THÔNG TIN TÀI LIỆU
THE MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMIC HO CHI MINH CITY VO TAN LIEM CHARACTERISTICS OF MANAGER IMPACT ON STRATEGIC CHOICES, USING MANAGEMENT ACCOUNTING SYSTEM INFORMATION AND FINANCIAL PERFORMANCE IN VIETNAM MANUFACTURING ENTERPRISES Major: Accounting Code: 9340301 DOCTORAL THESIS - SUMMARY Ho Chi Minh City – 2021 The thesis was completed at: University of Economics Ho Chi Minh City Supervisor: Dr Pham Ngoc Toan Dr Nguyen Thi Thu Reviewer 1: Reviewer 2: Reviewer 3: The thesis will be presented to the University Dissertation Board at: At… hours… day… month… year 20 The thesis can be found at the library: INTRODUCTION Statement of Problems Among the informations managers have for day-to-day decision making and strategy implementation, MAS information is considered very useful to support for them in decision making (Vo & Nguyen, 2020a; Demski, 2008) Broad scope MAS information originated from inside and outside of the organization, financial and non-financial in nature, and on historical and future events Timely MAS information was provided at the right time, MAS information is integrated and aggregated to provide vertical and horizontal information for the managers to have an overview of organization (Chenhall & Morris, 1986) However, there are many factors and contexts affecting managers 's behavior of using MAS information in making decisions that improve financial performance (Chenhall, 2007) Notably, factors such as uncertain environment, organizational structure (Gul, 1991; Mia & Chenhall, 1994), information technology (Mia & Winata, 2008), size of organization (Mia & Winata, 2008), culture (Patiar, 2005), organizational strategy (Chong & Chong, 1997) are considered to have an impact on managers' behavior using MAS information Recently, many studies on human behaviors have begun to pay attention to demographic and psychological characteristics, because it determines the behavior of the upper managers (Wangrow et al., 2015) However, the number of studies on upper manager ‘s characteristics affect on behavior of using MAS information is still quite limited (Hiebl, 2014, Le et al., 2020, Tran & Nguyen, 2020) In the world, there are very few studies examining the influence of upper managers ‘s characteristics on the choice of an organizational strategy (such as prospector strategy), as well as on the behavior of using MAS information (Hiebl, 2014) and in Vietnam (Nguyen et al., 2017; Vo & Nguyen, 2020a, 2020b) Besides, a match between the characteristics of upper managers, choiced of prospector strategy, behavior of using MAS information to implement a strategy will have strong effects on organization ‘s financial performance (Hambrick & Mason, 1984; Hiebl, 2014) has also been neglected Thus, from the stated objective characteristics, it is necessary to determine: Which characteristics of upper managers have an impact on the choice of prospector strategy and the behavior of using MAS information? How does the choosing of prospector strategy affect on the using of MAS information? How the characteristics of upper managers, the behavior of choosing prospector strategy, the using MAS information affect the financial performance of the organization? In addition, Rotter (1966) divided the human psychology into people with internal locus of control (people who believe that, in their lives, events occur largely as a result of their own actions and themselves efforts) and vice versa, people with external locus of control (who believe that their fate is determined by luck, by other people, or by chance inadvertently) The ILOC psychological was suggested by Hambrick & Finkelstein (1987, p 379) that it would mediate the relationship between upper managers ‘s characteristics and behavior of using information from a complex administrative system in an organization MAS is considered as a complex administrative system in an organization (Hambrick & Mason, 1984 and Chenhall & Morris, 1986) Therefore, how are the moderator role of ILOC in the relationship between upper managers ‘s characteristics and the behavior of using MAS information? From the above questions, the thesis is built based on the review of previous studies according to the following groups: (1) characteristics of upper managers and strategic choice, (2) the impact of characteristics ‘s upper managers on behavior of using MAS information, (3) choosing a prospector strategy that affects the behavior of using MAS information and financial performance, (4) the moderator role of ILOC in the relationship between the characteristics of upper managers and the behavior of using MAS information Researching the behavior of using MAS information of upper managers in Vietnamese manufacturing enterprises should be done because: Firstly, with an emerging economy line VietNam, it has many distinct characteristics Vietnam also has a diverse culture because of its long history of foreign influences (China, France and the United States) in different fields (Hoang, 2008; Nishimura, 2005; Yamazawa, 2012) Therefore, the behavior of using MAS information of upper managers in Vietnam will have distinct characteristics Among the upper managers ‘s characteristics (age, educational background, risk taking propensity, and ILOC), and strategy (choice of prospector strategy) were considered because (1) all the mentioned factors affecting on the behavior of using MAS information have been little studied and (2) in Vietnam, it will have a different effect than other economics Secondly, Vietnamese manufacturing enterprises need to understand: (1) the impact of upper managers characteristics and choiced of prospector strategies on the behavior of using MAS