Performance measurement system in the situation of simultaneous vertical and horizontal integration

Abstract

Purpose

The purpose of this paper is to extend the knowledge of the use of performance measurement systems (PMS) in situations where the benefits of both vertical and horizontal integration strategies are sought simultaneously.

Design/methodology/approach

This is a single case study, the purpose of which is to build a contextual theory.

Findings

The main results highlight three competing and partly contradictory tendencies in the development and use of PMS in organizational integration. In addition, the authors have identified features of PMS that may benefit or hinder integration. Grounded on empirical findings the paper presents a more complete theoretical framework of PMS for integration.

Research limitations/implications

The propositions of the framework need to be tested in different contexts with case and field studies or a large sample of data using statistical techniques to improve external validity. The causal relationships explored in this study may be further developed using longitudinal studies.

Practical implications

In acquisition situations there exists the need for vertical integration to control the growing complexity but at the same time for horizontal control to advance customer-centred production. Performance measurement is the key issue to examine the execution and results of such integrations.

Originality/value

Case study findings are used to develop a more comprehensive theory of PMS design and use in situations where both vertical and horizontal integration are sought. Contrary to current understandings, the central statement of this study is that horizontal organization is not an alternative to vertical organizational structure but they can be effectively coupled.

Citation

Pellinen, J., Teittinen, H. and Järvenpää, M. (2016), "Performance measurement system in the situation of simultaneous vertical and horizontal integration", International Journal of Operations & Production Management, Vol. 36 No. 10, pp. 1182-1200. https://doi.org/10.1108/IJOPM-12-2014-0611