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The use of management control and performance measurement systems in SMEs: A levers of control perspective
Abstract
ABSTRACT
Purpose: This paper responds to recent calls for understanding how multiple management control and performance measurement systems are used simultaneously for managing performance, particularly in the context of SMEs.
Design/methodology/approach: Data are collected during an in-depth case study of management control and performance measurement and management practices in a Dutch SME using multiple data sources and elicitation methods, including interviews and participant observations.
Findings: This study identifies managerial practices that enable the interplay of the four control systems - beliefs, boundaries, diagnostic and interactive – helping the organization manage organizational tensions in relation to short- and long-term focus, predictable goal achievement and search for new opportunities, internal and external focus, and control and creativity.
Research implications/limitations: This article advances the research on integrating multiple aspects of performance management, particularly technical and social. This research is based on a single case study; future qualitative and quantitative studies could explore the interplay between the four control systems in other settings and explore the relationship between control systems and leadership style.
Practical implications: Managing performance requires active and continuous use of all four control systems. This is particularly salient in SMEs where less formal controls play a key role and where balance needs to be ensured despite the lack of managerial processes and capabilities.
Originality/value: The findings advance performance measurement and management theory and practice in the context of SMEs.
Paper Type: Research paper.
Keywords: Performance measurement, performance management, management control, SME, levers of control.
... Bedford, 2015;Mura et al., 2021). Specifically, while PMS can be utilized diagnostically to help organizations monitor Performance measurement for ambidexterity performance, track progress and establish whether the desired level of performance is being achieved, they can also be used interactively to facilitate exploration by encouraging dialogue and debates that create avenues for new ideas and opportunities (Pĕsalj et al., 2018). Yet, other authors have argued that control mechanisms such as PMS (and specifically the Balanced Scorecard) can neither foster exploration nor bridge the gap between predominantly exploitative and mainly exploratory units in organizations (Hahn and Figge, 2018;Hansen and Schaltegger, 2018). ...
... It also facilitates organizational innovation and learning and drives performance (Koufteros et al., 2014;Schermann et al., 2012) by producing information that helps identify specific areas that need management attention (Smith and Bititci, 2017). By using performance information interactively, managers can encourage a bottom-up approach to organizational change and creativity by allowing frontline staff to identify and bring forward opportunities (Pavlov and Bourne, 2011;Pĕsalj et al., 2018). Such bottom-up inflows of knowledge can then help provide senior management with an increased understanding of changes in products, technology and markets which may lead to novel solutions (Elg et al., 2012;Haas, 2010;Zimmermann et al., 2015). ...
... industries, organizational practices). Also, we did not consider the Levers of Control framework in its entirety: while we did not directly ask about the company's belief and boundary systems (Simons, 1995), we could infer that these were sufficiently developed and used to define and guide positive behaviours (Pĕsalj et al., 2018). For example, we found evidence that the company's core values and ambitions were used to inspire and direct the search for new opportunities. ...
Purpose
This study aims to examine how different uses of performance measurement systems (PMS) enable or hinder organizational ambidexterity (OA), intended as the simultaneous pursuit of exploitation and exploration.
Design/methodology/approach
Following a qualitative research design, we gathered data through semi-structured interviews, observations and reviews of documents at four departments of an automotive firm.
Findings
We contribute to operations management research and practice by demonstrating how PMS, which are typically associated with exploitation, can also foster exploration and enable organizations to become ambidextrous. Specifically, we show how PMS can be structured and used in more agile ways and, in relation to innovation, we identify which PM practices should be introduced and with what effects and those that should be avoided. We also contribute to organization theory by highlighting how a single management tool can promote the achievement of both exploration and exploitation.
Practical implications
In investigating PMS uses and their effects, we identify several positive practices. For example, we show how managers can use PMS more effectively and how targets could be deployed to stimulate creativity and innovation. We also emphasize the need for managers to opt more often for team incentives rather than individual ones to encourage the collaboration needed for OA.
Originality/value
We provide in-depth insight into how PM tools affect an organization’s ability to pursue exploitation and exploration, thus contributing to research in operations, innovation and organization theory.
... Bedford, 2015;Mura et al., 2021). Specifically, while PMS can be utilized diagnostically to help organizations monitor Performance measurement for ambidexterity performance, track progress and establish whether the desired level of performance is being achieved, they can also be used interactively to facilitate exploration by encouraging dialogue and debates that create avenues for new ideas and opportunities (Pĕsalj et al., 2018). Yet, other authors have argued that control mechanisms such as PMS (and specifically the Balanced Scorecard) can neither foster exploration nor bridge the gap between predominantly exploitative and mainly exploratory units in organizations (Hahn and Figge, 2018;Hansen and Schaltegger, 2018). ...
