Philippine E-Journals

Contingency Characteristics of A Manufacturing Company: Predictors of Internal Control System and the System’s Relationship to Organizational Performance

Czarina Joyce G Castro | Camille Iane F Del Mundo | Katherine Anne V Molina

Discipline: management studies

 

Abstract:

To keep up with the trend in this ever-changing world, businesses must have a mindset of continual improvement. The rapid pace of change in rules, standards, and laws adds to the complexity, prompting businesses to consider internal control implementation. This research aims to give manufacturing companies a clear understanding of how important contingency characteristics are when implementing an Internal Control System. This way, the companies can implement and focus only on creating and implementing relevant controls in the operations resulting in better organizational performance. The study was guided by the objectives of determining the predictors that have an impact on the Internal Control System through the use of Contingency Theory and determining if there is a significant relationship between the Internal Control System to the organizational performance. With this, the researchers made use of a quantitative approach to collect data. The researchers gathered data from 30 employees under the Finance Department of a Batangas-based manufacturing company through Google forms. The result of the study concluded that the main predictor of an Internal Control System is a strategy being present in four out of the five Internal Control System components. It is further determined that there is a significant relationship between the internal control system and organizational performance.