Working mainly from the literature of modern organization theory, it

was possible to develop a model of organizational performance for

internal subunits. The model hypothesize three major contingencies
which affect subunit performance: 1) factors internal to the
subunit(internal factors), 2) interrelationships with other subunit
(interdependency factors) and 3) interactions external to the firm
(environmental factors). The contingencies operate differentially
across organizational subunits. Three propositions derived from the
model were examined empirically in a field study of large
manufacturing organizations. Strong support for two of the
analytical methodology of path analysis. The final section of the
paper explores the implications of the study approach and results
for managerial accounting theory and practice.
The structure of the paper is as follows. Contingency theory
research on assessment and a model derived from the literature are
outlined. Three propositions implied by the model are suggested,
followed by a description of the empirical research undertaken to
test the model.
The two dimensions concern the relative and homogeneity of the
environment faced by subunit . it is suggested that the uncertainly
associated with dealing with elements of the environment is lowest
in cell I and greatest in cell IV but that no ordering can be placed on
the relationships of the other situations in such a typology.
The nature of the environment faced by a subunit will determine the
relative difficulty such a unit will encounter in dealing with
environmental elements. It would appear a priori that the more
uncertain the environmental, the more difficult will be the tasks of
the subunit and the greater the extent of environmental influence
on their functions. Thus, type of environment is another contingent
aspect of performance, leading to contingent methods of
assessment.
The other major contingency aspects of performance evaluation
concern the internal structure and functions of a subunit. The nature
of the tasks performed. Types of people, interpersonal relationships
and the ability are all likely to vary with subunit type.
A three dimensional model pf the assessment function can be
constructed on the basis of the three major contingencies
associated with performance. This model is presented in F1.
The contingency aspect explored within this study concern subunit
interdepebndence, environmental relationships and factors internal
to the particular subunit of interest.

The interdependent relationships and the prosedur for their

coordination vary with organizational complexity. Stable pooled
interdependence occurs in those cases where the only connection
between two subunits is that they belong to the same organization,
no changes occur between them and coordination involves the
establishment of standardized procedures and rules.
The studies by Mahoney represent several different examinations of
the same data. Initially, the opinions of managers of diffrenet
organizational subunits were solicited on variabels a priori related to
subunit effectiveness. The same managers also were requested to
rate the overall effectiveness of the subunits. This rating was used
as the dependent variabel in the analysis of the latter two reports. In
the first study, the variabels were factor analyzed. The four highest
loading were interpreted to mesh neatly into the three dimensions
of the model proposed in figure 1. Two of the factors, planning and
initiative, appear to be related to dealing with the task environment:
the others, reliability and productivity, appear to be related to the
interpendency and internal factors, respectively. The second report
utilized these factirs in a regression analysis, and the third classified
subunit on the basis of the dominant technology of the unit prior to
performing a path analysis. In both these reports there were
indications that assessment methods differed across subunit.
Manufacturing firms in ohio fitting two major characteristics were
chosen for study. To overcome the problem of comparing the
responses of individuals from very small with very large firms, an
arbitrary size limit was selected as a cutoff rule for firm inclusion.
Although different indicators of size can be used, such as total
assets or sales, number of employees is a common measure in the
literature. Firm employing more than 500 persons were selected for
inclusion in this study. The other major characteristic of the firms
chosen was that each possessed research and development,
marketing and production departemen.
Two questionnaires sent to different individuals in each firm were
prepared. The major questionnaires was sent to the marketing,
production and research and development manager each of the 109
firms which met the required characteristic.
A two stage data analysis was undertaken on a departmental basis
across firms. The data initially was factors analyzed; then it was
inputted to a path analysis as described below. The other reason for
performing the factor analysis was that it provided a first crude
picture of the pattern of results. Path analysis the was undertaken
on the variables selected by the factors analysis. Stepwise
regression was performed on thos set of variables and a number of
other variabel.

The proposition on production departemen assessment indicate that

internal variables would be the major explanators of effectiveness,
with interdependency variables of secondary importance. The
buffering of production deparetements from the environment was
expected to result in little or no explanatory power residing in the
set of environmental variables
The proposition advanced concerning R&D deparetements stated
that interpendency variables would be the main explainators of
effectiveness. Internal and environmental variables were expected
to have little or no influence
Approximately equal contributions to the explaination of marketing
departements effectiveness were expected from interdependency
and environmental variables, limited explaiation was expected from
internal variables.

Internal

Departement
al
Effectiveness

Interdependen
cy

environmental

Productivity
Cost behavior
Supportive relations
Manpower utilization
Work group

Reliability
coorperation
Flexibiity

Planning ability
Share of market
Dealer opinions
Environmental
stability