... It also facilitates organizational innovation and learning and drives performance (Koufteros et al., 2014;Schermann et al., 2012) by producing information that helps identify specific areas that need management attention (Smith and Bititci, 2017). By using performance information interactively, managers can encourage a bottom-up approach to organizational change and creativity by allowing frontline staff to identify and bring forward opportunities (Pavlov and Bourne, 2011;Pĕsalj et al., 2018). Such bottom-up inflows of knowledge can then help provide senior management with an increased understanding of changes in products, technology and markets which may lead to novel solutions (Elg et al., 2012;Haas, 2010;Zimmermann et al., 2015). ...
... industries, organizational practices). Also, we did not consider the Levers of Control framework in its entirety: while we did not directly ask about the company's belief and boundary systems (Simons, 1995), we could infer that these were sufficiently developed and used to define and guide positive behaviours (Pĕsalj et al., 2018). For example, we found evidence that the company's core values and ambitions were used to inspire and direct the search for new opportunities. ...
... Many studies have shown that SMEs strongly emphasize multiple controls choices, encompassing formal systems and socio-ideological and informal controls (Nielsen et al., 2018;Pešalj et al., 2018;Sandelin, 2008;Ströbele and Wentges, 2018;Voss and Brettel, 2014). These studies were not aiming to identify control archetypes but to investigate the complementary effect of certain MC mechanisms on firms' performance. ...
... When complexity increases, the need to adopt more formal control practices increases. Pešalj et al. (2018) adopted Simons's (1995) LOC framework to understand how MC systems work within small businesses, providing an in-depth illustration of how the complementarity and interplay of different control mechanisms can help organizations manage specific conflicting goals and tensions. The authors highlighted the need for active interconnection between all four LOCs. ...
... Also, previous studies have not addressed important features such as administrative controls, policies and procedures and governance (Bedford and Malmi, 2015). Despite the fundamental role of the founder or managing director in SMEs (Hudson-Smith and Smith, 2007;Pešalj et al., 2018), few SME studies have included the centralization of power among the control mechanisms, unlike in studies on large entities (Einhorn et al., 2020;Nielsen et al., 2018). ...
Purpose
Interest has grown in how management controls operate together as a package of interrelated mechanisms. This study aims to contribute to the topic by focusing on a single industry in one country, addressing controls in medium-sized enterprises (MEs). It explores how accounting and other forms of control commonly combine and the associations these combinations have with firm characteristics and context.
Design/methodology/approach
This study used a cross-sectional sample of 242 firms. Data were collected in 2015 from a survey of the Italian mechanical-engineering industry.
Findings
The MEs studied used two different control configurations. One group relatively strongly emphasized most studied controls, except for centralizing decision-making and strong hierarchy; the other relied on centralization and emphasized other controls less. Size, task programmability, outcome measurability, complexity in terms of the extensiveness of the product range and environmental unpredictability can predict the configuration in use.
Originality/value
No broad-based empirical evidence on control configurations in MEs currently exists. Previous research has focused on to what extent control systems affect business effectiveness or efficiency, without assessing how, and in which contexts, they combine.
... By jointly pursing iMCS and dMCS and thus adopting an ambidextrous MCS, firms may boost experimentation, prospecting and exploration to adapt to the environmental changes, while simultaneously improve routines activities, exploit existing capabilities and better focus on current activities (Bedford, 2015). Pešalj et al. (2018) stressed that SME can implement multiple control systems to effectively evaluate and manage their performance and to balance long-and short-term objectives, control and creativity and to both focus on the current strategy and develop new one. In this line, on the one hand, dMCS is used to ensure that things are done as planned, monitor innovation projects and to reward performance or to correct non-conformance or to improve methods, processes or products, which can lead to exploitative innovation. ...
... Implementing a combination of iMCS and dMCS is particularly important in the context of KIFs where knowledge workers seek for autonomy and fewer formal controls to improve their creativity. This combination of such control systems, as it is difficult to imitate, may represent a distinctive organizational capability and a key source of sustainable competitive advantage (Pešalj et al., 2018). The complementary of the iMCS and dMCS helps the firms to balance between short-term and long term's objectives, generates single and double loops of learning (Pešalj et al., 2018), which fosters ambidextrous innovation. ...
... This combination of such control systems, as it is difficult to imitate, may represent a distinctive organizational capability and a key source of sustainable competitive advantage (Pešalj et al., 2018). The complementary of the iMCS and dMCS helps the firms to balance between short-term and long term's objectives, generates single and double loops of learning (Pešalj et al., 2018), which fosters ambidextrous innovation. ...
