Managing strategic uncertainty

2016 ◽  
Vol 31 (4/5) ◽  
pp. 512-534 ◽  
Author(s):  
Mandy M. Cheng ◽  
Kerry A. Humphreys
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Business Strategy ◽  
Business Environment ◽  
Performance Measurement System ◽  
Governance Mechanism ◽  
Strategic Uncertainty ◽  
Strategic Control ◽  
Content Type ◽  
Strategic Performance

Purpose Strategic uncertainty from emerging threats and opportunities in the business environment can significantly impact managers’ abilities to successfully implement their business strategy. A key strategic control and governance mechanism designed to enable managers to respond to strategic uncertainty is a strategic performance measurement system, such as the balanced scorecard (BSC). This study aims to investigate whether strategic uncertainty is associated with the diversity and types of performance measures in a BSC, which are used by managers for various strategic control and governance purposes. Design/methodology/approach A survey of senior-level managers within strategic business units of Australian Stock Exchange listed organizations was conducted. Findings This study finds that the extent to which managers face strategic uncertainty is positively associated with performance measurement diversity. Further, managers faced with greater strategic uncertainty use performance measures relatively more to evaluate subordinates’ performance, communicate business strategy, track performance against targets, identify problem areas and guide future directions. Outcome measures are used to a greater extent for all five purposes, whereas leading measures are used more only for future-oriented purposes. Practical implications Strategic performance measurement systems, such as the BSC, can and are being used to provide managers with the information and control mechanisms necessary to meet the challenges associated with strategic uncertainty. Originality/value This study provides the first evidence on the relations between strategic uncertainty, performance measurement diversity and managers’ use of performance measures for five key purposes. Understanding these relations is important, as managers need to formulate appropriate responses to strategic uncertainty, to protect and create value by exploiting emerging opportunities and managing associated threats.

scholarly journals The impact of contingency fit on organisational performance: an empirical study

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdallah Amhalhal ◽  
John Anchor ◽  
Nicoleta S. Tipi ◽  
Sara Elgazzar
Keyword(s):  
Information Technology ◽  
Performance Measurement ◽  
Performance Measures ◽  
Business Strategy ◽  
Contingency Theory ◽  
Emerging Market ◽  
Performance Measurement System ◽  
Organisational Performance ◽  
Content Type ◽  
The Relationship

PurposeThe research investigates the effectiveness of the performance measurement alignment approach which claims that measurement diversity (multiple performance measures) should be aligned with organisational contingencies to enhance organisational performance.Design/methodology/approachThe theoretical framework is contingency theory. The study is an empirical investigation of the indirect relationship between three contextual factors (business strategy, information technology and organisation size) and organisational performance via multiple performance measures. The results are derived from cross-sectional questionnaire survey data from 132 Libyan companies (response rate of 61%). For data analysis, the research uses mediation regression analysis via Preacher and Hayes' (2004) macro.FindingsThere is a significant indirect effect of business strategy and information technology, but not organisation size, on organisational performance. The measurement diversity approach plays a core mediating role in the relationship between the contingencies and organisational performance.Practical implicationsThe study helps to provide a better understanding of the usefulness of the fit/match between contingencies and Multiple Performance Measures in improving organisational performance.Originality/valueThe empirical evidence supports the central proposition of contingency theory that there is no universally appropriate performance measurement system which applies equally to all organisations in all circumstances. It also provides evidence relating to non–manufacturing and an emerging market context. This research significantly extends the relevant literature by highlighting the relationship between information technology, multiple performance measures and organisational performance. This study is the first to use Preacher and Hayes' (2004) macro to analyse mediation design in the field of contingency-based performance measurement.

scholarly journals Performance measurement systems in auditing firms

2015 ◽  
Vol 5 (4) ◽  
pp. 395-423 ◽  
Author(s):  
Mohamed Hegazy ◽  
Myada Tawfik
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Measurement System ◽  
Performance Measurement System ◽  
Future Research ◽  
High Quality ◽  
Content Type ◽  
Financial Measures ◽  
Measurement Systems ◽  
Performance Measurement Systems

