Article2005

An empirical study of performance measurement in manufacturing firms

190 citations0/0 files storedInternational Journal of Productivity and Performance Management

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Accounting and Organizational Management Information Technology Governance and Strategy Corporate Governance and Management

Abstract

Purpose The recent performance measurement literature suggests that organizations should put more emphasis on non‐financial measures in their performance measurement systems, that organizations must use new performance measurement approaches such as the balanced scorecard and that measures should be aligned with contextual factors such as strategy and organizational structure. The purpose of this paper is to assess the extent to which organizations are following these prescriptions. Design/methodology/approach A survey of a sample of Canadian manufacturing firms was conducted. In the questionnaire, organizations had to indicate the extent to which they use 73 performance measures. They also had to respond to questions about determinants such as strategy, organizational structure and environmental uncertainty. More than 100 organizations responded to the survey. The response rate was 50.5 percent. Findings The results show that manufacturing firms continue to use financial performance measures. Despite the recommendations from experts and academics, the proportion of firms that implement a balanced scorecard or integrated performance measurement systems is low. Furthermore, organizations that use these approaches are not employing more extensively non‐financial measures than those which are applying traditional performance measurement approaches. This research project also shows that there are some significant relationships between the types of measures and contextual factors like strategy, decentralization and environmental uncertainty. This research finally demonstrates clearly that there is a need to develop a theory that explains how firms can use their performance measurement system to enhance their performance. Originality/value This paper provides information on performance measures used by organizations and their association with organizational determinants.

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References

1992The balanced scorecard : measures that drive performance 1992The balanced scorecard--measures that drive performance.1978Organizational Strategy, Structure, and Process 1998The Balanced Scorecard 1998Putting the Balanced Scorecard to Work 1986THE IMPACT OF STRUCTURE, ENVIRONMENT, AND INTERDEPENDENCE ON THE PERCEIVED USEFULNESS OF MANAGEMENT ACCOUNTING SYSTEMS 1988A CONTINGENCY APPROACH TO STRATEGY IMPLEMENTATION AT THE BUSINESS-UNIT LEVEL: INTEGRATING ADMINISTRATIVE MECHANISMS WITH STRATEGY.1984Fit, Failure and the Hall of Fame

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