Behavioral Work Outcomes of a Strategic Performance Measurement System-Based Incentive Plan

Abstract

ABSTRACT: Strategic performance measurement systems (SPMS) that translate a firm's strategy to its employees are increasingly used. We examine whether the extent to which an SPMS is coupled with strategy affects employee performance indirectly through motivational characteristics including perceived self-efficacy and perceived psychological contract. Using data from 242 employees, we find evidence that the extent to which an SPMS is tightly coupled with strategy affects employee performance through perceived self-efficacy and perceived psychological contract. Self-efficacy is a critical dimension of intrinsic motivation. Thus, an implication of our findings is that tightly coupling an SPMS-based incentive plan with strategy facilitates internalized motivated behaviors. We also find that our hypothesized results hold across varying levels of two types of employee climate. However, the workforce's age and education levels serve as boundary conditions since we find that the relation between self-efficacy and employee performance holds only for the older, less-educated employees. Data Availability: Data used in this study cannot be made public due to a confidentiality agreement with the participating firm.

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