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1 – 10 of 897Chong M. Lau and Vimala Amirthalingam
Research on how performance measurement systems affect employees’ perceptions of workplace fairness is important. As organizations often rely on their performance measurement…
Abstract
Research on how performance measurement systems affect employees’ perceptions of workplace fairness is important. As organizations often rely on their performance measurement systems to communicate information to their employees, it is useful to ascertain if and how the developments of performance measurement systems that are far more comprehensive than traditional financial systems affect employees’ perceptions of informational fairness through the information communicated to employees. Informational fairness refers to employees’ perceptions of workplace fairness that is based on the amount and the truthfulness of information that organizations provide to their employees. Based on a sample of managers from manufacturing organizations, the Partial Least Square results indicate that comprehensive performance measurement systems (comprehensive PMS) have a significant direct effect on job-relevant information. They also indicate that comprehensive PMS have an indirect effect on informational fairness via job-relevant information. In contrast, systems that are based on financial measures have no significant effects on job-relevant information and informational fairness. These results demonstrate how comprehensive PMS (through the communication of a greater amount of job-relevant information) can be used to engender employees’ perceptions of high workplace fairness.
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Anderson Betti Frare and Ilse Maria Beuren
The purpose of this study is to investigate the effects of comprehensive performance measurement systems (PMS), role clarity and strategic flexibility on the individual creativity…
Abstract
Purpose
The purpose of this study is to investigate the effects of comprehensive performance measurement systems (PMS), role clarity and strategic flexibility on the individual creativity of founders/managers of startups.
Design/methodology/approach
The research population comprises 611 Brazilian startups in the e-commerce, retail and wholesale segments. One owner/manager of each startup was contacted by the survey, obtaining 91 valid responses. For data analysis, symmetric and asymmetric techniques were applied, respectively: partial least squares-structural equation modeling and fuzzy-set qualitative comparative analysis.
Findings
The findings show that the comprehensive PMS is an important predictor of individual creativity, role clarity and strategic flexibility. Role clarity has a direct effect on creativity and promotes partial mediation between comprehensive PMS and creativity. Comprehensive PMS and role clarity are of great importance and have high performance in favor of creativity, while strategic flexibility has high performance, but is of low importance. Several causal combinations promote high individual creativity.
Practical implications
It offers founders/managers an insight into the aspects that are worth of efforts to foster individual creativity in their startup.
Originality/value
The key contribution of the study is that the comprehensive PMS, which includes financial, non-financial and other measures for product and process innovation, can directly and indirectly (through role clarity) influence individual creativity.
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Pietro Micheli and Matteo Mura
The purpose of this paper is to investigate the mediating role of comprehensive performance measurement systems (PMS) – i.e. measurement systems that comprise financial and…
Abstract
Purpose
The purpose of this paper is to investigate the mediating role of comprehensive performance measurement systems (PMS) – i.e. measurement systems that comprise financial and non-financial indicators, and which also consist of indicators related to different aspects of an organisation’s operations – in the relationship between strategy and company performance.
Design/methodology/approach
Survey data of top managers of large European companies were collected and analysed by means of exploratory factor analyses and hierarchical regressions in order to validate the proposed hypotheses.
Findings
This research shows that different strategies lead to the use of different types of performance indicators. Also, it finds that the utilisation of a comprehensive PMS enables the implementation of both differentiation and cost-leadership strategies. Specifically, a comprehensive PMS positively mediates the effect of differentiation strategy on organisational and innovative performance, and of cost-leadership strategy on organisational performance.
Research limitations/implications
Further research could be undertaken in other contexts and consider additional factors, such as the structure, maturity and different uses of PMS, and the cost of measuring performance. Qualitative studies could examine the role of PMS in dynamic environments, as well as the evolution of PMS during strategic transitions.
Practical implications
Greater consideration should be given to the utilisation of different types of performance indicators when implementing and re-formulating strategy.
Originality/value
This study clarifies the links between strategy and performance measurement, and it is the first to identify the mediating effect of comprehensive PMS between strategy and company performance.
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Matthias D. Mahlendorf, Jochen Rehring, Utz Schäffer and Elmar Wyszomirski
This paper aims to investigate the ability of performance measurement systems (PMS) that were implemented by headquarters at foreign subsidiaries to influence decisions made by…
Abstract
Purpose
This paper aims to investigate the ability of performance measurement systems (PMS) that were implemented by headquarters at foreign subsidiaries to influence decisions made by the subsidiary. This is important because PMS are important control mechanisms in the relationship between headquarters and subsidiaries within multinational firms.
Design/methodology/approach
Acknowledging that controlling foreign subsidiaries is particularly challenging when they are geographically distant to headquarters, the authors collect survey‐based data from Chinese subsidiaries of multinational firms. They develop several hypotheses which are tested on a sample of 148 subsidiaries using multiple regression analysis.
