For over 20 years, management control literature has indicated the importance of supporting the strategy development and implementation process with strategic performance measurement systems (SPMS) and integrating traditional financial indicators with a set of multidimensional forward-looking measures focusing on the long term and linked to cause-effect relationships. Nevertheless, knowledge on the specific SPMS models used in practice and their effectiveness in supporting the managerial decision-making process is still fragmented and ambiguous. The purpose of this paper is to first analyse the SPMS models used in practice, also considering the role of strategy and firm size as drivers of adoption, thereafter analysing the capability of SPMS models to provide managers with measures that are consistent with their strategic information needs.
The research is based on a survey involving 88 Italian medium-large sized firms (or subsidiaries of multinational firms) operating on a global level.
The cluster analysis identifies two very different SPMS models used in practice. The first is the Short-term Financial Model, and as its name indicates, is based on short-term, internally focused and unconnected financial indicators. The second is the Multidimensional Additive Model, which integrates financial and non-financial measures but without a fully developed fit with the strategy. The research primarily indicates unsatisfied information needs in both clusters, presenting a significant challenge to the further development of existing SPMS models and in defining new theoretical SPMS frameworks.
The adoption of an incremental approach to SPMS, simply adding new operational and strategic non-financial measures without a real fit with the strategy does not increase the information effectiveness of the system.
The paper analyses the characteristics and use of SPMS models in practice from an exploratory perspective, defining and applying a model to evaluate the information effectiveness of SPMS.
Silvi, R., Bartolini, M., Raffoni, A. and Visani, F. (2015), "The practice of strategic performance measurement systems: Models, drivers and information effectiveness", International Journal of Productivity and Performance Management, Vol. 64 No. 2, pp. 194-227. https://doi.org/10.1108/IJPPM-01-2014-0010
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