Accountability and levers of management control in local government departments in Malaysia : a path analytic study within a contingency framework

Abstract

This study seeks to contribute to the development of knowledge about factors that influence accountability at subunit levels in the local government of Malaysia. Further, this study examines the possibility of significant contingency model paths relationships to provide insights about the ‘fits’ between sets of contingency, control systems and accountability outcomes variables in LAs in Malaysia. This study looks into the public sector control systems that allow managers to manage while holding them accountable for results. There are relatively few research studies that analyze the contingency approach to MCS design in public sector, particularly, the local government, and the mediating effect of levers of MCS on the relationship between the contextual variables and the rendering of the respective dimensions of accountability. The same can be observed about discussions on the relationship between psychological empowerment, task difficulty, situational constraint and levers of control and accountability. Based on the contingency theory modelling, this study proposes a framework that explicates the link between the relevant contextual variables; psychological empowerment, task difficulty, situational constraint, levers of MCS and the dimensions of accountability.This study was conducted on all three types of local authorities in Peninsula Malaysia, namely the city council, municipal council and district council. Primary data was collected through questionnaire survey on a sample of 665 head of departments and supervisory subordinates of local authorities departments comprising mainly those providing direct services to the public. The results of the tests on the hypotheses can be summarized as follows: Firstly, using cluster analysis, results identified three dimensions of accountability to exist in the Malaysian local authorities. Managerial/public, fiduciary and political accountability classify the disposition of Malaysian LA departmental managers’ discharge of accountability; Secondly, the path analysis results indicated that (1) psychological empowerment has significant direct effects on the respective dimensions of accountability; (2) task difficulty has significant inverse direct effect on the respective dimensions of accountability. On the contrary, there is no significant inverse direct relationships between situational constraint and accountability; (3) levers of MCS has significant direct influence on the respective dimensions of accountability; (4) the levers of MCS have full mediating function on the relationship between psychological empowerment and task difficulty and dimensions of accountability. In conclusion psychological empowerment and the extent of task difficulty faced by departmental heads and subordinates influence the rendering of respective types of accountability by those departments but not situational constraint. The four levers of control enhanced the multifarious types of accountability. Furthermore, the levers of MCS mediate the relationships between psychological empowerment and task difficulty and accountability of departmental managers in local authorities in Peninsula Malaysia. Finally, the study suggests directions for future research.