, especially the significant dependence on the budget provision for current operation This also leads to limitation in the optimization of the human and material resources in accomplishing the goals in increasing school management, thus, in order to effectively manage the performance of the schools, one of the most important aspects which is worth encapsulating comprehensively is administration Hence, the idea of transferring powers to the educational institutions of the Government is increasingly recognized and advocated Generally, autonomy expresses the level of selections that an organization can address (Verhoest et al 2010) in managing resources through its own discretion and policies As such, school autonomy was identified as decentralization of authority through relocating power structures from central or regional offices to school sites to allow school stakeholders to have their own decisions on resource utilization and school operations in a quickly changing academic environment There were two types of autonomy for agencies namely policy and management autonomy (Verhoest et al 2004) Whereas, the policy autonomy aspect focuses on independent discretion in policy implementation, management autonomy deals with the delegation of management functions Moreover, management autonomy contained organizational, human resources, and FA Of these, FA is described as a level of discretionary power over agency finances independent financing, and the decentralization of financial powers among the functionaries FA refers to its flexibility to raise financial resources and use them for agency activities (Verhoest et al 2010) In line with the global economic trend, Vietnamese decision makers seek ways to improve the efficiency and financial performance of the Vietnam education, the introduction of the Decree No 16/2015/ND-CP in 2015, which replaced the Decree No 43/2006/ND-CP promulgated in 2006, is one of the most prominent changes consisting new contents to consolidate these autonomies in organizing, staffs and financial mechanism and self-responsibility, intends to increase competition between public schools and to unlock untapped efficiency potential 2.2 Managerial performance Performance of the entities tends to enhance significantly only when managers utilizes budget to allocate resources Thus, sufficient resource allocation for the subordinates will make more productive performance of the subordinates (Fisher et al 2002) MP is the output of the work undertaken by each of individual members in the organization through managerial activities namely planning, investigation, coordination, supervision, staffing, negotiation and representation (Wong-On-Wing et al 2010) As such, MP also demonstrated the capacity of a manager working performance in management function in management functions for activities as their major duty (Anthony & Govindarajan 2001) 2.3 Foundation theory used in research 2.3.1 The contingency theory Contingency theory which was discovered in 1950 through the leadership behavior research developed from the sociological functionalist theories of organization structure was carried out by Chenhall (2003) Since contingency theory explored the behavioral aspect of an organization to elucidate how contingent factors namely culture, technology, and external environment had a dramatically influence on organizations designing and functioning (Ferreira & Otley 2005), it was defined as an important field of research in management accounting (Cadez & Guilding 2008) as well as organizational measurement and subunit measurement 2.3.2 The stakeholder theory With the first appearance in 1963 in the memorandum at the Stanford Research Institute, the "stakeholder" concept was then recommended to be adopted by managers (Freeman 1984) Stakeholder theory was first explained in the seminal work of Freeman (1984), experienced extensive evolution in the 1990s through the works of numerous researchers The adoption of stakeholder theory will give the organization a better chance to improve and enhance the matters concerned to more value for stakeholders and management the distribution of that value (Freeman 1984) Hypotheses development and research model Internal control The definition of IC involves in a series of effective actions when it is established into the entity’s infrastructure, essential mechanisms provision to help understand risks in the context of the entity’s objectives, taking for granted the achievement of objectives and minimizing the risk of failure Therefore, the IC system is reckoned as a management tool that serves to attain performance targets, precluding loss or misappropriation of resources (Nogueira & Jorge 2017) In other words, the objectives of the organization can be accomplished through better control activities which are all essential actions should be undertaken with the target to address risks (Saidu & Zabedah 2013) To be more precise, the management accountants can make a report about different operations in which extent patterns and causes of fraud, RM, fraud prevention, specifying fraud and responding to fraud in detail (Chartered Institute of Management Accountants 2002) H1 Internal control has a positively significant impact on effective management accountant Risk management RM is defined as the total process of specifying, controlling, and mitigating information system–related risks including risk assessment; cost and benefit analysis; and the selection, implementation, test, and security evaluation of safeguards Management accountants play significant role in developing and implementing RM and IC systems within their organizations (Chartered Institute of Management Accountants 2002) since their knowledge on what drives shareholder value in both monetary and nonfinancial terms can potentially produce information to help their organizations define, track, and manage different types of risk In particular, some contribution of management accountants can create for managing risks namely compliance and legal, employee-related, market-price, credit and liquidity, operational, information technology and data security, reputation, and strategic risks (Bento et al 2018) H2 Risk management has a positively significant impact on effective management accountant Effective management accountant The effectiveness of management accountants’ contributions to ERM owing to the empirical study investigated their effectiveness across a wide range of ERM areas namely finance-related compliance programs; fiduciary and statutory requirements; supporting, managing and minimizing risk; driving the integration of ERM with decision-making across the organization; enhancing internal controls; offering line managers with information regarding risks and outputs; conducting ERM for the accounting/finance function; measuring and improving the organization’s ERM processes; and analyzing and reporting the organization’s performance, including its related risks H3 Effective