Meditari Accountancy Research

The contingency of performance measurement systems in Moroccan public

institutions and enterprises
Mohammed Ibrahimi, Siham Naym,
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Mohammed Ibrahimi, Siham Naym, (2019) "The contingency of performance measurement
systems in Moroccan public institutions and enterprises", Meditari Accountancy Research, https://
doi.org/10.1108/MEDAR-05-2018-0336
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Moroccan
The contingency of performance public
measurement systems in institutions and
enterprises
Moroccan public institutions
and enterprises
Mohammed Ibrahimi and Siham Naym Received 3 May 2018
Revised 19 April 2019
National School of Business and Management, Casablanca, Morocco Accepted 3 May 2019
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Abstract
Purpose – In the framework of contingency theory, this paper aims to study the contextual variables that
influence the variety of the contents of a performance measurement system, specifically the use of non-
financial indicators in Moroccan public institutions and enterprises (MPIE).
Design/methodology/approach – Aiming to study the factors which influence the use of financial
and non-financial indicators within MPIEs, the authors attempted to identify all performance indicators
used by the MPIEs in the sample. They selected 23 MPIEs with an industrial and commercial character
and analyzed their reports for the period from 2010 to 2015. To evaluate the variety of performance
indicators within these organizations, they used the multi-dimensional definition of performance
recommended by Kaplan and Norton (1998) and used linear regressions to explain their relationship with
the contextual variables.
Findings – Three hypotheses were developed regarding these contingency factors, predicting a positive
relationship between the age, the size and the competitive environment of the organization, on one hand, and
the use of non-financial indicators on the other hand. Following the study of MPIEs, the authors found that
these organizations normally use financial indicators. However, the use of non-financial indicators is
influenced by the age of the organization alone.
Originality/value – The scientific contribution of this paper is twofold: first, the authors seek to fill the
gap in studies of performance measurement systems for MPIEs; second, they wish to enrich the scientific
literature for underdeveloped countries which suffer from lack of data. Its managerial contribution is also
dual: first, the authors aim to provide managers of MPIEs with a clearer understanding of non-financial
measures that fully address the different management needs of their organizations; second, they encourage
the government control using non-financial aspects alongside financial aspects.
Keywords Contingency theory, Financial and non-financial indicators, Public institutions
Paper type Research paper

Introduction
According to the Ministry of Economy and Finance[1], Moroccan public institutions and
enterprises (MPIE) are currently facing important challenges in terms of continuous
performance improvement and in breaking with the old means-based logic. Dissatisfaction
with the performance of these organizations has led the government to redirect control
toward future performance, comparing the resources committed and the results obtained by
apprehending performance from a global perspective with results-oriented management
styles. All of these elements provide significant incentives for the leaders of these
organizations to adopt a performance measurement system (PMS) which allows them to Meditari Accountancy Research
pursue performance by measuring not only the resources involved and the associated © Emerald Publishing Limited
2049-372X
results but also the generated impact. DOI 10.1108/MEDAR-05-2018-0336
 MEDAR However, PMS must take account of a multitude of indicators. The diversity of
performance measures, which depends on several contextual variables, can be explained
using contingency theory. Within this framework, researchers have demonstrated that the
public organizations use a set of financial and non-financial indicators to measure their
performance according to their organizational characteristics (Moynihan and Pandey, 2010;
Van Dooren, 2005; Davila, 2005).
We consider that contingency theory provides an appropriate framework to explain the
contextual factors influencing the choice of performance measures. This paper highlights
these contingency factors in the context of MPIEs. The objective of this paper is therefore
double: first, to explore and identify the content of the PMSs used by MPIEs and second, to
identify the factors that influence the variety of indicators used in PMS.
The choice of this study is justified by the fact that most research work in this field has
concentrated on the design and use of the system in public administrations (Van Helden and
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Reichard, 2013). Moreover, all of this research has been conducted in developed countries
(Jackson, 2011; Moynihan and Pandey, 2010; Fryer et al., 2009; Van helden et al., 2008). In
Morocco, the discipline of management control is a relatively new field of research (Ahsina,
2012a, 2012b) which is gradually finding its place in Moroccan public organizations. As we
know, the two studies conducted on the contingency of management control systems
(Ahsina, 2012a, 2012b; Ahsina et al., 2014) did not address the specific issue of performance
measurement in MPIEs.
The scientific contribution of our article is twofold: first, it seeks to fill this gap in the
field of PMS for MPIEs, and second, it aims to enrich the scientific literature for the
underdeveloped countries which suffer from a lack of data (Boussetta and Alami, 2017). Its
managerial contribution is also dual: first, it aims to provide managers in MPIEs with a
clearer understanding of non-financial measures that fully address the different
management needs of MPIEs; second, it encourages government control using non-financial
aspects alongside the financial aspects.
This paper primarily focuses on the MPIE sector, and specifically on MPIEs involved in
the industrial and commercial activities covered by our study[2], followed by the theory
background and an exposition of the research hypotheses and methodology. Finally we
dedicated a section to the end result followed by the discussion section, from which we draw
a number of conclusions.

