Reliance on budgetary control, manufacturing process automation and production subunit performance: A research note

The degree to which reliance can be placed on budgetary control in the assessment of production subunit performance, particularly with the advent of manufacturing process automation involving, for example, robots and CAD/CAM, is problematic. While budget-based control systems are extensively employed in organizations, such usage does not provide clear evidence of their utility as performance enhancement vehicles as advances are made in the automation of manufacturing processes. The purpose of this paper is to report the results of a study which examines the effect of automation on the link between reliance on budgetary control and production subunit performance. The findings suggest that manufacturing process automation moderates the relation between reliance on budgetary control and departmental performance. As such, firms may benefit from a reliance on budgetary control in the evaluation of production subunit performance as manufacturing processes become more automated.