... In this study, we consider PMSs as mechanisms that top management teams can deploy to link strategy and operations and to promote behaviors and actions consistent in line with the organization's goals (Hanson et al., 2011;Micheli and Mura, 2017;Bedford et al., 2019). Moreover, drawing on the recent research adopting the levers of control framework (Simons, 1995;Pe salj et al., 2018), we regard different PMS uses, and the dynamic tensions between them, as potential enablers of exploitation and exploration. Consistently with previous research (e.g. ...
... accuracy and precision of performance data, appropriateness of performance targets), how PMSs are used is fundamentally important. In particular, several authors have referred to Simons' "levers of control" framework (Simons, 1995), which states that PMSs, and other types of management control systems, can be used in four waysas beliefs systems, boundary systems, diagnostic systems and interactive systems (Pe salj et al., 2018). While all four "levers" play important roles, several authors have considered only two of them: diagnostic and interactive (see, e.g. ...
... While each use has specific characteristics and effects, several authors have also investigated the "dynamic tensions" existing among them, especially in relation to innovation (e.g. Henri, 2006;Koufteros et al., 2014;Pe salj et al., 2018). Indeed, Simons (1995) stated that organizations should use their control systemssuch as PMSin combination to generate a "dynamic tension" that promotes both predictable goal achievement and innovation and strategic change. ...
Purpose
This study aims to investigate how dynamic tensions between performance measurement system (PMS) uses enable organizations to achieve both exploitation and exploration and enhance firm performance.
Design/methodology/approach
The authors collected survey data on 153 Italian companies. Scales for each construct were validated through an exploratory factor analysis. Data on firm performance were cross-validated by using lagged accounting data. The authors tested our hypotheses using hierarchical ordinary least squares regressions, together with bootstrapping procedures for the test on mediation.
Findings
A diagnostic use of PMS has a positive association with both exploitation – e.g. reductions in total costs and lead times – and exploration, e.g. introduction of new products and extension of product ranges. The dynamic tension created by a joint diagnostic and interactive use has the strongest association with organizational ambidexterity, measured as the multiplicative interaction between exploration and exploitation.
Practical implications
If an organization or business unit is mainly pursuing exploitative goals, a mainly diagnostic use of PMS would be most suitable. If goals are both exploitative and explorative, a mix of diagnostic and interactive uses would be most effective.
Originality/value
This research helps reconcile conflicting views in the literature. The diagnostic use of PMS, far from acting as a “negative force,” appears to be necessary to guide opportunity search and to establish an appropriate scope for exploration-related activities. The authors’ focus on the uses of PMSs shows that ambidexterity is achieved through managerial capability, rather than just through the introduction of systems and structures.
... Research on MCS can be carried out in various industries and business scales. Pešalj et al. (2018) state that MCS can help organizations implement strategies, encourage the emergence of various positive behaviors, and improve performance. Micheli & Mura (2017), for example, surveyed various top managers from large companies in Europe (which came from the Bureau Vans) and found the critical role of performance measurement systems, which are part of MCS as a mediator of strategy implementation aimed at improving organizational performance. ...
... Micheli & Mura (2017), for example, surveyed various top managers from large companies in Europe (which came from the Bureau Vans) and found the critical role of performance measurement systems, which are part of MCS as a mediator of strategy implementation aimed at improving organizational performance. Meanwhile, Pešalj et al. (2018) researched small-scale companies (SMEs) in Barendrecht, the Netherlands, using an action research (in-depth participative immersion) approach. The research results show that MCS helps overcome the challenges faced by SME management, and the four elements of levers of control are used simultaneously and alternately. ...
Despite extensive research on construction delays, this persistent issue continues to challenge the global construction industry. This case study aims to enhance the theoretical and practical understanding of management control systems (MCS) in construction firms by identifying the primary causes of project delays and examining the MCS components involved. A qualitative case study was conducted at a national private construction company (Jakons) to identify delay factors and propose solutions by linking them to MCS. The study focused on two Jakons projects that experienced delays, with primary data collected through interviews with five key informants directly engaged in MCS for the projects. Analysis of the interviews revealed common delay causes related to the project owner, consultants, labor, and materials. These causes were then connected to MCS practices and assessed using the four Levers of Control (LoC) framework, including Belief, Boundary, Diagnostic, and Interactive control systems. The study identified areas for improvement in MCS related to communication management, coordination, competence, and risk management that impact schedule delays. These findings provide valuable guidance for construction practitioners in planning and managing projects and offer insights to reassess MCS strategies to mitigate delays and achieve timely project completion.
