REVISITING RESPONSIBILITY ACCOUNTING AS A PERFORMANCE CONTROL FRAMEWORK IN DECENTRALIZED ORGANIZATIONS: AN EMPIRICAL PERSPECTIVE

Abstract

This study revisited responsibility accounting as a performance control framework in decentralized organizations, focusing on its application in cost centres, profit centres, and investment centres, with the aim of determining how accountability mechanisms influence organizational performance. Relying on secondary data from Nigerian firms, the analysis drew from 97 firms, applying ex-post facto and survey designs supported by regression models, panel data methods, ANOVA, and descriptive statistics. Findings revealed that in cost centres, responsibility accounting significantly improved productivity, with organizational control exerting a positive effect on performance (β = 54.62, p < 0.001), explaining 13.9 percent of the variance. In profit centres, the impact was stronger, with responsibility accounting accounting for 72.4 percent of profitability outcomes. Cost of sales negatively influenced performance (β = –0.72, p < 0.001), while operating cost contributed positively (β = 0.58, p < 0.001), underscoring the role of balanced cost management in driving profitability. In investment centres, survey results showed consistently high managerial agreement on the relevance of responsibility accounting, with mean scores above 4.0 on a five-point scale across dimensions such as organizational structure (M = 4.13, SD = 0.53), responsibility power (M = 4.08, SD = 0.57), budgetary control (M = 4.08, SD = 0.52), performance reporting (M = 4.05, SD = 0.53), and reward systems (M = 4.04, SD = 0.59), all of which strongly influenced corporate investment decisions. The study concluded that responsibility accounting plays a vital role in strengthening performance control by aligning accountability with strategic objectives, ensuring efficiency in cost centres, profitability in profit centres, and sound investment decisions in investment centres. It recommends empowering cost centre managers with clearer accountability frameworks, strengthening reporting systems in profit centres, and adopting robust budgetary and reward mechanisms in investment centres to enhance sustainable organizational performance.