Abstract
Literature questioned the accuracy and appropriateness of the description and prediction propositions underlying the elements of Porter's theory of generic competitive strategies. Two common conclusions evolved from these criticisms. Firstly, future strategy research should develop a more accurate and more relevant description of strategic priorities for today's business environment. Secondly, an examination of a range of strategic and organisational variables within a contingency framework may provide more powerful insight into what contributes to an effective competitive strategy. However, the dominating emphasis on accounting controls and accounting information in past management accounting contingency-based research has been criticised. This criticism occurs because the focus of the research is not broad enough to capture modern approaches needed to achieve effective control and to cope with increased competition and market globalisation. For example, evidence suggests that middle management are involved in activities of strategic significance and the new styles of strategic decision making rely on middle management participation beyond the budgetary setting process. Modern management systems, such as the balanced scorecard (BSC), place an emphasis on administrative and personal controls so that the objectives of the chosen strategy can be communicated and reinforced. Therefore, the involvement and psychological empowerment of middle management in the strategic decision process are elements of the control mechanism needed to develop emergent competitive strategies for timely implementation in today's dynamic business environment. This contemporary view sees management control systems (MCS) as a more active set of control elements so that it can provide individual managers with information and power to achieve their goals. Therefore, academic commentators have concluded that future research needs to focus on contemporary dimensions of MCS and behavioural outcomes to maintain the relevance of MCS contingency-based research. Consequently, there were four objectives for this study. The first objective of this research aimed to provide a more accurate description of the dimensions of the differentiation strategy. This has been achieved by adopting competitive methods that prior studies derived from a number of strategy theories (e.g., Miles and Snow [1978], Hofer and Schendel [1978], and Porter [1980]). Competitive methods have been described as the composition of different strategic dimensions that might be used to characterise a particular generic strategy. These more specific descriptions of strategy have been labelled strategic priorities by other researchers. The first aim of the second objective was to establish a more accurate description of organisations' strategic orientations that have greater generalisability than Porter's notion about the mutually exclusive implementation of his broadly described typologies. For the second aim of the second objective, the research aimed to provide a better prediction about an organisation's performance ability compared to Porter's financial performance proposition that requires the selection of a single priority as an organisation's strategic orientation. The results of the confirmatory factor analysis, within a structural equation modelling (SEM) technique, support the description of more specific dimensions of the differentiation strategy. Similarly, the cluster analysis indicates organisations adopt a single strategic priority, no strategic priority, or different combinations of these strategic priorities as their strategic orientations. Furthermore, the ANOVA and post hoc tests results show no significant difference in above-average performance when organisations place an emphasis on one or more of the four strategic priorities. Such results suggest that a more accurate prediction of organisations' performance may be based on one strategic priority or multiple strategic priorities in an organisation's strategic orientation.