... Given that knowledge is one of the most valuable commodities in the modern technology era, openness to information creates a special wealth for enterprise. The transfer of knowledge and organizational innovation both depend heavily on knowledge sharing (Pešalj et al., 2018). Additionally, knowledge is the main driver of innovation by a corporation. ...
... This research adds technology turbulence and knowledge sharing to the body of literature. It is acknowledged that information sharing is important for both innovation and the operational and financial success of the enterprise(Pešalj et al., 2018). However, there belong been limited ...
Purpose: This study investigates how the absorptive management control system affects in the development of radical innovation. The purpose of this paper is to analyze the influence of using different types of management control (enabling levers and constraining levers) on radical innovation, which is mediated by knowledge sharing and moderated by technological turbulence. Methods: This study uses a methodology partial least squares structural equation modeling and qualitative comparative analysis have been applied to a sample of 253 Indonesian startups. Results and Conclusion: Enabling levers and constraining levers have an influence in generating the necessary knowledge sharing for a company to transfer information within, which affects the production of radical innovation, meaning innovation that is in line with market development and demand. Technological turbulence, as a moderator, has a relationship between knowledge sharing and radical innovation. Implication of research: The results can be useful for managers of startups in the traction stage, as the research highlights different management controls and possible combinations that can be used to drive radical innovation. Additionally, the research highlights the role of knowledge sharing in promoting radical innovation, especially in the context of technological turbulence.
... Management control systems (MCS) influence the behaviour of organisational resources to implement organisational strategies (Grabner and Moers 2013;Hofmann and Van Lent 2017;Masschelein and Moers 2020), and managers engaged with MCS apply its beliefs and desires, using MCS in an interactive and/or diagnostic manner, with different effects as boundary controls in international activity (Pešalj et al. 2018). Among the reasons why the different controls ought to be complementary and simultaneous are that they ease the transmission of common values and understanding and help in the achievement of the desired performance (Liu 2015;Kreutzer et al. 2015;Cardinal et al. 2017;Hofmann and Van Lent 2017;Sihag and Rijsdijk 2019;Masschelein and Moers 2020), as entrepreneurship also does. ...
... Managers engaged with MCS apply its beliefs and desires, using MCS in an interactive and/or diagnostic manner, with different effects as boundary controls in an international activity (Pešalj et al. 2018). The different organisational controls (outcome, behaviour, and clan) are complementary since the use of one makes the use of the others more effective (Kreutzer et al. 2015). ...
This study analyses how entrepreneurs adapt or change international control management and organisation structures in response to their resources and capabilities and the context of the situation, from the resource-based theory (RBT) and contingency and effectuation framework approaches, taking the dynamism from knowledge-intensive services (KIS) into consideration. A multiple case study has been performed, based on semi-structured interviews with nine founders (entrepreneurs) of less-than 5-year-old international businesses who are actively involved in the management. All the interviews have been recorded, coded, and analysed through factsheets. The findings suggest that there is a relation between entrepreneurship and the characteristics of the entrepreneur; the character of owners or founders is key to embarking on this kind of business challenge. Furthermore, the age and nature of the manager—entrepreneur or non-entrepreneur—influence the business direction. This research analyses the role of the founder, owner, and/or management depending on the resources, capabilities, and uncertain contexts of the small, young firms. The age of the organisation’s and the degree of professionalism of the management’s impact on the management style and the use of control mechanisms are scarcely analysed yet, which could improve the relationships in MCS to achieve local and global control needs.
... Performance measures are a key element of performance measurement systems (PMS), which have been widely investigated for large firms (e.g., Chenhall & Langfield-Smith, 1998;Ittner et al., 2003aIttner et al., , 2003bKaplan & Norton, 1992). Research regarding PMS in small and medium enterprises (SMEs) was sparse in the beginning of the century (e.g., Brem et al., 2008;Garengo et al., 2005;Hudson et al., 2001), but has increased substantially in the last decade (e.g., Ahmad & Zabri, 2015;Ates et al., 2013;Bititci et al., 2012;Heinicke, 2018;Pešalj et al., 2018;Rojas-Lema et al., 2020;Taylor & Taylor, 2014). ...
... This lack of evidence is even odder when the importance of SMEs to local economies is undeniable and there are significant differences between large and small companies (e.g., Garengo et al., 2005;Hudson et al., 2001;Pešalj et al., 2018). SMEs are crucial agents for the economy in every country (Wolff & Pett, 2006). ...