information can help upper managers use this information more effectively while decision making, which can improve the financial performance of the organizations and (2) understanding the relationships between age, education background, risk taking propensity, ILOC, the choice of prospector strategy, the behavior of using MAS information and the financial performance of the organization will help them to design an appropriate MAS Thirdly, in the Enterprise White Book 2020, the number and contribution to GDP of manufacturing enterprises is significant (accounting for 22% of VietNam 's GDP) and is considered to play an important and leading role in the economy (Ministry of Planning and Investment, 2020, page 19) Therefore, the study of this type of enterprise will help develop the general economy of the country Fourthly, at present, manufacturing enterprises in particular and enterprises in general are continuously innovating and creating products to meet market demands in order to increase competitiveness as well as to survive and sustainable development in a volatile and competitive environment in Vietnam (Duong, 2019) Therefore, a strategy with innovative and creative as the prospector strategy is being chosen and applied by many businesses Besides, the application of MA in manufacturing enterprises in Vietnam is still limited The accounting system is still mixed between FA and MA, causing difficulties in the process of applying MA in a scientific and reasonable way for enterprises, as well as upper managers who are not aware of the importance of MA information in decision making (Ngo, 2019) In manufacturing enterprises, the participation of upper managers in the strategic selection process as well as the design, construction and use of information from MAS is important to the success of each enterprise (Nguyen, 2018) On the other hand, the behavior of choosing strategy and using MAS information is influenced by characteristics of upper managers Therefore, the study of upper manager ‘s characteristics affecting the behavior of choosing a prospector strategy and using MAS information in manufacturing enterprises in Vietnam is worthy of attention Research objectives and research questions Research objectives: RO1: Determining the upper managers ‘s characteristics (demographic and psychological) affect the behavior of choosing prospector strategy, using MAS information and financial performance in Vietnam manufacturing enterprises 3 RO2: Measure the impact of upper manager ‘s characteristics on the behavior of choosing prospector strategy, using MAS information and financial performance in Vietnam manufacturing enterprises RO3: Measures the impact of the behavior of choosing the prospector strategy and using MAS information on financial performance in VietNam manufacturing enterprises RO4: Determining the moderator role of ILOC in the relationship between upper managers ‘s characteristics and behavior of using MAS information RO5: Measure the moderator effect of ILOC in the relationahipn between upper manager ‘s characteristics and the behavior of using MAS information Research questions: RQ1: Which are the characteristics of upper managers that affect the behavior of choosing prospector strategy, using MAS information and financial performance in Vietnam manufacturing enterprises? RQ2: How the characteristics of upper managers affect the behavior of choosing a prospector strategy, using MAS information and financial performance? RQ3: How the choice of prospector strategy affect the behavior of using MAS information and financial performance, as well as the impact of the behavior of using MAS information on financial performance? RQ4: What is the role of ILOC in the relationship between upper managers ‘s characteristics and the behavior of using MAS information? RQ5: How are the degree of moderator of ILOC in the relationship between upper managers ‘s characteristics and behavior of using MAS information? Subject and scope of research Subject research: are the characteristics of upper managers, prospector strategy, using MAS information, financial performance, ILOC and their mutual effects In which, the behavior of using MAS information is the main research factor in the thesis That behavior of using MAS information is influenced by the characteristics of upper managers and the choice of prospector strategy Scope of research: + Space: The scope of the survey is mainly in the area where many manufacturing enterprises are concentrated in the south, central and northern regions of Vietnam and only surveyed individuals who are CEOs, general directors and directors in Vietnam manufacturing enterprises (medium and large manufacturing enterprises), because these enterprises have high demand and enough resources for building a MAS + Time: from 1/2018 to 12/2020 Methodology research Using empirical research framework because with experimental data, it is suitable in the process of building and testing the proposed model Mixed methodology is a method that applies both of the above methods a flexible in order to design and test scientific theories (Nguyen Dinh Tho, 2013) In this respect, when the proposed hypotheses are quite numerous, the quantitative research is appropriate However, some concepts are still new in Vietnam (such as the variable MAS), so it is necessary to reevaluate and develop these concepts in Vietnam With this feature, qualitative method is a suitable method to applied in this study to identify research gaps, systematize theoretical basis to build research model scientifically as well as adjust the scales to suit with the environment and characteristics of manufacturing enterprises in Vietnam More specifically, the