2. Literature review
2.1 Moroccan public institutions and enterprises weight in the public sector
According to the Court of Auditors report[3], MPIEs involved in industrial and commercial
activities play an important role in the economic and social development of Morocco due to
their weight in the national economy.
These organizations are key players for the State in developing infrastructure and
logistical sectors such as energy, roads, rail, port and airport activities and in social sectors
such as education and health. Since the 2000s, taking an MPIE sector portfolio of 253[4]
entities, the aggregates of these organizations have displayed a constant increase allowing
the acceleration of the economic and social development of the Kingdom of Morocco. In 2015,
turnover for the sector was around 211,203.8m Dirhams, compared with 198,007.8m
Dirhams in 2014, an increase of 6.7 per cent, and the net result reached 17,255.2m Dirhams in
2015 compared with 14,083.4m Dirhams in 2014[5]. Investment in the sector amounted to
79,421.1m Dirhams in 2015, representing 24.6 per cent of gross fixed capital formation, and
more than 50 per cent of total public investment. MPIEs were the largest public investor,
exceeding the State and local authorities[6].
 The MPIE sector is characterized by the diversity of organizations involved. This Moroccan
diversity is reflected at different levels: organization size, the level of participation in capital, public
the business sector (competitive or monopoly) and management style. In general, however,
the conditions under which these MPIEs operate are quite similar to those experienced by
institutions and
private companies, due to the high pressure exerted by the State as majority shareholder. As enterprises
a result, these public enterprises[7] face national and foreign competition, and have to meet
performance and competitiveness requirements in a changing economic and technological
environment.

2.2 The need for a multidimensional performance measurement system

The traditional approach to management control systems, based on financial measures
obtained from financial and accounting statements alone, does not fully respond to the
different managerial needs of MPIEs. Traditional financial results present past performance
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only and in no way predict the future performance of enterprises (Kaplan and Norton, 1998;
Merchant, 1984). Lorino (1991) explains that the production of numerical information is an
important point of reference for external partners, but this leads professionals to focus
increasingly on the accuracy of accounting data. He adds that accuracy and relevance are
often far from coinciding.
The PMS used in these organizations must therefore take an expanded view of performance
by integrating other non-financial dimensions, taking account of qualitative data which is
essential for the analysis of operational issues (Batac and Ouvrard, 2010), and should permit the
measurement of global and multidimensional performance (Cappelletti and Khouatra, 2004).
With non-financial measures increasing in importance, the use of these measures represents a
part of an overall control system (Otley, 2016) that MPIEs can effectively use to meet the needs
of all their stakeholders, to support their commitment to efficiency and effectiveness to increase
the precision of strategic management of these organizations.
For this purpose, several PMSs using the multidimensional performance aspects have
been put forward in the literature, including the Balanced Scorecard (BSC) developed by
Kaplan and Norton (1991,1998), and have enjoyed considerable success, thanks to their
theoretical design and ease of application. Created in response to the need for global
performance measurement by combining both financial and non-financial performance
measures into a single framework divided into four “perspectives”, the BSC (Appendix)
provides answers to four pertinent questions (Kaplan and Norton, 1998):
(1) Financial perspective: How do we look to shareholders?
(2) Customer perspective: How do customers see us?
(3) Internal business process: What we must excel at?
(4) Learning and growth perspective: Can we continue to improve and create value?

This PMS is the best-known example of its type among researchers and the most widely
used in private organizations since 1990s (Bourguignon et al., 2002; Chenhall, 2005). Shortly
after, the framework was also adopted by different organizational and governmental bodies
in the public sector (Kaplan and Norton, 2001) in an attempt to improve efficiency and
effectiveness (Lawrence and Sharma, 2002).

2.3 Contingency theory: framework for studying performance measurement system

Contingency theory focuses its attention “on organizations as structured entities whose
(formal) structures [. . .] depend on the characteristics of their context” (Friedberg, 2001, p. 3).
It refutes the classic “one best way” approach. This theory is based on the simple principle
 MEDAR that “diverse and variable situations may correspond to diverse and variable modes of
organization” (Rojot, 2005, p.91), meaning that there is no single way to organize or control
an organization but that the latter is subject to the internal and external constraints of its
environment, to which it adapts by varying its function and structure according to these
contextual variables (Donaldson, 1996; Desreumaux, 1998, 2005). Applied to management
control systems since the 1970s, contingency theory is the theoretical framework most
widely used in explaining management control practices (Chenhall, 2003). as Dent (1990, p.9)
stated “the theoretical contingent framework has become the dominant logic for research on
the design of control systems”.
Anthony (1988) shows that contingency factors can explain variations in management
control practices. He argues that there is no universal control system, which can apply to all
organizations in all circumstances (Sharma and Nandan, 2000) but that control practices
depend on contextual factors. Contingency theory applied to management control assumes
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that, in general, organizations adopt management control systems that allow them to
improve their efficiency (Covaleski et al., 2003). In other words, according to Chenhall (2003),
the contingent approach allows us to study management control systems according to
contextual variables, assuming that organizations aim to adapt to changes in their
contingency factors to improve their performance.
Cavalluzzo and Ittner (2003) and Van Dooren (2005) conclude that to explain
management control practices, the characteristics of the organization and its organizational
context – in other words, different contingency factors specific to the organization – must be
considered (Ahsina et al., 2014). Despite being criticized for presenting “a deterministic,
historical view of organizations that provides limited insights as to the mediating processes
of organizations” (Covaleski et al., 1996, p.4), the contingent approach has given “insights
into how different configurations and uses of control systems have resulted in a variety of
different consequences” (Otley, 2016, p.11). It provides an appropriate framework for
explaining contextual factors, internal and external, that influence the use and choice of
performance measures. The main factors studied in recent years include internal factors
such as age (O’Connor et al., 2004; Davila, 2005), size (Moores and Yuen, 2001; Germain and
Gates, 2010; Ahsina et al., 2014), structure (Chenhall, 2003; Germain and Gates, 2010) and
strategy (Hoque, 2004; Chenhall, 2005), alongside external factors such as the environment
and its complexity (Fisher, 1998; Davila, 2005).
All of these factors are likely to influence the content of the PMS used in the MPIEs, but
for our article we will limit our study to three variables: age, size and the nature of
competition as a component of the environment, data which were collected from the activity
reports published by these organizations[8].