Findings
The results suggest that the influence of headquarter‐designed PMS on subsidiary decisions is higher when the compensation of subsidiary management is linked to PMS, when additional formal control is enforced, when PMS are affected by external events, when PMS are comprehensive, and when subsidiaries are embedded into the local business environment. Also, the authors find a negative interaction effect between comprehensive PMS and the extent to which PMS are affected by external events on the decision‐influence of PMS.
Research limitations/implications
Limitations arise from the study setting in China. As management accounting research originates from and has mostly focused on Western countries, it remains somewhat unclear whether the constructs and instruments used in this study are fully transferable to China, despite the statistical and conceptual remedies that were applied.
Originality/value
The study offers new insights into the role of PMS in multinational companies. It extends earlier research by offering empirical evidence from one of the most important emerging economies. As such, the results are relevant for almost every global firm using PMS to control foreign subsidiaries.
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Lorenzo Lucianetti, Valentina Battista and Xenophon Koufteros
The purpose of this paper is to provide empirical evidence regarding the relationship between the level of comprehensiveness of a performance measurement system (PMS) and its…
Abstract
Purpose
The purpose of this paper is to provide empirical evidence regarding the relationship between the level of comprehensiveness of a performance measurement system (PMS) and its respective organizational effectiveness. The extant literature has highlighted that a PMS may successfully contribute to the implementation of the organizational strategy, with the balanced scorecard (BSC) serving as an exemplar of a strategy performance management tool and playing a primary role to this end. However, the reasons for the overall high rate of failure in the implementation of the BSC remain unexplained and, to date, little empirical research exists regarding the design of PMSs such as the BSC and its constituent elements.
Design/methodology/approach
Using a survey of 103 Italian managers, the paper advances a model describing a comprehensive BSC design, after identifying the key attributes from the performance management literature. Data were analyzed using cluster analysis and multiple regression analysis.
Findings
Results suggest that organizations are implementing the BSC following two different approaches, which vary from a less comprehensive to a more comprehensive design. More importantly, the BSC design explains variation across three organizational effectiveness measures: improvements in translating the organizational strategy into operational goals, understanding cause–effect relationships and enhancing internal communication among employees.
Originality/value
The paper builds on and extends the previous literature on performance management in two ways. First, via a literature review, it introduces a model describing a comprehensive BSC design, which includes 12 attributes. Second, it demonstrates that organizational effectiveness varies positively with the level of comprehensiveness of the BSC design.
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Tarmo Kadak and Erkki K. Laitinen
The assessment of the success of Performance Management Systems (PMS) is difficult because there are many success factors, they are mutually dependent on each other, and located…
Abstract
Purpose
The assessment of the success of Performance Management Systems (PMS) is difficult because there are many success factors, they are mutually dependent on each other, and located at different hierarchical levels of an organization. Therefore, there is a need to describe the complete logical chain, which makes PMS successful for an organization and to find out a comprehensive list of key factors (KF) affecting the success of PMS. The objective of this research paper is to develop a method to assess success of a PMS based on a logical chain of 14 KF.
Methodology/approach
The research first develops a logical chain based on the 14 KFs on the basis of prior studies and then carries out a survey about these KFs (15 check points) of PMS and their connection to organizational performance for a small sample of firms from two EU countries.
Findings
There are next findings of this study which indicate following: KFs of PMS affect organizational performance; successful PMS improves organizational performance; PMS is successful for the organization when the completeness of the logical chain in PMS is high.
Practical implications
The practical contribution of this study is that findings show that firms can assess their own PMSs and compare their check point values against the values of successful PMS group. This kind of analysis indicates directly improvement potential for the different check points in PMS.
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Esben Rahbek Gjerdrum Pedersen and Frantisek Sudzina
The purpose of this paper is to outline the anatomy of firms which adopt comprehensive performance measurement (PM) systems in order to gain an understanding of how internal…
Abstract
Purpose
The purpose of this paper is to outline the anatomy of firms which adopt comprehensive performance measurement (PM) systems in order to gain an understanding of how internal (organisational capabilities) and external (perceived environmental uncertainties) factors shape performance measurement practices.
Design/methodology/approach
This paper hypothesises that firms dominated by organic capabilities and operating in unpredictable markets are more likely to adopt comprehensive PM systems. The statistical test of these hypotheses is based on a 2008 survey of 299 Danish firms.
Findings
This paper concludes that a limited number of internal and external factors have a significant influence on the adoption of PM systems. There is no consistent pattern, however, between the different sub‐categories of organisational capabilities/perceived environmental uncertainties and PM adoption.
Originality/value
Much has been said about how changes in the environment and business structure require firms to develop new ways to measure performance. Less has been done to study whether firms adopting comprehensive PM systems actually match the characteristics of the “new economy”. The findings from this study indicate that the relationship between PM adoption and the organisational characteristics/external environment is more complicated than anticipated.