literature review aims to identify gaps in some relationships between: upper managers ‘s characteristics (Age, educational background, risk taking propensity) – Strategy (Prospector strategy) – Behavior of using MAS information – Financial performance and the moderator role of ILOC in some relationships between upper managers ‘s characteristics (Age, educational background, risk taking propensity) – behavior of using MAS information As well as arguing and explaining the application of UET is the fundamental theory to build research model And the adjustment of the scale is done through group interviews Quantitative research is used to test the proposed hypotheses to answer for the initial questions of this study Contribution About theoretically: - Built a model of upper managers ‘s characteristics affecting the behavior of choosing prospector strategy, using MAS information and financial performance of VietNam manufacturing enterprises This is a combination of: people characteristics / accounting (MAS) / Marketing (prospector strategy) - Characteristics of upper managers will affect their perception and behavior Therefore, the characteristics of upper managers themselves strongly influence the behavior of strategic choice and use of MAS information in decision making - Clarifying the role of upper managers ‘s characteristics affect the behavior of using MAS information to implement the prospector strategy chosen by them, their interactions impact on financial performance in Vietnam manufacturing enterprises - Empirical results on the behavior of using MAS information to implement the strategy with the survey subject being upper managers, while many previous studies on the behavior of using MAS information have paid little attention to this subject in Vietnam - The model is built by using UET A theory that has received little attention in the field of accounting in Vietnam - When upper managers make decisions, the psychological of upper managers (ILOC) plays an important role in the behavior of using MAS information About managerial, when choosing and implementing strategies, MAS information will help upper managers gain relevant insights Therefore, this result indicates a perfect combination of upper managers ‘s characteristics /strategic choice /using MAS information that can improve the financial performance of the organization, as well as help Vietnam manufacturing enterprises to design a MAS is suitable for the characteristics of upper managers To adjust the MAS in accordance with the characteristics of upper managers and strategic characteristics of the organization 5 CHAPTER 1: RESEARCH OVERVIEW 1.1 Overview of international research 1.1.1 Characteristics of upper managers related to the management accounting system 1.1.1.1 Research on internal and external characteristics of organizations and management accounting systems are based on contingency theory Many studies have examined many factors in different contexts affect the behavior of using MAS information such as: Mia & Goyal (1991); Soobaroyen & Poorundersing, (2008), Agbejule (2005), Bangchokdee (2011); Chong & Chong, (1997); Bouwens & Abernethy (2000); Heidmann et al (2008), Chia (1995); Soobaroyen & Poorundersing (2008), Bangchokdee (2011), Naranjo-Gil & Rinsum, (2006), Rasid & Associates (2011), Novas, Sousa & Alves (2012), Ismail et al (2018); Drobyazko et al (2019) 1.1.1.2 Researches on the characteristics of upper managers and management accounting systems are based on Upper Echelons Theory 1.1.1.2.1 Researches on demographic characteristics of upper managers and management accounting systems A number of studies have investigated the impact of top management team characteristics (NaranjoGil & Hartmann, 2006, 2007b; Lester et al., 2006; Kyj & Parker, 2008; Speckbacher & Wentges, 2012; Lee et al., 2013; Naranjo-Gil, 2015) Some studies examined the characteristics of individual upper managers (including CEOs and/or CFOs) to MCS or MAS (Naranjo-Gil & Hartmann, 2007a; Naranjo-Gil et al., 2009; Pavlatos, 2012; Abernethy & Associates, 2010; Burkert & Lueg, 2013; Laitinen, 2014; Hiebl & Associates, 2017; Zor & Associates, 2018; Kalkhouran & Associates, 2015; Kalkhouran & Associates, 2017; Ojeka & Associates, 2019) and a number of studies have investigated the characteristics of two senior executives (CEO, CFO) and the entire top management team as well as the characteristics of the chief information officer (Lee & Associates, 2013) and surveyed simultaneously two senior managers (CEO, CFO) and marketing director (Pavlatos & Kostakis, 2018) While accounting and governance control systems often fall within the CFO's primary area of responsibility, CEOs also influence the design and use of those systems (Heibl, 2014) 1.1.1.2.2 Researches on psychological characteristics of upper managers in the field of management accounting Currently, in the field of MA based on UET to examine the impact of upper managers ‘s psychological characteristics on the behavior of designing MAS and using MAS information is still quite limited, but it has just been used a lot in the field of financial accounting and auditing (Plöckinger et al., 2016) Psychological characteristics of upper managers are difficult to measure accurately (Hambrick, 2007) Psychological characteristics commonly considered in financial accounting and auditing include: overconfidence, selfishness, risk aversion and risk taking 1.1.2 Researches on strategic choices of upper managers Regarding the characteristics of upper managers affect strategy choices that has been implemented Naranjo-Gil & Hartmann (2007b), Speckbacher & Wentges (2012), Naranjo-Gil & Hartmann (2007a), Papadakis, Francioni & Associates (2015), Strandholm & Associates (2004), Goll & Associates (2008) , Finkelstein & Hambrick (1990), Papadakis (2006) Besides, a number of studies have been interested in the impact of the strategy on MAS, MCS Such as Naranjo-Gil & Associates (2009), David Naranjo-Gil & Hartmann (2006), Chong & Chong (1997), Bouwens & Abernethy (2000) The line of research about strategy impact on organizational performance is interested by many scholars such as Naranjo-Gil (2015), Soltanizadeh & Associates (2016), Bangchokdee (2011) 1.1.3 Researches related to financial performance Based on contingency theory: Enterprise characteristics – Strategy – MAS – Financial performance: Naranjo-Gil et al (2009), Pavlatos et al (2018), Naranjo-Gil et al (2006), Ajibolade & associates, (2010) Besides, the research group on the relationship between: Strategic – MAS – Financial Performance is outstanding with the study of Bangchokdee (2011) Based on UET, characteristics of upper managers - behavior of use MA information - financial performance researched by Kalkhouran et al (2015, 2017), characteristics of upper managers - Strategy financial performance researched by Strandholm et al (2004) In the relationship between Strategy – MAS – Financial performance highlights by the research of Naranjo-Gil (2015), Soltanizadeh et al., (2016) 1.1.4 Researhes on the moderator role of managerial discretion Managerial discretion is initially presented by Hambrick (2007) through three groups of factors: (1) environmental characteristics; (2) organizational characteristics; (3) personal characteristics of the upper manager (Hambrick & Finkelstein, 1987, p 379) The group of environmental characteristics is quite diverse in the field of governance (Wangrow et al., 2015) Prominent among them, Datta & Associates (2005); Goll & Associates (2008); Haleblian & Finkelstein (1993); Messersmith & Associates (2014), Datta & Associates (2005) \ The group of characteristics belongs to the prominent organizational characteristics with research by Rajagopalan (1997); Finkelstein & Hambrick (1990); Campbell & Associates (2012) Rajagopalan (1997) The group of personal characteristics of upper managers stands out with the research of Crossland & Chen (2013); Crossland & Hambrick (2011); Fisher (1996) and Chong & Eggleton (2003) Crossland & Chen (2013) 1.2 Viet Nam researches on management accounting system 1.2.1 Researches related to management accounting Regarding construction, design and completion of MA as studied by Nguyen (2014), Doan (2012); Huynh (2008); Wang & Huynh, (2013), Thai (2018), Tran (2016), Nguyen (2019) 1.2.2 Researches related to the management accounting system Some prominent studies are Nguyen et al., (2017), Nguyen (2018), Tran & Nguyen (2019) and Le & Nguyen (2020) 1.3 Research gaps 1.3.1 Characteristics of senior managers affect the choice of strategy to explore and use MAS information The characteristics of upper managers have certain influences on innovative strategies such as prospector strategies as well as on the design and behavior of using information from complex administrative systems such as MAS, but this line of research has not been interested Regarding demographic characteristics, the age and educational affect on the use of MAS have not been considered Regarding the psychological characteristic of risk-taking propensity, it deserves more attention, especially in the Vietnam environment that is always subject to many unstable influences from the outside 1.3.2 Moderator role of managerial discretion 7 ILOC contribute to explain and influence of the behavior ‘s upper managers regarding the effective of using information (Lefcourt, 1982) In particular, ILOC has been confirmed by Hambrick and Finkelstein (1987, p 379) to have a moderator role in the relationship between characteristics of upper managers and the complex administrative system of the organization (MAS is considered an complex administrative system), but the moderator role of ILOC has not been studied (Wangrow et al., 2015; Hiebl, 2014; Vo & Nguyen, 2020a; 2020b) 1.3.3 Financial performance in the research model The financial performance of enterprises is also strongly influenced by the characteristics of upper managers, strategies choiced and complex administrative systems (Hambrick & Mason, 1984; Hiebl et al., 2014; 2017) Although, based on UET, financial performance is proposed as dependent variable (Hambrick & Mason, 1984), control variable (Burkert and Lueg 2013) or as a prerequisite for the use of MAS (Naranjo-Gil & Associates, 2009) However, to date, there have been few studies analyzing the financial performance of the organization (dependant variable) affected by the characteristics of upper managers or affected by the complex administrative system/strategy of the organization ( Vo & Nguyen, 2020b) Hiebl (2014) also suggests that a high fit between: upper manager ‘s characteristics - strategy - complex administrative system will lead to better financial performance for the organization 1.3.4 There is a lack of researches in Vietnam on the characteristics of upper managers in the field of management accounting Characteristics of uppers managers affect the behavior of choosing prospector strategy, using MAS information, as well as affecting financial performance However, in Vietnam it is still very limited in this aspect In particular, in Vietnam, although interested in the behavior of using MAS information, they are relying on other theories such as resource base theory, knowledge-based and dynamic capacity perspective, but have not used UET Therefore, the use of UET to consider the behavior of choosing a prospector strategy and using MAS information in Vietnam is a big gap that needs to be