3. Research hypotheses and methodology

3.1 Development of hypotheses
3.1.1 Organization age. This is one of the most studied variables in literature and has a
direct influence on organizations (Mintzberg, 1982). The association between the age of the
firm and the use of management accounting techniques has been discussed by several
authors such as Nicholls and Holmes (1988), who argued that the managers of Australian
SMEs[9] rely more on accounting information and data as the age of the organization
increases. O’Connor et al. (2004), Davila (2005) and Davila and Foster (2005a, 2005b) found
that older organizations are the most likely to adopt management techniques. Similarly,
Davila (2005) found that age acts through experiential learning which can be interpreted by
the emergence of more developed management control systems to formalize this learning.
 H1. The older the MPIE, the more it will use non-financial indicators. Moroccan
3.1.2 Organization size. Organization size is the second most widely-studied contingency public
factor in the literature (James and Hoque, 2000). It represents an explanatory variable for institutions and
organization management practices. Several studies have shown that size has a positive enterprises
influence on the degree of development and variation of performance indicators (Moores and
Yuen, 2001; Germain and Gates, 2010). Based on the observation that, in the public sector,
non-financial indicators are more often used alongside financial indicators by large firms
than by medium-sized ones, this variable has been shown to influence the content of PMSs
(Fryer et al., 2009; Van Helden et al., 2008, 2012). Van Dooren (2005), analyzing the PMS used
in the Flemish Community Ministry in Belgium, showed that organization size has a
positive influence on the degree of use of performance measures, indicating that as size
increases, PMSs become more sophisticated. In the Moroccan context, Ahsina et al. (2014)
found that size is one of the explanatory variables for the differentiation of management
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control systems in public organizations.

H2. The larger the size of the MPIE, the more it will use non-financial indicators.
3.1.3 Nature of competition. In a constantly changing and increasingly competitive
environment, company performance is no longer solely expressed in terms of financial indicators
such as revenue, increased profit or the profitability of the capital invested. Performance becomes
multidimensional, and its measurement must take account of the position of the firm in relation
to the market. According to a study of Australian firms of all sizes by Hoque et al. (2001), firms in
a competitive situation exhibit greater reliance on non-financial measures.
Banker et al. (2000) and Germain and Gates (2007) conclude that non-financial client-
oriented measures, such as customer satisfaction and customer retention, contain additional
information that cannot be obtained from historical financial measures. The situation of the
sector therefore constitutes a real contingency factor that can influence the strategic choices
and the performance of an organization (Anthony, 1988).

H3. The more competitive the sector, the more MPIEs will use non-financial indicators.

3.2 Methodology
Since we wish to study the factors influencing the use of financial and non-financial
indicators within MPIEs, we attempted to identify all performance indicators used by the
MPIEs in our sample. Note that financial indicators are based on accounting and financial
data, and non-financial indicators include quantitative and qualitative measures that affect
intangibles such as the quality of service, employee performance and customer satisfaction.
To evaluate the variety of performance indicators within MPIEs, we used the multi-
dimensional definition of performance recommended by Kaplan and Norton (1998) in which
indicators were grouped according to the four perspectives of the BSC model (Appendix).
This allowed us to calculate and evaluate the average score for each performance axis.
To explain the relationship between the different variables, we used linear regression:

Y ¼ b0 þ b1X1 þ b2X2 þ b3X3

with: Y = the variable to explain

where:
Y1 = degree of use of “customer” indicators
Y2 = degree of use of “internal process” indicators
 MEDAR Y3 = degree of use of “organizational learning” indicators; and
b0 = the constant
X1 = organization age variable
X2 = organization size variable
X3 = nature of competition variable
3.2.1 Sample and data collection. Our data were collected from the Ministry of Economy and
Finance and the Court of Accounts databases. These databases provide information on 90
MPIEs with an industrial and commercial character. However, our study is limited to those
MPIEs which publish their activity reports, reducing our sample to the 23 MPIEs which
fulfill this data availability requirement. From the various activity reports published by
these 23 MPIEs, we collected the data necessary for our analysis.
These reports cover the period from 2010 to 2015. The sectors of activity of the MPIEs
are very varied. Their turnover is close to 80 per cent of the total turnover of the sector, and
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they were responsible for more than 60 per cent of investments in the MPIE sector.
3.2.2 Operationalization of variables
3.2.2.1 Diversity of use of performance indicators To evaluate this variable, we used the
perspectives of the BSC advocated by Kaplan and Norton (1998), giving us four variables:
(1) the degree of use of “financial” indicators;
(2) the degree of use of “customer” indicators;
(3) the degree of use of “internal process” indicators; and
(4) the degree of use of “organizational learning” indicators.

We assigned three values (3-strong, 2-average, 1-weak) for each variable. The different
contingency factors used in our analysis have been interpreted as follows[10]:
3.2.2.2 Organization age. Based on the number of years since the beginning of activity,
using our data, firms were grouped into four age groups: 1-less than 20 years; 2-between 20
and 40 years; 3- between 40 and 60 years; 4-more than 60 years. This choice is inspired by
the work of Quesado et al. (2016), working on the adoption of the BSC by Portuguese
companies.
3.2.2.3 Organization size. Several size criteria may be used, such as turnover, staff and
net income. Following the example of Van Dooren (2005) and Davila (2005), we selected the
number of permanent employees to represent organization size. To distinguish size groups,
however, we adopted the criteria used in France by the INSEE[11]: ME (micro-enterprises)
[<10] employees; SME (small and medium size enterprises) [10-249]; MSE (mid-size
enterprises) [250-4999]; LE (large enterprises) [>4999].
3.2.2.4 Nature of the competition. Monopolistic MPIEs were assigned a value of 1 and
competing MPIEs were given a value of 2. Information about the market situation was
obtained from the activity reports of each organization.

4. Results
4.1 Statistical analysis
4.1.1 Descriptive statistics. Our sample is composed of two types of organizations: 12 public
institutions with legal personality and financial autonomy, representing 52.17 per cent of the
sample, and 11 public enterprises, 47.83 per cent (Table I).
We notice that the sectors in our sample are relatively diverse. The water and electricity
production and distribution sector is predominant compared to other sectors, representing
more than a third of the organizations in the sample (34.79 per cent). Next is the port and
 airport infrastructure sector, at 17.4 per cent. Finally, the transport networks and financial Moroccan
institution sectors each account for 13.04 per cent, with the three remaining sectors, public
development, mining and agriculture, each representing 4.35 per cent of the sample.
From Table II, we see that 52.2 per cent of our sample is less than 40 years old: within this
institutions and
group, 16.7 per cent are SMEs, 75 per cent are MSEs and 8.3 per cent are LEs. For MPIEs enterprises
with over 40 years of activity, 9.1 per cent are SMEs, 63.7 per cent are MSEs and 27.2 per
cent are LEs. In terms of market conditions, we note that 56.5 per cent of MPIEs are
monopolistic and 43.5 per cent are in competition. Each group thus represents about half of
the MPIEs in the sample.
Table III presents the results of calculations of the average score for the variety variable
for the contents of the PMS. The average score for this variable is the average obtained over
all four performance axes. This enables us to evaluate the degree of use of indicators from
each axis and to calculate an overall score (on a 12-point scale)[12] measuring the degree of
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diversity of performance indicators within the MPIEs.

No. of Total turnover

Business sector the MPIE in millions MAD (%)

Transport networks 3 19737 13.04

Port and airport infrastructures 4 8595 17.4
Agricultural development 1 1078 4.35
Mine 1 55,327 4.35
Production and Distribution of Water and Electricity 8 36,310.51 34.79
Development and Habitat 1 4,635 4.35
Telecommunication and Audiovisual 2 17,180.1 8.7 Table I.
Financial institutions 3 12,388.83 13.04 Business sector of the
TOTAL 23 155,251.44 100 MPIE

Contextual variables No. (%)

