Toward Contingency Theory of Performance Measurement

Zusammenfassung

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Performance measurement, although extensively studied in the last two decades, has been given relatively little consideration in terms of the factors that influence the design of performance measurement systems. Few organisations appear to have systematic processes in place for managing the evolution of their measurement systems and few researchers appear to have explored the question, what determines the design of an organisation 's measurement system? The paper addresses this gap by providing empirical evidence on performance measurement contingencies based on a sample of large Slovenian companies.

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Auszug

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Toward Contingency Theory of Performance Measurement

1. Introduction

Since the late 1980s performance measurement has become very topical with ever-increasing interest in the subject. The increasing interest has been driven by the increased rate of change in the business environment in both the private and public sectors (McAdam/ Bailie 2002). According to Bourne et al. (2000) this rapid change has led to general dissatisfaction with traditional backward looking performance measurement systems, identifying their shortcomings and arguing for change. In his Performance Measurement Manifesto, Eccles (1991) suggested that it would become increasingly necessary for all major businesses to evaluate and modify their performance measures in order to adapt to the rapidly changing and highly competitive business environment. He questioned the dominant role of financial performance measures and proposed the shift from treating them as the foundation for performance measurement to treating them as one among a broader set of measures. Numerous other authors (Johnson/ Kaplan 1987; Garrison 1990; Kaplan/ Norton 1992; Maskell 1992; Hronec 1993) laid out arguments against judging performance based solely on financial criteria. They highlighted the failure of financial performance measures to reflect changes in the competitive circumstances and strategies of modern organisations. Businesses today require better information across a wider scope than that of the traditional, and often linear, financial measures, to achieve understanding of the factors that create the foundations of future success. While profit remains the overriding goal, it is considered an insufficient performance measure, as measures should reflect what organisations have to manage in order to profit.

Consequently, attention in practitioner, consultancy and academic communities has t...

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