Corporate Frugality: Theory, Measurement and Practice

• 成果类型: Article
• 署名作者: Anderson, Shannon W.; Lillis, Anne M.
• 署名单位: University of California System; University of California Davis; University of Melbourne
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/j.1911-3846.2011.01107.x
• 发表日期: 2011
• 页码: 1349-+
• 关键词: organizational culture; control-systems; budget; strategy; CONSEQUENCES; GUIDELINES; targets; DESIGN; SLACK; FIRMS

摘要

This paper uses a mix of field research and survey methods to provide evidence on the existence of frugality as a company characteristic. We define corporate frugality as an enduring corporate trait of consistent, disciplined management of spending to achieve long term strategic objectives and sustainable profits. Drawing upon established scales of frugality in the literature on consumer psychology, we develop and validate a multi-item measure of corporate frugality. Like individual frugality, we find that the presence of corporate frugality is indicated by three corporate behaviors: disciplined spending, resourcefulness in use and reuse, and deferred gratification. A key part of scale development is establishing discriminant validity, the uniqueness from and relatedness to extant constructs. We demonstrate that frugality differs from budgetary control, and is not associated with organizational culture types in the Competing Values framework. Further, we investigate the association between frugality and business strategy using Porter's (1980) typology of low cost and product differentiation strategies and find that frugality is equally present in companies with both strategies. Having established frugality as a distinct construct, we examine its nomological validity, the consequences of frugality for cost management practice. We find that frugal companies control labor cost through greater use of incentive pay, control material costs through supplier sourcing strategies, and focus capital expenditures on efficiency-enhancing investments. Frugal companies also make greater use of a broad range of cost management practices associated with continuous improvement both within the firm and across the value chain. In sum, we develop and validate a theory-consistent measure of corporate frugality - a construct that has been present in descriptions and anecdotes of business practices of cost management for decades, but which has gained new currency in modern economic times.