completed CONCLUSION CHAPTER Chapter has reviewed the researches related to the characteristics of upper managers and strategy, MAS and financial performance of the organization, the basis for identifying gaps In chapter 2, the theory used for the thesis and hypothesis building, research model building is presented CHAPTER 2: THEORETICAL BASIS 2.1 Characteristics of upper managers 2.1.1 Demographic characteristics of upper managers CEO, Director and General Manager are certainly indispensable and very important people in every organization (Hambrick & Mason, 1984) Therefore, they are selected as upper managers who will choose and implement the organization's strategy Due to the important roles of age, the educational background of upper managers and the results are not consistent This study selected age and educational background as the upper managers ‘s demographic characteristics that affect the behavior of choosing strategies, using MAS information and financial performance to conduct the research 2.1.2 Psychological characteristics of upper managers 8 The Jackson Personality Inventory (JPI) psychological tool was first published in 1976, revised and republished in 1994 Risk-taking propensity include four dimensions: physical, monetary, and social and ethical (Jackson et al., 1976) This study selected the propensity to accept administrative risks as a psychological feature of upper manager that needs to be studied 2.2 Prospector strategy Miles & Snow have also shown that the prospector strategy is an effective strategy because the future needs of the external environment are need to be rapidly and proactively adapted by the organization During the analysis of each strategic feature, Miles & Snow (1978) assessed the prospector strategy as having the highest risk because this strategy requires a lot of resources and if left unchecked, good monitoring will cause damage businesses 2.3 Information characteristics of the management accounting system The MAS provides information for operational planning, control and performance measurement There are different definitions of MAS (Table 2.1) Table 2.1: MAS definition Authors Horngren Definition et al., A formal administrative system built to carry out the collection, (2002) arrangement, and communication of information within an organization Chenhall (2003) Use MA systematically to work towards organizational goals Chenhall & Morris It is a mechanism to support managers to make decisions in accordance (1986) Anthony with the organizational structure et (2000) Bouwens Abernethy (2000) al., The activities of gathering, classifying, and calculating, systematically generated information in strategic decisions & The formal system is designed for operational purposes by providing information for managers Source: Author's own compilation 2.4 Financial performance Organizational performance includes financial and non-financial performance (Bangchokdee et al., 2011) In it, financial performance refers to how an organization achieves its financial goals, including improving profitability, reducing costs, increasing revenue, and enhancing asset utilization (Kaplan & Norton, 1996); it is assessed using financial metrics such as ROI, ROA, ROS, revenue growth and operating profit (Hoque & James, 2000; Nguyen, 2018) 2.5 Upper Echelon Theory The UET model (Figure 2.1) includes the premise that organizational characteristics, upper managers characteristics (psychological and demographic), Organizational output or strategic choice, and the dependent variable are organization performance In which, the characteristics of upper managers are influenced by conditions internal and external of the organization, which in turn determine the behavior of upper managers and influence organizational ‘s output or strategy Ultimately, decisions that will lead to the achievement or success of the organization they run 9 Upper echelon characteristics Demographic: External and Internal environment Strategic choice/ Outcomes - Product innovation - Age - Administrative complexity - Education background - Unrelated diversification Psychological - Functional tracks - Related diversification - Other career experiences - Acquisition - Socioeconomic roots - Capital intensity - Financial position - Plant and equipment newness - Group characteristics - Backward integration - Forward integration - Financial leverage - Response time Figure 2.1: Framwork of Upper Echelon Theory Source: Hambrick & Mason (1984, p.198) Performance 10 2.6 Relationship between upper managers ‘s characteristics and choice of prospector strategy Strategic choice (Prospector strategy) Upper managers ‘s characteristics (Age, Education background, risk taking propensity) 2.5.2 thuyết nghiên cứu managers ‘s characteristics on the choice of prospector strategy Figure 2.2:Giả The impact of upper Source: Adjusted from Hambrick & Mason (1984) H1: The younger upper manager, the more to choose prospector strategy H2: The more upper managers have business orientation education background, the more they will choose prospector strategy H3: Upper managers with the more risk-taking propensity, the more they choose prospector strategy 2.7 The characteristics of senior managers affect the behavior of using management accounting system information 2.7.1 Age characteristics and educational background of upper managers Demographic characteristics (Age, Education background) Complex administrative system (Using MAS information) Figure 2.3: Impact of upper managers ‘s age, educational background on using MAS information Source: Adjusted from Hambrick & Mason (1984) 2.7.2 Risk-taking propensity Psychological characteristics (Risk taking propensity) Complex administrative