Business strategies and performance measurement systems: empirical evidence
(English)Manuscript (preprint) (Other academic)
In this article, we discuss the fit between business strategy and the performance-measurement system. The types of business strategy treated in the article are cost leadership and differentiation. The performance-measurement system is studied from a standpoint of design (financial and non-financial measures of performance) and use (interactive and diagnostic). Based on the findings of previous studies, a number of hypothetical relationships between business strategy, the design and use of the performance-measurement system, and financial results are formulated. Data were collected by means of a questionnaire sent to 800 business units in Denmark, Finland, Sweden and Norway, with 224 complete responses. The data was analyzed with the aid of cluster analysis. It could not be shown that financial results were affected by the design and use of the performance-measurement system. Furthermore, the relationships between business strategy and performance measurement were not as straightforward as hypothesized. Nevertheless, two clusters of business units have rather clear tendencies in the design and use of their performance-measurement systems. One of them is cost leaders with relatively undeveloped performance-measurement systems. Neither financial nor non-financial measures seem to be important. Interactive use is also limited. The other cluster is comprised of differentiators with a well-developed and complex system of performance measurement. These business units focus to a substantial extent on both financial and non-financial measures. Also in regard to use, all dimensions were generally emphasized in the questionnaire; in other words, both diagnostic and interactive uses are considered important.
IdentifiersURN: urn:nbn:se:liu:diva-36406Local ID: 31268ISBN: 91-85295-82-5OAI: oai:DiVA.org:liu-36406DiVA: diva2:257254
An earlier version of this paper has been presented at The 19th Nordic Conference on Business Studies, Reykjavik, Iceland, August, 20032009-10-102009-10-102013-01-22