Purpose – The purpose of this paper is to investigate challenges facing auditing firms in designing and measuring their performance and discusses why and how the balance scorecard (BSC) could support the auditing firms overcome such challenges. The paper contributes to the existing literature by identifying the peculiarity of the auditing firms in designing and implementing performance measurement systems including the need for sound and advanced information systems, subjectivity embedded in measuring customer satisfaction, growth and success of the firms and restrictions imposed by regulations and auditing standards for the provision of non-audit services which may increase the firms’ revenues and profits to help maintain high-quality outputs. Also, the paper provided evidence for the use of non-financial measures in service industry in particular for customers and finance. The unique dilemma in the auditing firms to provide services to satisfy customers yet maintaining distance and independence from them represent an important research question requiring investigation and study. Design/methodology/approach – A review of the literature for performance evaluation in general and in particular BSCs in service industries was made to identify challenges facing auditing firms when measuring their performance. Data were collected using case study approach; two auditing firms, one of the Big 4 and a medium size auditing firm with international affiliation operating in the Egyptian market were selected. Interviews, document analysis and participant observations were used in the analysis of each firm performance measurement system. Findings – The paper suggests that major challenges face auditing firms in measuring their performance mainly the size of the firm and its affiliation with international auditing firm, the qualification and experience of partners and audit managers needed for the design and implementation of a BSC or similar performance measures, the resources required for the introduction of such performance measure and the peculiarity of the auditor and client relationship with the need to maintain independence and confidentiality while providing high-quality services. Although both auditing firms being studied have formal performance measurement systems, they differ in their degree of comprehensiveness. In particular, the performance measurement system of the larger firm is more elaborate than that of the smaller one and both place more emphasis on qualitative measures such as learning and growth and internal business processes than financial measures. Research limitations/implications – Overall, the results have implications for understanding the performance measurement process of auditing firms in general and in particular in an emerging economy such as Egypt. The identification of the challenges facing auditing firms in measuring their performance and how the implementation of BSC can help partners and employees to overcome those challenges will add to the literature for performance evaluation in service companies. Future research should be carried to compare and assess differences between the behavioural aspects of performance measures in auditing firms and possible application of BSC in such firms and those used in services industry. Also, the practicality of implementing a BSC measures for different auditing firms should be investigated further in future research. Originality/value – The research among the first to investigate the challenges facing auditing firms in designing and operating a performance measurement system and to discuss, using case studies, how a BSC could support the auditing firms to overcome such challenges. Further, the research provides insights into performance measures in auditing firms in developing economies like Egypt which are sparse since most studies have been conducted in developed economies. Also, the paper enriches the literature of performance measurement systems in service rather than the manufacturing sector especially for medium and small size firms.

scholarly journals Measuring strategic performance in construction companies: a proposed integrated model

2015 ◽  
Vol 13 (2) ◽  
pp. 109-132 ◽  
Author(s):  
Luqman Oyekunle Oyewobi ◽  
Abimbola Olukemi Windapo ◽  
James Olabode B. Rotimi
Keyword(s):  
Performance Measurement ◽  
Construction Industry ◽  
Integrated Model ◽  
Performance Measurement System ◽  
Performance Excellence ◽  
Single Model ◽  
Content Type ◽  
Strategic Performance ◽  
Business Results ◽  
And Performance

Purpose – This paper aims to examine and compare a performance measurement system and performance frameworks commonly used within the construction industry. The paper explores the strengths and weaknesses of balanced scorecard (BSC) and business excellence model (BEM) to propose an integrated model for measuring strategic performance of construction organisations as a single model. The purpose is to help organisations achieve performance excellence, financial integrity and continuous improvement in business results to sustain competitive advantage. Design/methodology/approach – This paper examines and compares performance measurement system and performance frameworks commonly used within the construction industry. The paper explores the strengths and weaknesses of BSC and BEM to propose an integrated model for measuring strategic performance of construction organisations as a single model. The purpose is to help organisations achieve performance excellence, financial integrity and continuous improvement in business results to sustain competitive advantage. Findings – The study reveals that the most popular performance measurement framework in construction includes: BSC; Key Performance Indicators and European Foundation for Quality Management. However, literature also reveals that Malcolm Baldrige National Quality Award is being used to measure performance in the construction. The study findings indicated that BSC and BEM could be combined to provide an integrated model that will encompass every facet of construction performance measures. Research limitations/implications – The paper integrates the BSC and BEM performance measurement models, to provide construction organisations the opportunities of benefitting from the two models as a single tool without having to use more than one model or miss out any important aspect of performance measures. The model will assist organisations perform regular health checks of all business process and at the same time help align organisational activities with strategic primacy. Practical implications – The paper offers an integrated construction excellence model as a useful tool for measuring both financial and non-financial performance aspects of construction organisations. This will provide managers, owners and other stakeholders the chance of measuring processes and pre-eminent strategic initiatives using a single model. Originality/value – The conceptual paper presents an integration of processes and perspectives for measuring performance as a new and useful tool in the context of the South African construction industry. The paper suggests that research efforts should be directed on how to implement the strategic performance model efficiently within a specific construction environment.