system (Using MAS information) Figure 2.4: Impact of risk-taking propensity on the using MAS information Source: Adjusted from Hambrick & Mason (1984) 2.7.3 Research hypothesis H4: The upper managers with older, the lower of the behavior in using MAS information H5: The upper managers with the more business-oriented education background, the higher of the behavior of using MAS information H6: The upper managers with the more risk-taking propensity, the higher of behavior of using MAS information 2.8 The relationship of prospector strategy and using MAS information 2.8.1 Feature Upper managers ‘s characteristics (Age, Education background, risk taking propensity) Complex administrative system (Using MAS information) Strategic choice (Prospector strategy) Figure 2.5: Model of upper managers ‘s characteristics –Prospector strategy – MAS Source: Adjusted from Hambrick & Mason (1984) 11 2.8.2 Research hypothesis H7: Upper managers with the more to choose prospector strategies, the more they will use MAS information 2.9 Financial performance in the research model 2.9.1 The impact of upper manager ‘s characteristics on financial performance Upper managers ‘s characteristics (Age, Education background, risk taking propensity) Complex administrative system (Using MAS information) Strategic choice (Prospector strategy) Financial performance Figure 2.6: The model of relationahip between upper managers ‘s characteristics - Prospector strategy - Using MAS informationFinancial performance Source: Adjusted from Hambrick & Mason (1984) 2.9.2 Research hypothesis H8: The age of upper manager has positive impact on financial performance H9: The business-oriented education background of upper manages has the positive impact on financial performance H10: Risk taking propensity of upper manager has positive impact on financial performance H11: The prospector strategy has positive impact on financial performance H12: The using MAS information has positive impact on financial performance of enterprises 2.10 The role of the moderator variable in the UET model 2.10.1 Moderator role of Managerial Discretion 2.10.2 Internal Locus of control Internal locus of control Upper managers ‘s characteristics (Age, Education background, risk taking propensity) Complex administrative system (Using MAS information) Figure 2.7: Moderator role of Internal locus of control 2.10.3Source: Research hypothesis Adjusted from Hambrick & Mason (1984) and Hambrick (2007) H13: ILOC will have a positive impact on the relationship between low age of upper managers and the behavior of using MAS information H14: ILOC will have a positive impact on the relationship between business-oriented education background of upper managers and the behavior of using MAS information H15: ILOC will have a positive impact on the relationship between risk-taking propensity of upper managers and the behavior of using MAS information 2.11 Proposed research model 12 H1 (+) H14 (+) H15 (+) Internal locus of control H4 (-) Using MAS information Age (+ H5 ) ( H6 Education background H8 (+) +) H 12 (+ ) H9 (+) Financial performance H2 (+ ) H3 (+) H7 (+) Prospector strategy Figure 2.8: Proposed research model Soure: Own development H 11 Risk taking propensity H1 (-) (+ ) ) H10 (+ 13 CONCLUSION CHAPTER Chapter presented about UET and selected upper managers ‘s characteristics affecting the choice of prospector strategy and the behavior of using MAS information At the same time, based on UET, the author argues to predict and hypothesize about the relationship between the characteristics of upper managers - the behavior of choosing prospector strategy - the behavior of using MAS information - the financial performance and examine the moderator role of ILOC in the relationship between upper manager ‘s characteristics and using MAS information and proposed a research model Next, thesis will proceed to argue and build method of research in chapter CHAPTER 3: METHODOLOGY 3.1 Research process Identify and measure upper managers ‘s characteristics including: (1) demographics (age, education background) and (2) psychological (risk taking propensity) that affect the behavior of choosing prospector strategy, using MAS information, financial performance of the organization, and the moderator role of ILOC in some relationships were the key objectives considered These relationships are presented through 15 hypotheses (Figure 2.8) A reasonable method to test hypotheses will be argued, the argumentation process consists of steps: Step 1: Interpret the selected research method In this step, many methods are presented, analyzing the advantages and disadvantages of each method Then, draw conclusions to choose method for the thesis At the same time, the implementation process is also designed and built Step 2: Design the scale The author relies on the documents in Chapter to get the concept of the variables in the model, to argue and discuss to build the initial scale for these variables After that, design the draft questionnaire, adjust the questionnaire through group interviews; then a pre-test and re-test to get a questionnaire that does the pilot research Step 3: Pilot research to evaluate the scale After performing the pilot survey, the data obtained will be checked to see if the scales meet conditions for statistics; suitable for environmental conditions and operating characteristics of manufacturing enterprises in Vietnam Step 4: Design the formal study In this last step, the final research program is built and completed, and the data is collected; from there, put into statistical procedures as a basis for hypothesis testing From the above argument, the implementation program is expressed as follows: + Units of