This study explores the relationship between contextual variables—strategy, perceived environmental uncertainty (PEU), and decentralization—and the use of non-financial performance measures (NFPM) for managerial compensation in small and medium enterprises (SMEs). Using questionnaire data from SMEs’ managers, we find that the use of NFPM is positively associated with PEU hostility and decentralization. Furthermore, our study shows that these results are mostly driven by CEO’s compensation (in comparison to non-CEOs compensation) and family firms (in comparison to non-family firms). Finally, our analyses reveal that the use of different types of NFPM (customer-oriented, employee-oriented and operations-oriented) is associated with distinct contextual variables. Particularly, customer-oriented NFPM are negatively related to PEU dynamism and positively related to decentralization, while operations-oriented NFPM are positively related to PEU hostility.
... Additionally, Pešalj et al., (2018) explored the use of management control and performance measurements systems in Dutch small and medium enterprises. The purpose of the research was to answer to the current demand of understanding how various management controls and performance measurements systems were used to manage performance concurrently in the SME context. ...
This study sought to examine the moderating effect of environmental contingency factors on the relationship between path-goal leadership style and performance in manufacturing SMEs in Nairobi. The target population comprised of managers/owners from 425 SME’s listed members of the Kenya Association of Manufacturers based in Nairobi region. A sample size of 369 managers/owners was derived using stratified random sampling technique. Data was collected using self-administered questionnaires. Binary logistic regression (Cox and Snell R Squared) was used and results indicated that the environmental contingency factors explain 16.5 % of the probability of the relationship between path-goal leadership style and organizational performance. The parameter estimates showed that the coefficient of path-goal leadership styles by environmental contingency factors were; directive leadership (2.935, p =.112), supportive leadership (-.427, p =.717), participative leadership (-.4.645, p = 0.046), achievement oriented leadership style (2.586, p = 0.118). Hence, the study failed to reject the null hypothesis that environmental contingency factors do not significantly moderate the relationship between path goal leadership style and organizational performance in three study variables (directive, supportive and achievement oriented leadership styles). However, the study rejected the null hypothesis that environmental contingency factors do not significantly moderate the relationship between participative leadership style and organizational performance. The study revealed that environmental contingency factors did not significantly moderate the relationship in three path goal leadership styles (directive, supportive and achievement-oriented leadership style) and organizational performance while it significantly moderated the relationship between participative leadership style and organizational performance in manufacturing SMEs in Nairobi. Therefore, the study recommends that owners/ managers of manufacturing SME need to define the tasks and duties to be performed, instruct employees on how to carry out tasks and duties and build a cohesive team to carry out tasks especially when they apply participative leadership style to realize optimal organizational performance.
... Enabling leverage, which consists of a belief system and an interactive system, is an essential element in organizational management to encourage performance (Pešalj et al., 2018). Both help create an environment that supports innovation, collaboration, and adaptation to change. ...
Aim/Purpose: This study investigates how external stimuli and organizational culture influence the development of a management control system (MCS) to foster radical innovation and improve organizational performance. Specifically, it quantifies the effects of constraining and enabling levers on interaction and Knowledge sharing while examining how radical innovation mitigates technological turbulence to enhance performance. Background: This research was conducted on startup companies because many of them are closed due to a lack of visibility into the external environment and organizational culture in creating control system management and a lack of creation of radical innovation. Methodology: This quantitative research includes 329 respondents who are managers at startup companies in Indonesia. Questionnaires were distributed to respondents at startup enterprises to conduct the study. Data collection was performed both in person and online. SEM-PLS was the instrument employed for the measurement. Contribution: Startups are often in a dynamic environment with high uncertainty. This research offers insights into managing external influences and building an organizational culture that supports Knowledge and innovation to improve performance. The research can also provide input for policymakers, such as governments or business incubators, to create policies that support startup growth, especially in the face of technological challenges. Findings: Sampling 329 startup managers from Indonesia, this quantitative research was conducted using a structured self-administered questionnaire, and the data was analyzed through SEM-PLS. The results show that external stimuli and organizational culture significantly influence the establishment of the MCS and foster the ability of the startup to respond to drastic changes in the environment. This system encourages the promotion of knowledge sharing, which brings about radical innovations that increase market share and improve organizational performance. Interestingly, the analysis shows that enabling and constraining levers, knowledge sharing, and radical innovation are the factors that determine 76.9% (R² = 0.769) of organizational performance. Recommendations for Practitioners: Innovation remains the company’s main focus, and startups need to consider external stimuli, cultivate an organizational culture that supports innovation, and change the management control system so that the company can take advantage of fundamental changes and achievements, especially during the technological revolution. Recommendation for Researchers: Research has the potential to simultaneously add variables such as leadership style, employee engagement, or market orientation to observe how they affect innovation and organizational performance. The study may encompass startups and other marketplaces, including large technology firms, small and medium-sized enterprises, and the creative sector, to ensure consistency in findings across diverse settings. Impact on Society: With the improvement of the performance of startup organizations, people can enjoy high-quality products or services at more competitive prices. More innovative and well-performing startups will drive business growth, directly creating new job opportunities in various sectors. In addition, the growing emphasis on innovation means that people will be motivated to gain technological and creative skills, which in turn improves workforce efficiency. Future Research: Further research could examine how changes in government policies, such as implementing digital taxes or restrictions on foreign investors, affect the interaction between radical innovation and a company’s performance. Future researchers may also focus on the impact of blockchain technology on the creation of facilitating mechanisms for improving performance and innovation in technology-based startups.
