Is performance measurement suitable for an extended enterprise?

Abstract

Purpose

The purpose of this paper is to assess whether performance measurement literature and as a result, practical applications, models and frameworks drawing from this literature are compatible with the central features of extended enterprises.

Design/methodology/approach

The paper is based on a bibliometric study that is supplemented with an empirical case study.

Findings

The results of this paper indicate that literature on performance measurement and literature on extended enterprises are only partially compatible. The common underlying reasons for measuring performance are highly valid also in the context of an extended enterprise. However, performance measurement processes and practices utilized within firms are to a considerable degree incompatible with central characteristics of extended enterprises. A highly apparent conflict between the two streams of literature is related to choosing individual performance measures (i.e. the question of what to measure). Performance measurement literature emphasizes intra‐organizational measures which conflicts starkly with the emphasis of inter‐organizational collaboration dominant in literature addressing extended enterprises.

Research limitations/implications

The sample consists of articles published in many leading academic journals. The primary implication of this paper is that the importance of inter‐organizational relations and collaboration, and the lack of a central decision‐making authority should be taken into consideration when designing and implementing performance measurement systems for extended enterprises.

Practical implications

Managers implementing performance measurement systems may tend to adopt solutions recommended by industry actors and dominant performance measurement literature. As increasingly many firms operate as a part of an extended enterprise, the adoption of these off‐the‐shelf solutions poses considerable risks.

Originality/value

The main contribution of this paper is that it systematically assesses the compatibility of performance measurement and extended enterprise literature by means of a bibliometric analysis. In addition, the paper identifies key contributions from both streams of literature. An empirical case representing the shipbuilding industry is carried out to validate obtained findings.

Citation

Lehtinen, J. and Ahola, T. (2010), "Is performance measurement suitable for an extended enterprise?", International Journal of Operations & Production Management, Vol. 30 No. 2, pp. 181-204. https://doi.org/10.1108/01443571011018707