analysis are manufacturing enterprises belonging to many different production industries + Research subjects are CEOs, General Directors, and Directors Three steps of the process are presented in figure 3.1 that shows the implementation process: 14 STEP Determine the target Identify the problem Questionnaire draft Discussion groups (n = 5) Document study Pretest and Retest Model, hypothesis Pilot questionaire ( n = 6) Corrected Item - Pilot study - quantitative Evaluation of scale reliability (n = 113) Total and Cronbachs‘ Alpha EFA Factor loading and Average variance extracted Final questionaire STEP Final Research – Quantitative (n = 234) -Evaluate the measurement model -Evaluate structural model Hypothesis test STEP Conclusions and suggestions Figure 3.1: Research process - (Source: Author's synthesis) 3.2 Pilot study to evaluate the scale When conducting a pilot survey with CEOs, General Directors and Directors in manufacturing enterprises by convenient sampling method, there were 113 satisfactory questionnaires used to analyze Internal consistency reliability assessment, using Cronbach's alpha and EFA were conducted The variable PRO4 did not pass, so it was disqualified The remaining scales were continued to be included in the final questionnaire and conducted a final survey 3.3 Final study design 3.3.1 Evaluate the measurement model Includes many different assessments: (1) Internal consistency reliability assessment based on composite reliability (2) Evaluate the convergent validity, consider the reliability of each scale (outer loading) and the 15 average variance extracted (AVE) and (3) Using additional Fornell-Larker criteria and cross loading, HTMT criterion (discriminant validity) is also considered 3.3.2 Evaluation of structural model The six steps of the Structural Model Evaluation Process are shown in Figure 3.2 Figure 3.2: Structure model evaluation process Step 1: Evaluate collinearity problems Step 2: Assess the significance and relevance of the relationships Step 3: Assess R2 Step 4: Assess f2 Step 5: Assess Q2 Step 6: Assess q2 Source: Hair el al., (2017) 3.3.3 Evaluation of the role of mediation variables In the original objective did not mention the role of the rmediation variables However, examining the mediations effect adds value to the study and adds the impact of age and risk-taking propensity on Financial Performance (through mediation variables), although their direct relationships is not significant Therefore, the total impact will include the sum of direct and indirect impacts Types of mediation effects include: - Direct without mediation: (Direct-only nonmediation): Direct impact is meaningful without indirect impact - No-effect nonmediation: There is no meaning for both direct and indirect effects In addition, three types of mediation effects are identified as follows: - Complementary mediation: Indirect and direct effects are both significant and in the same way - Competitive mediation: Indirect and indirect effects are both significant and opposite - Indirect-only mediation: Indirect effects are significant but not direct CONCLUSION CHAPTER Mixed method was selected to carry out the research procedure Inherited scale and adjusted through group discussion to suit Vietnam manufacturing enterprises After that, pre-tests and re-tests were performed, Then, in the pilot study, Cronbach ‘s alpha and EFA analysis excluded the variable PRO4 16 CHAPTER 4: RESULT 4.1 Measurement model 4.1.1 Internal consistency reliability Table 4.1: Result of internal consistency reliability Reliability Constructs Cronbach ‘s rho_A CR alpha Age 1,0 1,0 1,0 Education background 1,0 1,0 1,0 Risk taking propensity 0,803 0,808 0,871 Prospector strategy 0,918 0,919 0,934 MAS information 0,931 0,932 0,936 MAS broad scope 0,925 0,925 0,941 MAS timeliness 0,920 0,920 0,943 MAS aggregation 0,887 0,887 0,930 MAS integration 0,911 0,912 0,938 ILOC 0,662 0,672 0,816 Financial performance 0,878 0,880 0,911 Source: Author's compilation The results showed that all scales have rho_A coefficient: 0.7 < rho_A < 0.95; only the ILOC with rho_A of 0,672 less than the minimum allowable value 0.7 is not significant Cronbach alpha has 0.7 < α < 0.95; only ILOC scale with α = 0,662 less than the minimum value 0,708 is not significant However, the CR of all variables has 0.8 < CR < 0.95; where the ILOC scale has CR = 0.816 Therefore, the scales achieve the necessary reliability 4.1.2 Convergent validity Convergent validity is the measure that is positively correlated with other measures in the same measure It is necessary to consider the loading factor in addition to the observed variable and the average variance extracted value (Average variance extracted – AVE) All loading factors are higher than 0.7; in which, the loading factor of the variable TL3 with the value 0,923 is the highest The AVE value of the MAS information scale has the highest value (AVE = 0,815) Therefore, convergence is guaranteed 4.1.3 Discriminant validity Discriminant validity is the consideration of whether a variable is actually different from other variables by empirical criteria The objective of discriminant computation is to show that one variable is distinct from other variables in the model The experimental standards are tested by: (1) cross loading and (2) FornellLarcker criteria and (3) HTMT The results have shown that the factor loading coefficients of each measurement variable are larger than all the cross-loading coefficients of other variables The results show that the square root of the AVE value for each variable is always on the diagonal and is larger than the square of the correlation with any other variable in the model 17 The results show that all