Organization age
under 20 years 6 26.1
between 20 to 40 years 6 26.1
between 40 to 60 years 10 43.5
more than 60 years 1 4.3
Total 23 100
Organization size
Less than 10 0 0
From 10 to 249 3 13
From 250 to 4999 16 69.6
More than 4999 4 17.4
Total 23 100
Nature of the competition
Monopolistic 13 56.5
Competitive situation 10 43.5 Table II.
Total 23 100 Contextual variables
 MEDAR Considering Table III, we note that the majority of MPIEs accord significant importance to
financial indicators (with an average score of 2.57 from a total of 3 points) with 95.7 per cent[13].
The “Internal process” axis comes in second (with an average score of 2.57 out of 3), concerning
87 per cent of MPIEs. However, only 30.4 per cent of the MPIEs in our sample considered
indicators relating to the “customer” axis (average score 1.22 out of 3). Regarding the
“organizational learning” axis, we note that most MPIEs accord little importance to indicators
for this axis (average score 1.70 out of 3).
In light of these results, the MPIEs in our sample develop PMS that are relatively partial
and unbalanced. As a result, the BSC’s axes are unevenly covered. As you can see in
Table IV, most of the organizations in the different business sectors have focused on two
major axes in their PMS, the “financial” axis which groups the main key indicators of the
financial performance and the “Internal process” axis by focusing more on quantitative
indicators. As for the indicators of the “customer” axis, they often cover market share and
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customer satisfaction, while for the “organizational learning” axis, the most common
indicators observed in the activity reports are workforce, training rate and supervision rate
by category, while the indicators representing motivation, information system quality and
employee satisfaction are not followed up in most of these organizations; only four MPIEs in
the sample continuously monitor these types of indicators.
4.1.2 Correlation test. To determine the absence or presence of a significant linear
relationship between variables representative of PMS content and contingency variables, we
calculated Pearson’s linear correlation coefficient.
Table V shows that the correlation test is not significant for the crossings between the
three contingency variables and the use of the three performance indicators, namely
financial indicators, customer indicators and operational indicators. The degree of use of
organizational learning indicators only correlates with the organization age variable. This
can be explained by the fact that the duration of MPIE presence in the market influences
their choices in terms of non-financial performance indicators of the “organizational
learning” type.

4.2 Factors influencing the variety of performance measurement system content

Regression analysis was used to assess the influence of contextual variables (age, size,
nature of competition) on the use of non-financial indicators. Here, we want to determine the
variable which most explains the use of these types of indicators.
4.2.1 Use of “customer” indicators.

Y1 ¼ b0 þ b1X1 þ b2X2 þ b3X3

where Y1: degree of use of “customer” indicators

Table VI shows that the model is not significant since the significance threshold is higher
than 0.05. The detailed results of the regression are presented in Table VII.

Measured variables Average score (on 3 points)

The degree of use of the financial indicators 2.57

Table III. The degree of use of the customer indicators 1.22
Scores of the The degree of use of the internal process indicators 2.57
performance The degree of use of organizational learning indicators 1.70
measurement axes Variety of content of PMSs 8.06 (on 12 points)
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Business sector Financial indicators Customer indicators Internal process indicators Organizational learning indicators

Transport Networks Turnover by activity Market share
Investment realized Number of travelers
Net profit Customer satisfaction
EBE
CAF
EBITA
Port and Airport EBITDA Market share in global traffic
Infrastructures Traffic by activity segment
Agricultural Market share by category of
development plants
Market share by seeds
Number of customers
Mine Part of global phosphate rock
market
Ground market share of
phosphate fertilizers
Production and Market share/activity
Distribution of Water Number of customers/
and Electricity category
Customer satisfaction
Average flight duration Number of employees by activity/
Number of trains/plane gender/age
Number of regularity Supervision rate
Rates of the lines Training rate
Transportation of products Number of training days
Accident rate
Traffic rate per port Number of employees by activity/
Port traffic per activity gender/age
Air traffic rate by nature Training rate
Movements/year per company
Passengers/year by company
Traffic passengers
Energy consumption rate
Number of multipliers Number of employees by gender
Number of varieties multiplied Training rate
Storage capacity
Capacity of conditioning
Capacity of treatment
Production rate Number of employees by gender/post
Ratio of timely completed orders Actions of formation
Turnover of material assets Training days
Number of properly executive The continuous training of the
orders Technicians/Agents of Mastery and
Workers/Employees
Electricity/water network efficiency Number of employees by category/
rate gender
Storage capacity Supervision rate
Average cycle time Qualification
% Planned downtime to total Total feminization
downtime Training rate
(continued)

indicators used in
Summary of
Table IV.
institutions and
public
Moroccan

enterprises

MPIEs
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Table IV.
Business sector Financial indicators Customer indicators
Development and Market share/activity/
Habitat product
Number of customers
Telecommuni-cation Market share
and Audiovisual Number of customers/
category
Customer retention
Customer satisfaction
Financial institutions Market share
Number of customers
Number of new customers
Customer satisfaction
Claims management
MEDAR
Internal process indicators Organizational learning indicators
Number of units delivered Number of employees
Number of delivered lots Training rate
Number of trade delivered
Completion rate
Demolitions shacks
Local relocated
Net coverage by region Number of employees by gender/
Consumption of electricity/fuel post/activity
Storage capacity Training rate
Capacity of conditioning Number of work accidents
Rate national production by chain
Sales outsourced production by
chain
Daily average of processed flows Number of employees by agency/
Number of security trades gender/activity
processed Training rate
Number of value retained Supervision rate
Processed securities transactions The educational satisfaction rate
State of compliance Distribution of staff by level of
States of materialization education
Delay in the supply
Total reliability records
 Measured variables representative of PMS Organization Organization Nature of the
Moroccan
content age size competition public
institutions and
Degree of use of financial indicators
Pearson Correlation 0.051 0.334 0.205 enterprises
Sig. (bilateral) 0.816 0.120 0.348
Degree of use of customer indicators
Pearson Correlation 0.224 0.061 0.243
Sig. (bilateral) 0.305 0.783 0.264
Degree of use of Internal process indicators
Pearson Correlation 0.098 0.327 0.205
Sig. (bilateral) 0.657 0.128 0.349
Table V.
Degree of use of organizational learning indicators
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Pearson Correlation 0.580** 0.288 0.198

Correlation between
Sig. (bilateral) 0.004 0.182 0.365 the contextual
variables and the
Note: **The correlation is significant at the 0.01 level (bilateral) PMS

Error Change in statistics

standard
R Adjusted of the R Square F
Model R Square R Square Estimate Variation Variation ddl1 ddl2 Sig.