Influence of institutional pressures on performance measurement systems

2016 ◽  
Vol 12 (2) ◽  
pp. 106-128 ◽  
Author(s):  
Rahat Munir ◽  
Kevin Baird
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Financial Institutions ◽  
Performance Measurement System ◽  
Institutional Pressures ◽  
Content Type ◽  
Normative Pressure ◽  
Banking Regulations ◽  
Corporate Change ◽  
Coercive Pressure

Purpose Grounded in DiMaggio and Powell’s (1983) institutional isomorphism perspective of institutional theory, the purpose of this study is to examine the influence of institutional pressures on the performance measurement system (PMS) within banks and financial institutions. Design/methodology/approach A survey was used to collect data from 71 banks and financial institutions operating in Australia. Findings Four institutional pressures, the normative pressure “corporate change” and the coercive pressures “economic and financial legislation”, “socio-economic political pressures” and “banking regulations” were found to be associated with the use of multi-dimensional performance measures. In addition, the coercive pressure “economic and financial legislation” and the normative pressure “corporate change” were associated with the use of financial, internal and learning and growth performance measures. Finally, the use of internal and learning and growth measures was positively associated with the coercive force “socioeconomic-political pressures”, and the use of financial measures was associated with the coercive pressure “banking regulations”. Research limitations/implications Given the recent global financial crisis, the study offers a reference within the contemporary performance measurement literature in relation to the influence of institutional pressures on the PMS within banks and financial institutions. Originality/value While prior research has focused on manufacturing organisations, this study deepens our understanding of the institutional environment of banks and financial institutions and how specific coercive, mimetic and normative forces influence the PMS.

The effectiveness of strategic performance measurement systems

2017 ◽  
Vol 66 (1) ◽  
pp. 3-21 ◽  
Author(s):  
Kevin Baird
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Content Type ◽  
Strategic Performance ◽  
Four Dimensions ◽  
Internal Customer ◽  
Measurement Systems ◽  
Business Units ◽  
Organisational Process ◽  
Performance Measurement Systems

Purpose The purpose of this paper is to examine how the characteristics of strategic performance measurement systems (SPMSs) influence the effectiveness of such systems. Specifically, the study examines the association between the following three strategic performance measurement approaches with the effectiveness of SPMSs: the use of multidimensional performance measures, the use of performance measures that are linked to value drivers, and the use of performance measures that are linked to strategy. Design/methodology/approach Data were collected using a mail questionnaire distributed to a random sample of 800 Australian manufacturing and service business units. Findings The use of multidimensional performance measures is found to positively influence the effectiveness of SPMSs. Practical implications Organisations need to strive to design their SPMSs in a manner which considers the achievement of both performance- and staff-related goals, with the findings suggesting that managers need to focus on a broad set of performance measures relating to the four dimensions of the BSC (financial, internal, customer, and learning and growth measures). Originality/value This study contributes to the literature by examining the important role that SPMSs play in the achievement of organisational process outcomes. The incorporation of a measure of organisational process effectiveness, and the subsequent identification of the performance-related outcome and staff-related outcome dimensions, provides future researchers with an alternative approach to analyse SPMS effectiveness and provides managers with an insight into how to adjust their SPMS to improve their organisational processes.

