Theodorus Radja Ludji*
Department of Accounting
School of Business and Economics (SBE)
Universitas Prasetiya Mulya
BSD City Kavling Edutown I.1. Jl. BSD Raya Utama
BSD 15339, Tangerang, INDONESIA.
Department of Accounting
School of Business and Economics (SBE)
Universitas Prasetiya Mulya
BSD City Kavling Edutown I.1. Jl. BSD Raya Utama
BSD 15339, Tangerang, INDONESIA.
Abstract
Market orientation and differentiation strategy are essential determinants of contemporary performance measurement practice. However, studies investigating the association between market orientation and differentiation strategy on the use of non-financial measures (NFMs) in an emerging economy setting are still limited. This study examines whether these factors affect NFM use and eventually firm performance. A survey method was used in which the questionnaires were distributed to Indonesian manufacturing firms. Analysis was undertaken using Partial Least Square (PLS) Structural Equation Modelling (SEM). The results from a survey of 41 Indonesian managers documented positive and significant associations between market orientation and differentiation strategy, market orientation and NFM use, differentiation strategy and NFM use, and NFM use and firm performance. Additional tests revealed significant mediating relations in which NFMs facilitate positive impacts of market orientation and differentiation strategy on firm performance. These findings demonstrate the effect of market orientation and differentiation strategy in influencing NFMs use and illuminate the integral role of NFMs in bridging positive associations involving market orientation, differentiation strategy, and firm performance. This study contributes to the contingency-based management accounting literature in an emerging economy context by providing empirical evidence for the association between market orientation, differentiation strategy, NFMs, and firm performance