Owner’s Commitment to the Planning and Controlling Processes to Improve Performance in Small and Medium Manufacturing Companies

Tarigan, Zeplin Jiwa Husada and Suprapto, Widjojo and Basana, Sautma Ronni (2013) Owner’s Commitment to the Planning and Controlling Processes to Improve Performance in Small and Medium Manufacturing Companies. In: The 3rd International Forum Conference on Logistic and Supply Chain Management (LSCM), 27-06-2013 - 30-06-2013, Bali - Indonesia.

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Abstract

Owners of small companies usually have the role as the top management that has to commit to the provision of time, cost, and resources. For the top management, the most important aspect to run the business is to develop and to create a value for the company so that the value can increase the performance. Based on the previous researches, good commitment and leadership style from the top management have effects on planning and controlling processes in improving organization performance. Meanwhile, the survey results from interviewing and collecting questionnaires from 110 practitioners of small manufacturing companies and examining the hypothesis create a fit model which has been thoroughly tested using Partial Least Square (PLS). After the PLS test, the results show that: first, there is a positive effect but not significant commitment from the company owners to the effectiveness of the company planning processes second, there is a positive effect and significant commitment from the company owners to the effectiveness of the controlling processes third, planning process conducted by departments inside the company has positive effect and significance to the controlling processes in small companies fourth, the planning process conducted by companies has positive effect and significance to increase company performance fifth, the controlling process conducted by companies has positive effect and significance to increase company performance. Further exploration, owners of small companies in East Java have the tendency not to focus on planning process but to stress more on controlling process.

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