coefficients lying on the diagonal are less than 1, satisfying the condition of HTMT criteria Therefore, the discriminant validity of the research variables is guaranteed 4.2 Structural measurement 4.2.1 Direct effects Based on SmartPLS 3.3.0 software, author implemented the algorithm to calculate the path coefficient (coefficient effect) and runs bootstrap 2,000 times (t-2 tailed test) to consider the statistical significance of the relationships in the model Two hypotheses have been rejected (age and risk-taking propensity to financial performance), the remaining 10 hypotheses are accepted at 95% and 99% significance level (Table 4.2): Table 4.2: Results of testing the direct hypothesis Relationships Coefficient H1: AGE → PRO -0,270 H2: EDU→ PRO Standard T value P value Hypothesis 0,057 4,767 0,000 Accepted 0,248 0,047 5,329 0,000 Accepted H3: RT → PRO 0,314 0,060 5,186 0,000 Accepted H4: AGE → MAS -0,237 0,058 4,114 0,000 Accepted H5: EDU → MAS 0,229 0,056 4,118 0,000 Accepted H6: RT → MAS 0,345 0,101 3,428 0,001 Accepted H7: PRO → MAS 0,141 0,064 2,185 0,029 Accepted H8: AGE → PER -0,014 0,047 0,309 0,758 Rejected H9: EDU → PER 0,277 0,055 5,023 0,000 Accepted H10: RT → PER 0,045 0,055 0,819 0,413 Rejected H11: PRO → PER 0,386 0,060 6,428 0,000 Accepted H12: MAS → PER 0,285 0,060 4,731 0,000 Accepted deviation Source: Author's compilation Table 4.2 showd the results of direct effects Age, educational background and risk-taking propensity have significant effects on choices of prospector strategy and using MAS information (p < 0,01) In addition, the prospector strategy also has a positive impact on the behavior of using MAS information (p < 0,05; 95% confidence level) Finally, characteristics of educational background, prospector strategy and behavior of using MAS information have a positive effect on financial performance (p < 0.01; 99% confidence), however the characteristics Age and risk-taking propensity did not affect financial performance 4.2.2 Moderator effects Testing the moderator hypothesis A two-stage approach (Chin et al., 2003) is used, the first stage estimates the main impact in model In stage 2, the moderator and independent variables obtained from Stage were multiplied to measure the three interaction terms (Age x ILOC; Edu x ILOC, RT x ILOC) and run boostrapping was performed 2,000 times to determine statistical significance The results of testing the moderator hypotheses are presented in Table 4.3 Table 4.3: Results of testing the moderator hypothesis Age → MAS Coefficient R2 p-value -0,179 0,541 0,001 Hypothesis 18 ILOC -> MAS 0,252 0,001 Age x ILOC → MAS 0,119 0,020 Edu → MAS 0,197 0,001 ILOC -> MAS 0,189 Edu x ILOC -> MAS 0,132 0,020 RT -> MAS 0,324 0,000 ILOC -> MAS 0,177 RT x ILOC -> MAS 0,178 0,533 0,549 Accepted 0,006 Accepted 0,002 0,023 Accepted Source: Author's compilation Below, the author summarizes the results of testing 15 hypotheses in Table 4.4: Table 4.4: Summary of hypothesis testing results Relationships Coefficient p-value Hypothesis H1: Age → Prospector strategy -0,270 0,000 Accepted H2: Education background→ Prospector strategy 0,248 0,000 Accepted H3: Risk-taking propensity → Prospector strategy 0,314 0,000 Accepted H4: Age → Using MAS information -0,237 0,000 Accepted H5: Education background → Using MAS information 0,229 0,000 Accepted H6: Risk-taking propensity → Using MAS information 0,345 0,001 Accepted H7: Prospector strategy → Using MAS information 0,141 0,029 Accepted H8: Age → Financial performance -0,014 0,758 Rejected H9: Education background → Financial performance 0,277 0,000 Accepted H10: Risk-taking propensity → Financial performance 0,045 0,413 Rejected H11: Prospector strategy → Financial performance 0,386 0,000 Accepted H12: Using MAS information → Financial performance 0,285 0,000 Accepted H13: Age x ILOC -> Using MAS information 0,119 0,020 Accepted H14: Education background x ILOC -> Using MAS information 0,132 0,020 Accepted H15: Risk-taking propensity x ILOC -> Using MAS information 0,178 0,023 Accepted Source: Author's compilation 4.3 Mediation effects The results of the analysis of mediation impacts in Table 4.5 showed that: Age of upper managers still has an impact on financial performance, but through the mediation of using MAS information, prospector strategy with a significance of 99% and 95% Educational background through mediate variables increased the behavior of using MAS information and increase financial performance (all mediation variables play an additional role in supplementing the impact of direct relationships The managerial risk-taking propensity through MAS and the choice of prospector strategy (mediation role) impact on financial performance with coefficient are respectively 0.098 and 0.121 (with 99% confidence) CONCLUSION CHAPTER Chapter presented the results of the structural model analysis and the measurement model, as well as the results of hypothesis testing and analysis of the direct, mediated and moderator relationships The results accepted 13 hypotheses and rejected hypotheses ... information have paid little attention to this subject in Vietnam - The model is built by using UET A theory that has received little attention in the field of accounting in Vietnam - When upper managers... mentioned factors affecting on the behavior of using MAS information have been little studied and (2) in Vietnam, it will have a different effect than other economics Secondly, Vietnamese manufacturing... upper managers in Vietnamese manufacturing enterprises should be done because: Firstly, with an emerging economy line VietNam, it has many distinct characteristics Vietnam also has a diverse
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