DISCUSSION OF: Testing Strategy with Multiple Performance Measures: Evidence from a Balanced Scorecard at Store24

2015 ◽  
Vol 27 (2) ◽  
pp. 67-73 ◽  
Author(s):  
Clara Xiaoling Chen
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Balanced Scorecard ◽  
Business Strategy ◽  
Business Models ◽  
Performance Measurement System ◽  
Future Research ◽  
The Balanced Scorecard ◽  
Performance Measurement Systems ◽  
Using Data

ABSTRACT The Campbell, Datar, Kulp, and Narayanan (2015; hereafter, CDKN) study empirically investigates how the quality of a firm's business strategy can be tested and validated using statistical analysis of the firm's internal performance measurement system. Using data from the balanced scorecard of a convenience store chain, their study provides empirical evidence that the company's internal performance measures reveal timely information about problems with the strategy and can help identify where and why the strategy failed. In this brief discussion of the study, I first summarize the major strengths of their study, then discuss my concerns and comments, and finally point out some potential extensions. In summary, CDKN's study is important in that it makes significant contributions to several streams of literature. CDKN have inspired follow-up studies on the use of performance measurement systems to evaluate strategy and the testing of business models, and has opened up exciting opportunities for future research.

Performance measurement system for a lean manufacturing setting

2019 ◽  
Vol 23 (3) ◽  
pp. 240-252 ◽  
Author(s):  
Samudi Perera ◽  
Chandana Perera
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Measurement System ◽  
Lean Manufacturing ◽  
Performance Measurement System ◽  
Structured Interviews ◽  
Content Type ◽  
Lean Practices ◽  
Manufacturing Performance ◽  
Key Performance Measures

Purpose The purpose of this paper is to propose a performance measurement system for a lean manufacturing environment, which assesses the multi-dimensional performance of lean manufacturing. Design/methodology/approach Following a case study approach, structured interviews were conducted to identify the parameters to measure the performance of a lean manufacturing apparel company. A model was developed with the analytical hierarchical process to assess the performance. Findings The proposed model consists of three levels: first level (overall manufacturing performance), second level (criteria that represent the stakeholders’ view of manufacturing performance) and third level (sub-criteria for the criteria which represent the areas affected by lean manufacturing). The model connects indicators that measure manufacturing performance with the areas required improvements, according to their relative importance to stakeholders. Research limitations/implications The interviewers’ perspectives were used to determine the importance of each manufacturing area for stakeholders. Key performance measures can vary from company to company. Practical implications Managers can use this model to identify important areas for manufacturing performance and the performance improvements driven by different types of lean practices. The results revealed that identifying stakeholders’ requirements was an important aspect of evaluating manufacturing performance. Social implications The model embeds a stakeholder approach in performance measurement, thereby providing a comprehensive model to assess performance. Originality/value This study applies the stakeholder view to identify the multi-dimensional nature of performance in a lean manufacturing setting. It also defines the key performance measures using lean practices.

Strategic performance measurement system,firm capabilities andcustomer-focused strategy

2019 ◽  
Vol 31 (2) ◽  
pp. 288-307 ◽  
Author(s):  
Yuliansyah Yuliansyah ◽  
Ashfaq Ahmad Khan ◽  
Arief Fadhilah
Keyword(s):  
Developing Countries ◽  
Organizational Learning ◽  
Performance Measurement ◽  
Measurement System ◽  
Financial Services ◽  
Performance Measurement System ◽  
Content Type ◽  
Strategic Performance ◽  
Services Sector ◽  
Financial Services Sector

Purpose The impact of a firm’s strategic performance measurement system (SPMS) on its customer-focused strategy, under varying contexts, has largely been documented in the literature. However, the system’s capacity to positively influence the firm strategy through its impact on the firm’s peculiar internal and external capabilities, in the peculiar context of the developing countries’ financial services sector, has so far skipped a thorough academic enquiry. This study, using Indonesia’ financial services sector as its ‘site’, aims to fill this void in the literature. Design/methodology/approach The authors gleaned the study’s empirical data from financial services sector firms using survey questionnaire and analyzed it using SmartPLS. A total of 107 valid responses from management members of different financial services sector firms in Indonesia were deemed useable. Findings The study findings support the paper’s main thesis. The findings revealed that the strategic PMS contributes to enhancing firms’ market orientation and robustness by positively contributing to their customer-focused strategy from three distinct dimensions – competitors, customers and organizational learning. Research limitations/implications The authors posit that an effective customer-focused strategy can be accomplished by purposefully adapting the focus of the firm’s strategic PMS to positively influence the organizational learning, which subsequently translates into the firm’s high competitiveness in the marketplace. Originality/value The unexplored link between the SPMS, firm’s internal and external capabilities and customer-focused strategy in the particular context of a developing country’s financial services sector will not only fill the current void in the literature but also instigate a new academic debate. The study will also contribute to the management accounting practice in service firms in the developing countries context.