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Nelson Waweru and Gary Spraakman
The intent of microfinance institutes (MFIs) in developing countries is to provide loans to very poor people in order to help them transform their lives. MFIs tend to receive…
Abstract
Purpose
The intent of microfinance institutes (MFIs) in developing countries is to provide loans to very poor people in order to help them transform their lives. MFIs tend to receive subsidies; sustainability is being sought to free MFIs from non‐market dependencies. Sustainability is expected to be achieved with “best practices,” of which management with performance measures is a component. The purpose of this paper is to examine the use of performance measures by three Kenyan MFIs, which are classified as formal and client based, and likely to use rational and explicit performance measures. Clients in these MFIs are placed into self‐help groups with two responsibilities: to provide mutual support and advice to the borrowing client; and to provide the MFI with a guarantee that loans of group members will be repaid.
Design/methodology/approach
Based on a review of the economics and performance measurement systems literatures, research questions were developed along with an interview guide. Case studies were used to administer an interview guide which was distributed to the respondents prior to the face‐to‐face interviews.
Findings
The study concludes that MFIs have relatively well‐developed performance measures that support their particular businesses. There was a good balance between the use of financial and non‐financial performance measures. However, output measures were more commonly used than process measures. The nature of the MFIs suggests the importance of performance measurement. The managers of the MFIs are concerned with performance measurement, as expected within a bureaucracy, and a top‐down demand is present. In addition, group members or clients are interested in performance measurement as each member guarantees the loans of all fellow group members who have loans with the MFI. Thus, the customers exert a bottom‐up demand for performance measurement.
Originality/value
The findings support the view that performance measures are a means for managing MFIs and are a likely requirement for sustainability. Furthermore, the findings have identified performance measures (similar to those at banks) that are appropriate for the three MFIs in Kenya. The findings are important since the identified performance measures may be adopted by other evolving MFIs in this relatively new sector. In addition, the findings contribute to a better understanding of the genesis of the less popular results and determinants performance measurement framework of Fitzgerald et al.
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Bunjongjit Rompho and Sununta Siengthai
The purpose of the study is to explore the relationship between performance measurement systems (PMSs) and organizational learning (OL) and the impact on firm human capital…
Abstract
Purpose
The purpose of the study is to explore the relationship between performance measurement systems (PMSs) and organizational learning (OL) and the impact on firm human capital building.
Design/methodology/approach
Data were collected using a survey instrument. Then, a structural equation model (SEM) was used to test the proposed model.
Findings
The results reveal that PMS, which is designed with three main qualities – valid, comprehensive, and coherent with its environment – has an overall positive relationship with OL and firm's human capital (employee satisfaction and work‐related competencies). First, the validity of the individual performance measure is found to be positively linked to employee satisfaction. Second, the comprehensiveness of the PMS and work‐related competencies are positively associated. Third, the coherence of the PMS with its environment has a positive relationship with OL but not directly with the human capital indicators. Thus, OL, which is positively associated with both work‐related competencies and employee satisfaction, mediates the relationship between the coherence of the PMS and the work‐related competencies.
Originality/value
There are some linkages among these three concepts (PMS, OL and human capital) that have not been specifically explored in the existing relevant studies. Previous studies have asserted that human capital could not be utilized and nurtured without supporting infrastructure. Therefore, this study explores the relationships among the three constructs to uncover the additional benefits of PMS and OL for different purposes such as building firm's human capital. This could help firms to improve the utilization of their existing management tools and their competitiveness.
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Kamilah Ahmad, Shafie Mohamed Zabri and Siti Anisah Atan
This study investigates the extent to which performance measures (PMs) are used, the relationship between multidimensional PMs and firm performance and the factors related to…
Abstract
Purpose
This study investigates the extent to which performance measures (PMs) are used, the relationship between multidimensional PMs and firm performance and the factors related to firms' PM use.
Design/methodology/approach
The authors surveyed a sample of Malaysian manufacturing firms. Participants responded to a questionnaire indicating their use of PMs, firm performance, level of managerial commitment, degree of environmental uncertainty and firm's use of technology.
Findings
The results indicate a high degree of PM use related to financial indicators, internal efficiency and customer-related metrics. The results also demonstrate that firm performance has significant positive relationships with use of PMs related to quality and customers, efficiency, innovativeness and social responsibility, as well as comprehensive PM use. Industry variation, firm size, technology use and environmental uncertainty are also significantly related to PM use.
Practical implications
Performance measurement systems (PMSs) are an important tool for improving organisational strategy in rapidly changing markets. These findings underscore the significant role of PMSs in manufacturing firms' performance, including emerging economies. The results suggest that individual PMS approaches should align with each firm's evolving needs and the characteristics of the sector and environment in which each firm operates.
Originality/value
This study advances understandings of the contingency approach to PMSs in manufacturing environments.
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