Management Control Systems, Organizational Culture and Village Credit Institution Financial Performance

Abstract

This study aims to provide empirical evidence about the influence of misfit management control systems (levers of control) with an organizational culture that will negatively affect the financial performance of Village Credit Institution (LPD). This study uses a survey method (questionnaire) based on a sample of 149 LPD units in Buleleng Regency with purposive sampling criteria. The research respondents were all three LPD officers (penyarik, pemucuk, and petengen) and one staff each from the credit and accounting department. The research hypothesis suggests that each organizational culture orientation, namely clan, adhocracy, hierarchy, and market, shows a fit (through misfit values) with levers of control (belief, boundary, diagnostic, and interactive control system) has a negative effect on LPD financial performance. The analysis technique uses OLS regression residual approach to testing the research hypothesis. The results showed that the hierarchical culture was able to have a fit (a small misfit value) with a management control system (levers of control) to influence the financial performance of the LPD.

Keywords

• management control system
• organizational culture
• lpd financial performance