The Effects of Market Competition and International Orientation on Management Control Systems’ Use by Emerging Market Publicly Listed Companies

We examine the effects of market competition and international orientation on management control systems’ use by emerging market Public Listed Companies (PLCs). Our inquiry focuses specifically on China because this country is the world’s largest annual source of exports from among emerging market countries. We examine management control systems whose widespread use by Chinese PLCs has been documented by prior accounting research: formal procedures, strategic planning, approval procedures, budget targets, participative budgeting and performance evaluation. We provide empirical evidence that the association between two specific types of market competition (foreign entrants’ competition and customers’ buying power) and management control systems’ use depends on whether the PLCs compete predominantly in the domestic or international market. We discuss implications of our findings and provide some directions for future research.