Return on Sales, Management Control Systems, Management Controls, Manufacturing Companies.


Management Control Systems are important tools supporting organization, organizational learning and innovation, as the premise of management control is to ensure the attainment of organizational objectives. The Sri Lankan manufacturing sector is the largest contributor to the industry sector, which in turn is the second largest contributor to the country’s GDP, has continuously shown improved financial results. This study focuses on the impact of Management Control Systems on the Return on Sales of manufacturing companies in Sri Lanka. A structured questionnaire was developed and forwarded to a sample population of 83 public quoted manufacturing companies in Sri Lanka. 85.5% or 71 of the companies responded to the questionnaire. Structured interviews were subsequently conducted with selected personnel in these 71 organizations to ensure proper completion of the questionnaire and to authenticate the information provided. Based on the analysis of data it was found that there is a statistically significant relationship between Management Control Systems and Return on Sales of manufacturing companies in Sri Lanka.

Full Text : PDF

  1. Abernethy, M. A., & Brownell, P. (1999). The role of budgets in organizations facing strategic change: An exploratory study. Journal of Accounting Organizations and Society, 24, 189-204.
  2. Abeysinghe, A.A.C. (2009). Budget Contradiction and Consensual Space: A Meaning to Political Interferences in Sri Lanka Railway. Sri Lankan Journal of Humanities and Social Sciences Vol.1(2), 51-63 
  3. Akroyd, C., and Kober, R.(2010). The emergence and utilisation of management control systems in a high growth firm.  American Accounting Association Annual Meeting, Washington DC, 2012
  4. Anthony, R.N. (1965). Planning and Control Systems: A Framework for Analysis (Boston: Division of Research, Harvard Business School)
  5. Argyris, C. (1990). The dilemma of implementing controls: The case of managerial accounting. Journal of Accounting, Organizations and Society, 15, 503-512. 
  6. Bisbe, J., & Otley, D. (2004). The effects of the interactive use of management control systems on product innovation. Journal of Accounting, Organizations and Society, 29(8), 709-737.
  7. Bloom, N., Eifert, B., Mahajan, A., Mckenzie, D., & Roberts, J. (2012). Does Management Matter? Evidence from India. The Quarterly Journal of Economics, Volume 128:1, 1-51
  8. Chenhall, R. H. (2003). Management control systems design within its organizational context: findings from contingency-based research and directions for the future. Journal of Accounting, Organizations and Society, 28 (2-3), 27-168.
  9. Chenhall, R. H., & Langfield-Smith, K. (1998). The relationship between strategic priorities, management techniques and management accounting: An empirical investigation using a systems approach.  Journal of Accounting, Organizations and Society, 23(3), 243-264.
  10. Chow, C.W., Shields, M.D., & Wu, A. (1999). The importance of national culture in the design of and preference for management controls for multi-national operations. Journal of Accounting, Organizations and Society, Vol. 24, 561-582. 
  11. Cooper, D.R., & Schindler, P.S. (2006). Business Research Methods. (9th edition.). New Delhi, Tata McGraw-Hill Publishing
  12. Dent, J. F. (1990). Strategy, organization and control: some possibilities for accounting research.  Journal of Accounting, Organizations and Society, 15, 3-25. 
  13. Drucker, P. F. (1997). Managing in a time of great change, Oxford, Butterworth-Heinemann.
  14. Ekanayake, S (2004). Agency Theory, National Culture and Management Systems. Journal of American Academy of Business (March), 49-54
  15. Fonseka, K.B.M., Manawaduge, A.S.P.G., & Senaratne, D.S.N.P. (2005). Management Accounting practices in quoted public companies in Sri Lanka, Colombo: CIMA Sri Lanka division.
  16. Ho, J.L., Huang, C., & Wu, A (2011). The Impact of Management Control Systems on Efficiency and Quality Performance – An Empirical Study of Chinese Correctional Institutions. [Online] Available:
  17. [Accessed on January 24, 2014].
  18. Jankala, S. (2007). Management control systems (MCS) in the small business context, [Online] Available: 88.pdf. [Accessed on January 12, 2014].
  19. Knight, D., & Wilmott, H. (1993). Its a Very Foreign Discipline - The Genesis of Expenses Control in a Mutual Life Insurance Company. British Journal of Management, l-18.
  20. Merchant, K. A., & Otley, D. T. (2007). A review of the literature on control and accountability. Handbook of Management Accounting Research. (Ed.) C. S. Chapman, A. G. Hopwood, and M. D. Shields, 785-804, Amsterdam: Elsevier Press. 
  21. Miller, D., & Friesen, P. (1984). A longitudinal study of the corporate life cycle. Journal of Management Science, 30, 1161-1183.
  22. Otley, D. (2003). Management control and performance management: whence and whither?, The British Accounting Review, 35, 309-326.
  23. Otley, D. T., Broadbent, J., & Berry, A. (1995). Research in management control: an overview of its development. British Journal of Management, Vol. 6, 31-44.
  24. Sandino, T. (2004). Introducing the first Management Control systems; evidence from the retail sector. Boston, Management Control Department, Harvard Business School.
  25. Sekaran, U. (2006). Research Methods for Business: A Skill Building Approach. (4th ed.). New Delhi: Wiley-India
  26. Simons, R. (1990). The role of management control systems in creating competitive advantage: New perspectives. Journal of Accounting, Organizations and Society, 15 (1/2), 127-143.
  27. Simons, R. (1995). Levers of control: How managers use innovative control systems to drive strategic renewal. Boston, Harvard Business Press.