1 0.343a 0.118 0.022 1.054 0.118 0.846 3 19 0.486 Table VI.

Model Summary of
Note: aPredictors: (constant) organization age, organization size, nature of the competition the first regression

Unstandardized Standardized Collinearity

coefficients coefficients statistics
Standard
Model A Error Bêta t Sig. Tolerance VIF

1 (Constant) 0.043 1.071 0.040 0.968

organization age 0.282 0.250 0.246 1.124 0.275 0.966 1.035
organization size 0.082 0.419 0.044 0.196 0.847 0.909 1.100
nature of the 0.553 0.460 0.269 1.202 0.244 0.928 1.078
competition Table VII.
Result of the first
Note: aDependent variable: degree of use of customer indicators regression

From Table VII, we note that Beta values are not significant. None of the three independent
variables explains the use of non-financial indicators of the “customer” type.
4.2.2 Use of “internal process” indicators.

Y2 ¼ b0 þ b1X1 þ b2X2 þ b3X3

Where Y2: degree of use of “internal process” indicators

 MEDAR Table VIII shows that the model is not significant with p = 0.395. The detailed results of
the regression are shown in Table IX.
Table IX shows that the three independent variables are not significant in explaining the
use of non-financial indicators of the “Internal process” type.
4.2.3 Use of “organizational learning” indicators.

Y3 ¼ b0 þ b1X1 þ b2X2 þ b3X3

where Y3: degree of use of “organizational learning” indicators

From Table X, we find that the model is significant at the 0.05 level. This model explains
41.2 per cent of the variation of the dependent variable. It also indicates that we have less
than 5 per cent chance of error when stating that the model helps to explain the use of
organizational learning type indicators.
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To identify the explanatory variable (age, size and nature of competition) that most
explains the dependent variable (degree of use of organizational learning indicators), we
need to analyze the standardized Beta coefficient.

Change in statistics
Error Standard R Square
Model R R Square Adjusted R Square of the Estimate Variation F Variation ddl1 ddl2 Sig.
Table VIII. 1 0.377a 0.142 0.006 0.836 0.142 1.047 3 19 0.395
Model Summary of
a
the second regression Note: Predictors : (constant) organization age, organization size, nature of the competition

Unstandardized Standardized Collinearity

coefficients coefficients statistics
Standard
Model A Error Bêta t Sig. Tolerance VIF

1 (Constant) 1.649 0.850 1,940 0.067

organization age 0.128 0.198 0.140 0.647 0.525 0.966 1.035
organization size 0.476 0.332 0.319 1.432 0.168 0.909 1.100
nature of the 0.193 0.365 0.117 0.528 0.604 0.928 1.078
Table IX. competition
Result of the second
regression Note: aDependent Variable: degree of use of internal process indicators

Error Change in statistics

R Adjusted Standard R Square F Durbin–
Model R Square R Square of Estimate Variation Variation ddl1 ddl2 Sig. Watson
Table X. 1 0.642a 0.412 0.320 0.764 0.412 4.445 3 19 0.016 1.864
Model Summary of
the third regression Note: aPredictors: (constant) organization age, organization size, nature of the competition
 Table XI shows that variance inflation factors and tolerances are within the recommended Moroccan
limits (VIF < 3.3 and Tolerance > 0.3). There is therefore little correlation between the public
explanatory variables. In terms of error independence, the last column of Table X shows the
results of the Durbin-Watson test, with a value of 1.864. As this statistic is considered to be
institutions and
acceptable when results are between 1 and 3, we may assert that there is no problem of error enterprises
independence, and the quality of the model is good.
We find that the “age” variable is the only explanatory variable significant at the 0.01
level in this regression, with a standardized Beta coefficient of 0.569 (greater than 0.5). We
can thus reject the hypothesis that the relationship found in the sample is due to chance: the
“age” variable has a positive and significant effect on the degree of use of non-financial
indicators (organizational learning indicators) within MPIEs. However, the values of the
standardized Beta coefficient for both the size and nature of competition variables are not
significant and have no influence on the variable to explain.
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5. Discussion
According to the three regression models, we conclude that the values obtained in terms of
the standardized Beta coefficients and the significance tests related to the “size” and “nature
of competition” variables are not significant in the three regression models. The probability
of error in indicating that these two variables have an influence on the three types of non-
financial indicators is significantly higher than 10 per cent. The two explanatory variables
therefore do not contribute to explaining the use of non-financial performance indicators,
leading us to reject H2 and H3.
The variety of content of PMS is not related to size or to the nature of competition.
This finding contradicts the conclusions presented by James and Hoque (2000) and Hoque
et al. (2001), associating diversification of PMS with increase in organization size and the
competitiveness of the business sector. Our results show that large company size does not
necessarily imply a diverse PMS, given that 87 per cent of the organizations in our
sample exceed 250 employees nor does competition result in increased reliance on
customer indicators: 43.5 per cent of the organizations in our sample operate in
competitive markets.
According to the third regression, the “age” variable has a positive effect on the degree
of use of “organizational learning” indicators. The older the MPIE, the more it will use
non-financial indicators of the organizational learning type, confirming our first
hypothesis.
This finding is supported by several studies on the contingency of management control
systems which consider age as the driving force for the emergence of PMS (O’Connor et al.,
2004; Davila, 2005; Davila and Foster, 2005a, 2005b). Supporting this idea, Davila (2005) who