... Despite SMEs' importance and high vulnerability, they are often characterised by the lack of efficient management control or financial performance measurement tools and methods. Smaller companies use performance measurement tools less frequently and efficiently (Pešalj et al., 2018;Taylor and Taylor 2014). Garengo et al. (2005) studied the constraints of using performance measurement systems in SMEs, which are the lack of financial and human resources, the short-term nature of planning, or the increased instability of the business environment. ...
... This process assigns meaning to the rules through storytelling. Insights derived from these discussions inform the establishment of future performance targets within diagnostic control (Pešalj, Pavlov, & Micheli, 2018). ...
... strategic approaches can carve out market niches, overcome resource limitations, and achieve sustainable growth (Pešalj et al., 2018). Strategic orientation, therefore, is not merely a tool for large corporations but a critical driver of success across businesses of all sizes. ...
This study examines the impact of corporate culture, strategic orientation, and environmental uncertainty on firm performance, focusing on the moderating role of the Lever of Controls (LoC). Primary data were collected through a survey involving 203 respondents from both listed and unlisted companies in Indonesia on the Indonesia Stock Exchange. Firm performance was measured using customer satisfaction, revenue, profit growth, return on investment, and market share. The findings reveal that corporate culture and strategic orientation significantly enhance firm performance. However, environmental uncertainty was found to have no direct impact on business performance. Furthermore, the moderating role of the LoC was not validated, suggesting that the relationship between management control systems and performance is complex and requires further investigation, particularly in uncertain environments. This research provides valuable insights for practitioners, emphasizing that firm performance is strongly influenced by corporate culture, strategic orientation, and effective management of environmental uncertainty.
... ( ات ار القر التخاذ كافية استقاللية الموظفين ومنح الشركة، Henri, 2006 .) ديناميكية ات توتر حدوث إلى ذلك ويؤدي لتحسين جديدة وطرق إمكانيات عن البحث و التقليدي)، الرقابي (االستخدام الشركة أهداف تحقيق ضمان بين التفاعلي) (االستخدام وتجديدها الحالية الممارسات(Kruis et al., 2016;Pešalj et al., 2018) .يعمل ا متز بشكل االستخدام من النوعان هذان الناتج التوتر في تكمن قوتهما فإن ذلك، ومع مختلفة، اض ألغر ولكن من ( التكامل و التنافس ة فكر ذاته الوقت في يعكس مما ازن، المتو استخدامهما عن Henri, 2006 .) ...
... MCS is a set of policies, procedures, and practices that managers use to ensure that the organization is achieving its goals and objectives (Abernethy and Brownell, 1997;Bisbe and Otley, 2004). Recently, research on MCS has changed the focus from demonstrating the design and application of several controls to comprehending the way they are used and integrated with other organizational functions (Hudson et al., 2001), their outcomes (Franco-Santos et al., 2012), their effect on organizational effectiveness (Pešalj et al., 2018), and their consequences on corporate performance (Pavlov and Bourne, 2011). Feedback provided by MA on financial performance (e.g. ...
In today’s knowledge-driven economy, organizations compete through their intellectual capital (IC). However, effectively leveraging IC requires robust management control systems (MCS) and sound management accounting (MA) practices. Despite theoretical arguments, empirical evidence on the interplay between these elements and their combined impact on performance remains limited. This study addresses this gap by investigating how MCS and MA influence IC development and how IC subsequently affects business performance within Saudi Arabian companies. Data were collected through a questionnaire survey sent to diverse manufacturing and service companies and analyzed using structural equation modeling with AMOS software. Findings reveal that comprehensive MCS drives increased use of MA tools, both contributing to IC development, although MCS's influence operates indirectly through MA. Importantly, this study provides strong empirical support for the positive and significant impact of IC on business performance. Interestingly, IC fully mediates the relationships between MCS/MA and performance, suggesting that the direct effects of these practices lack independent influence. These findings underscore the critical role of aligning MCS and MA with IC components. By establishing processes, systems, and environments that foster knowledge creation, information networks, organizational learning, and capabilities, companies can unlock the full potential of IC for improved performance. This study offers valuable insights for managers seeking to optimize their control and accounting practices to build a strong foundation for sustainable competitive advantage through enhanced intellectual capital.