Is more really better? Performance measure variety and environmental uncertainty

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Pall Rikhardsson ◽  
Stefan Wendt ◽  
Auður Arna Arnardóttir ◽  
Throstur Olaf Sigurjónsson
Keyword(s):  
Firm Performance ◽  
Performance Measurement ◽  
Performance Measures ◽  
Measurement System ◽  
Environmental Uncertainty ◽  
Performance Measure ◽  
Performance Measurement System ◽  
Service Firms ◽  
Content Type ◽  
Improve Measurement

PurposeThis paper asks the question of whether more environmental uncertainty affects the design of performance measurement systems in terms of a greater variety of performance measures and whether this leads to more management satisfaction with the performance measurement system and improved firm performance.Design/methodology/approachInformation processing theory is used to frame the hypotheses and findings. A questionnaire was sent to the 300 largest companies in Iceland, where environmental uncertainty has been prevalent.FindingsThe results indicate that increased uncertainty leads to a larger variety of non-financial performance measures, such as customer measures. A positive relationship is found between management satisfaction with the performance measurement system and firm performance. However, the variety of performance measures was not linked to management satisfaction or firm performance.Research limitations/implicationsThe results suggest that managers increase the variety of performance measures when uncertainty increases. However, it is not the variety itself that increases management satisfaction or improves firm performance.Practical implicationsPerformance measurement design is affected by environmental uncertainty. Managers focus on important stakeholder groups such as customers under such conditions and can consult research and practice for the purpose of customer relationship management and customer profitability measurement to improve measurement selection.Originality/valueThis work focusses on performance measurement system design, examining the use of more than 50 different performance measures, and differentiates between small and medium-sized firms and between service and non-service firms.

Benchmarking the Lean Six Sigma performance measures: a balanced score card approach

2019 ◽  
Vol 26 (6) ◽  
pp. 1921-1947 ◽  
Author(s):  
Shruti J. Raval ◽  
Ravi Kant ◽  
Ravi Shankar
Keyword(s):  
Performance Measurement ◽  
Performance Measures ◽  
Measurement System ◽  
Six Sigma ◽  
Manufacturing Industry ◽  
Lean Six Sigma ◽  
Performance Measurement System ◽  
Content Type ◽  
Score Card ◽  
Manufacturing Organizations

Purpose The purpose of this paper is to develop the balance score card (BSC) approach based Lean Six Sigma (LSS) performance measurement system and investigate the critical measures currently practiced by Indian manufacturing organizations. Design/methodology/approach This study offers insights of LSS performance measurement from manufacturing industry. Initially, the BSC-based framework is developed to recognize the adoption of LSS performance measures. Then, the framework is applied to nine Indian manufacturing organizations to assess the LSS performance measure practice. Findings The BSC-based framework of LSS performance evaluation for manufacturing industry is formulated. Then, adoption of these LSS performance measures is investigated with nine Indian manufacturing organizations. The result indicates significant variability in terms of practicing level of LSS measures. However, the majority of organizations are more sensitive to the customer perspectives. Practical implications This study reveals a background as to why the performance measurement is required for the success of LSS and for providing practical guidelines for designing performance metrics. The framework interrelates and captures various LSS perspectives and indicator measures, and furnishes a comprehensive outlook of the organization for strategic analysis. This study provides BSC-based template for performing the benchmarking study. This analysis may serve as a reference point for manufacturing organization to determine their system weaknesses, and assist them to concentrate on their most vital and suitable criteria and objectives. However, the analysis contributes to the knowledge on LSS performance measurement system and catches differences in theory and practice, paving the approach to newer research. Originality/value This study renders an industry-oriented LSS performance measurement practical approach and suggests the easily adopted vital performance measures for different manufacturing organizations.

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