Standardized Collinearity
Unstandardized coefficients coefficients statistics
Model A Standard Error Bêta t Sig. Tolerance VIF

1 (Constant) 0.627 0.776 0.807 0.430

organization age 0.575 0.181 0.569 3.178 0.005 0.966 1.035
organization size 0.252 0.304 0.153 0.828 0.418 0.909 1.100
nature of the competition 0.354 0.334 0.194 1.061 0.302 0.928 1.078 Table XI.
Result of the third
Note: aDependent Variable : degree of use of organizational learning indicators regression
 MEDAR studied the emergence of human resource management as a particular system of
management control system in 95 small high tech firms with less than 10 years of activity,
found that firm age had a significant positive association with the adoption and use of a
management control system. He explained the age effect by the fact that experience-based
learning increases over time, this can be seen in the emergence of more developed
management control systems to formalize this learning, leading to the construction of
organizational routines and the monitoring of their evolution. Similarly, Davila notes that
organizations test different ways of executing processes over time, exploring different
options for aligning employee motivation and managing company culture. Once a solution
has been found, mechanisms are developed to sustain the selected option, which is
subsequently codified. Codification affects both staff control and results, and consequently,
this exploration leads to the formalization of more developed PMSs with the integration of
non-financial indicators.
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Our correlation and regression results show that the use of non-financial indicators
(organizational learning indicators) is associated with the “age” contingency factor. Only the
oldest organizations use non-financial organizational learning indicators such as training
rate, coaching rate and productivity per employee, while indicators related to information
system quality and employee satisfaction, are almost absent from their reports. However,
the performance of an organization depends largely on the motivation, satisfaction and
skills of its people (Kaplan and Norton, 1998).
Remaining within the Moroccan context, our study also shows that PMS used by the
MPIEs in our sample are relatively diversified. The different axes of the BSC are unevenly
covered by focusing more on financial performance. Most of the MPIEs accord high
importance to financial indicators such as operating profitability, gross margin and
economic profitability (more than 95 per cent of MPEs use these types of indicators)
followed by the “internal process” axis (about 80 per cent of MPIEs have developed
indicators on this axis), but relatively few on the “customer” axis (about 30.4 per cent), only a
minority of competing organizations take account of these measures such as market share
and customer satisfaction. Finally, very few organizations concretize, through the use of
indicators, the issue of organizational learning which, according to Kaplan and Norton
(2001) is the basis of the generic performance model on which the BSC is based. However,
despite the fact that 80 per cent of organizations have developed indicators on the “internal
process” axis, we note that the majority of MPIEs use only the “Internal process” indicators
of a quantitative nature (product volumes, number of units delivered and storage capacity).
The choice of financial indicators may be explained by the fact that organizations are
used to operating under profitability constraints, managing public bodies with financial
requirements and control requirements imposed by senior management and the State.
However, over-reliance on accounting or financial indicators may produce biased results
(Otley, 2016), as they fail to give a clear picture of what drives a certain organization
performance (Niven, 2005). Thus, they are often criticized for being historical and providing
little indication of future performance. As Eccles (1999, p.40) points out:
The leading indicators of business performance cannot be found in financial data alone. Quality,
customer satisfaction, innovation, market share–metrics like these often reflect a company’s
economic condition and growth prospects better than its reported earnings do.
That said, the choice of non-financial or qualitative measures which are highly valued and of
significant impact, such as the quality of products and services, the compliance rate and
order processing time may be motivated by other considerations, since they can constitute
 elements of differentiation in a competitive environment, allowing operational visibility for Moroccan
MPIEs involved in industrial and commercial activities in a competitive environment. public
The absence of these indicators in the annual reports published by MPIEs can only be
explained by the delay in developing management systems in these institutions.
institutions and
Furthermore, it appears that the State does not exert effective pressure in support of enterprises
qualitative performance measures in these organizations, suggesting a lack of effective and
relevant control, associating responsibility with performance. We feel that the time has come
for a shift in mentality in Moroccan institutions.