management accountant has a positively significant impact on Managerial performance Strategic leadership SL is a vital component in effective school management and leadership with a view to identify the vision and moral purposes of an organization and put them into practice Taking this into consideration, the school management, hence, should express teamwork and collaboration which are necessary elements in provision of higher quality education Additionally, school leaders have to increase SL in the context of autonomy mechanism Since they are not only primarily consulted in operative management in daily routine operations relevant to administration and pedagogy, but also requested for specifying targets of organization, human resource development, conducting, and assuring externally set the instructional rules In this regard, MP significantly based on management functions namely planning, organizing, controlling and leadership (Mahoney et al 1963) H4 Strategic leadership has a positively significant impact on Managerial performance Management stakeholder Public schools have to pledge with a diversity of heterogeneous stakeholders in conducting their mandate Therefore, public schools are claimed to have a better understanding and involve stakeholders in a participatory manner It is very critical for an organization to manage relationship with the stakeholders to foster them to conduct in ways that support the functions, targets and development of organization (Midin et al 2017) The more in value of stakeholders’ inner have been enhanced, the more increasing in the performance of management within the organisation will be achieved H5 Management stakeholder has a positively significant impact on Managerial performance Figure Theoretical proposed model Methodology 4.1 Procedures and scope of survey The qualitative in-depth interview experts were employed to increase insights on this subject Thematic analysis was performed to analyze interview data The findings from the interviews were then adopted to establish a structured questionnaire survey for collecting primary data These questionnaires provided was lasted from April in 2019 to June in same year in Vinh Long province and personally collected by the researchers 4.2 Sample and data collection The questionnaire survey was used to collect data in this research The targeted respondents were accountants of Vinh Long public schools since almost all of the studies on management accounting have considered accountants as key respondents In addition, apart from undertaking the duty of financial accountants, they are responsible for providing useful information relevant to management or utilization budget legitimately and effectively due to the fact that they occupy commanding positions in their respective organizations and have access to detailed information regarding the functions, strategic development, the market and competitors of the entities The questionnaires were sent to 432 accountants in PES located in districts and city in Vinh Long province to increase the response level Of those, 412 respondents completed the survey, resulting in a completion rate of 95.37% and a useable response rate of 4.63% 4.3 Variable measurement The theoretical constructs of the proposed model were measured through multi-item scales validated in prior literature and modified as follows As such, the study has tried to measure the RM by 5-item scale, IC by 8-item scale, EMA by 9-item scale, SL by 10-item scale, MS by 5-item scale, and the managerial performance by 6-item scale The items of RM were adapted with some modification from Bento et al (2018) The items of IC were adapted with minor adjustment from COSO ERM Framework (2004), which was developed by Datar and Rajan (2014) The items of EMA were adapted with some modification from Bento et al (2018) The items of SL were adapted with some modification from Sotirakou and Zeppou (2006) The items of MS were adapted with some modification from Sotirakou and Zeppou (2006) The items of MP were adapted with some minor adjustment from Agbejule (2005) The 5-point Likert scale was employed in this research, as such, the respondents were requested to rate the extent to which they applied in each item of the scale (from “completely disagree” to “completely agree”) On the other hand, MP is measured by an instrument using a self-evaluation questionnaire Thus, respondents were demanded to rate on a five-point Likert scale their own perceived performance (from 1"very poor" to "excellent").To control for a possible size effect, the degree of FA applied in this study were based on the level stipulated in the Decree No 16/2015/ND-CP in 2015 namely FA in respect of public administrative units of which recurrent expenses are covered by the government; FA in respect of public administrative units which cover a part of their own recurrent expenses; FA in respect of public administrative units that cover their own recurrent expenses; FA in respect of public administrative units that cover their own recurrent and investment expenses 4.4 Data analysis tools and techniques In this research, the SEM was set up using the maximum likelihood approach and conducted a two-step procedure requested Anderson and Gerbing (1988) Statistical analysis tools namely EFA, CFA, and SEM were applied with the assistance of SPSS 25 and AMOS 24 software in order to carry out the tests relevant to reliability and SEM Results of research 5.1 Descriptive statistics Ultimately, 412 completed questionnaires were received from 129 males and 283 females All respondents were accountants The majority of respondents were in the age from 30 to less than 35 years old (34.95 percent) In terms of year of experience, 73 respondents (17.72%) belong to “5-10” group, 92 respondents (22.33%) are “10-15” group, 203 respondents (49.27%) are the “Above 15” group and the remaining 44 (10.68%) are classified as “Below 5” The level education ranges of the sample, of which 275 participants had undergraduate degree and 137 participants had post graduate degree The results consist of 27.43 percent for Nursery school, 45.87 percent for Elementary school, 20.15 percent for Secondary school and 6.55 percent for High school Approximately 65 percent of the selected organizations had their recurrent expenses covered by the government while 35 percent was left for the schools of which a part of recurrent expenses was covered by government In addition, the survey included the characteristics relevant to the size of organization, of which 47.33 percent was over “41 employees” group, while 29.13 percent was “31-40 employees” group, and the remainder belongs to the other two groups with lower 31 employees A detailed description of the respondents’ demographic characteristics was depicted in Table 5.2 Confirmatory phase: large-scale study All items of the constructs loaded in the measurement model significantly The measurement model yielded a model fit with df = 687, p