... Research on applying management principles in ECCD centres in Ghana has been limited, neglecting the utilisation of various management theories and the interconnectedness of ECCD systems. Prior studies by Ali and Abdalla (2017), Chukwumah (2015), Musingafi et al. (2014), Mustafa and Pranoto (2019), Pešalj et al. (2018), Strehmel (2016), Strunk et al. (2016), Thornton and Cherrington (2014) and VanGronigen et al. (2017), mainly focused on secondary school principals' roles, in school improvement planning and organizational functions. The researchers in this study argue that previous studies, which focused on secondary school principals' managerial roles, overlooked the comprehensive perspective of management principles within ECCD systems, particularly in Ghana. ...
Early Childhood Care and Development (ECCD) directors are crucial for sustainable quality ECCD centre management, leading to a focus on efficient 21st-century practices. Planning principles are essential for managing the complexity of early childhood education services. This paper aimed to explore how ECCD directors plan management activities in their centres in Ghana. The study was conducted in sixteen ECCD centres located in five metropolitan and municipal districts within the Greater Accra Region of Ghana. The study involved 20 participants, including directors/head teachers and board members, selected using a purposive sampling strategy. Data were collected through interviews and document reviews. Although evidence from the study showed that ECCD directors put much effort into managing their centres, the study found that ECCD directors experience various challenges concerning applying the basic management principle of planning at their centres. In this article, the authors contend that planning is a crucial management function that sets achievable goals in line with the ECCD centre's vision and provides direction for actions to achieve ECCD goals. In addressing the identified challenges, the researchers developed a systems-based planning framework to guide directors in their planning roles at the ECCD centres.
... The Levers of Control (LoC) framework has attracted considerable attention and application in contemporary organizational research. Scholars such as (Mura et al., 2021), Pešalj et al. (2018) , (Bedford, 2015), (Frow et al., 2010), (Widener, 2007), (Henri, 2006), and(Naranjo-Gil &Hartmann, 2006) have extensively explored the practical implementation of LoC and its impact on organizational outcomes. For instance, (Bedford, 2015) identified a positive association between belief systems and workplace flexibility, while (Henri, 2006) examined the role of interactive control systems in fostering innovation. ...
This systematic literature review investigates the application of the Four Levers of Control (4LOC) framework in Indonesian organizations post-COVID-19. The research method involved a systematic search of electronic databases and analysis of relevant literature. Major findings indicate that effective implementation of the 4LOC framework contributes to organizational resilience, performance improvement, and competitive advantage across various sectors. Cultural factors, leadership styles, and strategic alignment emerge as critical determinants of success. The study underscores the versatility and effectiveness of the 4LOC framework in navigating challenges posed by dynamic environments. Conclusions highlight the importance of adaptive strategies, cultural sensitivity, and integrated control systems in driving sustainable growth and organizational success in Indonesia. Results indicate that LoC implementation has positively impacted organizational performance across sectors such as hospitality, start-ups, state-owned enterprises, government organizations, manufacturing, and the service industry. Notably, effective utilization of belief systems, boundary systems, diagnostic control systems, and interactive control systems has been instrumental in fostering innovation, resilience, and strategic alignment. These findings underscore the importance of robust management control systems in achieving organizational objectives and navigating uncertainties. The review concludes by recommending further research to explore longitudinal effects, contextual influences, and the role of emerging technologies in enhancing LoC implementation.
... Innovation is closely tied to a firm's competitiveness, seen in its ability to innovate in operations and imitate external factors (Slater et al., 2014;Nada & Ali, 2015;Arshad & Arshad, 2019;Nagati & Rebolledo, 2012). Performance is measured by efficiency in converting inputs to outputs, including cost, quality, quantity, capacities, and creativity (Pešalj, Pavlov, & Micheli, 2018). ...