6. Conclusion
This article contributes to knowledge of management control systems in developing
countries, particularly in Morocco, where the discipline of management control is a fairly
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new field of research. Our study has provided a fresh perspective on PMSs in the Moroccan
public sector. The goal was to explore and describe the PMSs used by Moroccan public
institutions. Based on a literature review, we identified a number of contextual factors that
influence the variety of content in PMSs, such as size, age, and the competitive environment.
Our field of research, relating to MPIE, has yielded two observations: first, managers rely
heavily on financial indicators. Second, older institutions are more likely to use non-financial
indicators. This result confirms the findings earlier studies which suggest that every
organization evolves through a series of life cycle stage. In the oldest stage of a MPIE, the
organization incorporates procedures, rules and more developed control systems to guide
the employees (Nicholls and Holmes, 1988; Davila and Foster, 2005a, 2005b) and rely more
on accounting information and data as age increases.
We have been unable to observe any effect of size (H2) and the nature of competition (H3)
on the variety of content of PMS in MPIEs, unlike other authors (Germain and Gates, 2010;
Moores and Yuen, 2001) who noted a significant correlation in these relationships. Our
results show that increased organization size or competition, do not necessarily lead to the
adoption of more diversified PMS. These results are consistent with the findings of Kuratko
et al. (2001), who noted intense use of non-financial indicators in small US firms, and of
Löfsten and Lindelöf (2005) who found that there is no relationship between the nature of
competition and the importance given to methods of management control in their study
based on a survey of 183 small firms in Sweden.
In addition to the scientific contribution, this article tries to highlight ways to improve
instrumentation in the Moroccan public sector, by encouraging the managers of MPIE to
lean toward non-financial measures. Any management action that acts on immaterial
aspects such as quality, innovation, employee motivation or customer satisfaction leads to
financial performance. The government also needs to focus more on other aspects of
performance by integrating these elements into budgeting and investment.
However, our results suffer from some limitations, particularly due to the small size of
our sample. A broader sample survey with questionnaire including other variables such as
strategy, structure, culture, and environmental uncertainty could be make a valuable
contribution to this topic. Additionally, by focusing only on contingency factors, our article
does not take into account of the institutional environment of these types of organizations,
especially when these organizations are subject to regulatory and other institutional
pressures to improve their performance. In future work, it would be interesting to use the
neo-institutional approach alongside the contingent approach, as part of a broader
framework, to explain the use of PMS in the public sector.
 MEDAR Notes
1. Draft Budget and Financial plan for the year 2017, Report on Institutions and Public Enterprises,
pp.17-19.
2. MPIEs involved in administrative activities are not covered by this study.
3. Report of the 2nd Chamber of the Court of Auditors, “The Sector of Institutions and Public
Enterprises in Morocco: Strategic Anchoring and Governance”, Rabat, June 2016.
4. Public service, commercial or industrial activity.
5. Draft Budget and Financial plan for the year 2017, Report on Institutions and Public Enterprises,
pp.17-19.
6. Report of the 2nd Chamber of the Court of Auditors, “The Sector of Institutions and Public
Enterprises in Morocco: Strategic Anchoring and Governance”, Rabat, June 2016, pp.2.
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7. According to the definition proposed by the directive of the EEC in 1980, a public enterprise is
“any company over which public authorities can exercise a dominant influence because of the
financial participation or the rules which govern it”.
8. These three variables were retained for reasons of data availability. The activity reports
published by the organizations of our sample do not provide information about strategy,
environment uncertainty or structure.
9. Small- and medium-sized enterprises.
10. The measures used in this study are inspired by the work of Quesado et al. (2016), Zian (2013),
Van Dooren (2005), Davila (2005).
11. INSEE: National Institute of Statistics and Economic Studies.
12. We have four variables that explain the diversity of use of performance indicators to which we
have assigned three values (strong, average, weak), so 4 * 3 = 12 points (see Operationalization of
variables).
13. This percentage is equal to the percentage of MPIEs that strongly use these indicators þ the
percentage of MPIEs that use these indicators moderately. For example, 60.9 per cent of MPIEs
use “strongly” the financial indicators and 34.8 per cent of MPIEs use “moderately” this type of
indicators, giving a figure of 60.9 þ34.8 per cent = 95.7 per cent.

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 MEDAR Appendix

Perspectives Indicateurs Objectifs

Financial Return On Investment Ensure a satisfactory return on capital

EBE/EBITDA employed by evaluating financial
Turnover performance using a set of financial
Value Added indicators
Cash flow
Customer Customer Satisfaction Questions the relationship of the company
Market share with its customers in terms of image,
Customer Retention reputation, satisfaction and customer
Revenue per Customer loyalty
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Number of lost customers

Internal Process Production rate Measure the functioning of processes that
Average product labor-output ratio contribute closely to the creation of values
Ratio of timely completed orders to improve the quality of services and
Turnover of material assets products delivered to customers
Number of properly executive orders
Supplier frequency
Organizational Employee Satisfaction Align the intangibles (people, information
Learning Time spent for education and training of systems, innovation) to improve staff
personnel involvement and their contribution to
Employee Retention business, information systems and
Table AI. Employee Turnover innovation
BSC perspectives revenue per employee

Corresponding author
Siham Naym can be contacted at: siham.naym@gmail.com

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