This study aims to assess the dynamics of innovation and productivity of formally registered small and medium enterprises in Pakistan. It considers learning by doing and learning by schooling theories along with stylized facts about determinants of firms’ ability to practice innovation. This is the first detailed study that considers learning by doing and learning by schooling aspects of firms determining innovation practices. These are considered building blocks of sustainable economic growth and hence the growth processes of the firms. Realizing the state of these aspects provides valuable support to policymakers in developing effective policies for the manufacturing sector. For this purpose, a structural model is used to assess the factors affecting innovation followed by the effects of innovation on the productivity of the firms with reference to formality. The latest data by World Bank collected through Enterprise Survey between May 2013 to May 2015 is used to address the purpose. It is found that novel organizational and management practices promote the innovation of small and medium firms significantly. It is concluded that higher levels of productivity can be achieved through better organizational structure, employee training, the transformation of the internal structure of the production process, export growth, and the development of the business environment in various locations. These findings imply that export-oriented policies, research, and development for SMEs, training provisions for managers and employees, and changes in the hierarchal structure of the old established enterprises are the key elements for SMEs growth in Pakistan. Therefore, it is suggested to promote positive competition among SMEs as it works as a driving force to bring innovation and enhance the capacity utilization of the firms. It is observed that non-exporting firms are less concerned to adopt innovative practices that limit their productivity and growth. Thus, it is recommended to encourage these firms to grow at the par of their exporting counterparts by following their innovative strategies. These strategies bring direct benefits to the firms in terms of productivity and growth and have the potential to ultimately improve the livelihood and socio-economic status of the associated employees. Moreover, with higher levels of growth informal sector may also catch up with the formal sector through the effect of agglomeration economies of the formal firms located in the region.
... The strategic objectives of the enterprise are reflected in key indicators that are easy to measure, which is the unique measurable advantage of the BSC (Pesalj et al., 2018); ...
As China’s higher education begins to change from the original elite education to mass education, it is required to establish and improve the quality evaluation system and mechanism as soon as possible. How to comprehensively evaluate the performance of higher education teachers based on the implementation of effective incentives has become the focus of governance and institutional innovation in higher education nowadays. How to fully mobilize the human resources of higher education institutions to work actively and give full play to their creativity is an important issue related to the realization of the strategic objectives of the university. In order to solve this problem, it is necessary to establish a scientific and reasonable performance evaluation system for human resources in colleges and universities. The paper draws out a new performance evaluation method by analyzing four existing performance evaluation methods and discussing their advantages, disadvantages and peculiarities. The importance and practical application of the fuzzy analytic hierarchy process method show that it is more suitable for the performance evaluation of teachers in Chinese colleges and universities than the previous four methods.
... Scholars indicate that personal mastery, trust, shared vision and psychological safety promote KAFIF (Rhaiem and Halilem, 2023). However, boundary and diagnostic control systems create a centrally structured system that controls knowledge sharing, team building and trust (Pešalj et al., 2018;Luqman et al., 2022;Masood et al., 2022). Therefore, this study considers boundary and diagnostic control systems as controlling MCS, which would not encourage KAFIF. ...
Purpose
This study aims to empirically examine the influence of management control systems (MCSs) on knowledge acquisition from innovation failure (KAFIF), which further impacts empowerment, creativity and organizational innovation. This study argues that enabling an MCS positively influences KAFIF, whereas controlling the use of an MCS negatively influences KAFIF. Further, KAFIF positively impacts empowerment, creativity and organizational innovation.
Design/methodology/approach
This study aims to create a comprehensive stimulus–organism–response (S-O-R) framework. This framework includes an MCS (belief, interactive, boundary and diagnostic) as a stimulus, KAFIF as an organism and creativity, empowerment and organizational innovation as responses. The data were gathered using an online survey administered to a sample of 321 employees working in India’s micro, small and medium enterprises and analyzed using partial least squares structural equation modeling.
Findings
The results indicate that there is no correlation between belief control and the acquisition of knowledge from the failure of innovation, interactive control has a positive association with KAFIF and boundary control has no relationship with KAFIF. Diagnostic control has a significant negative association with KAFIF. Further, this study found that KAFIF positively associates with empowerment, creativity and organizational innovation.
Originality/value
This study is among initial studies that examine the influence of MCSs on KAFIF, which impacts empowerment, creativity and organizational innovation. Further, it helps be one of the initial literature on studying KAFIF rather than innovation success.
... The importance of levers of control in an organization is often discussed in multiple business contexts. For instance, the discussion may be circular in the context of how levers of control can enable managerial performance (Hermawan, 2021), the company's performance (Baird, Su, and Munir, 2019;Baird & Su, 2017;Smith & Marx, 2022;Handoyo & Putri, 2022), its role in the strategic process (Naro & Traville, 2011), value creation (Sheehan, Vaidyanathan, and Kalagnanam 2005), product development (Bellora-Bienengräber, 2019), implementation towards corporate socially responsible activities (Laguir, Laguir, and Tchemenie 2019), performance management (Abdel-Halim & Ahmed, 2021), performance measurement (Pesalj, Pavlov, and Micheli 2018), innovation (Barros & Ferreira, 2021) but only the little discussion had been made on their contribution in behavioral control to prevent the fraudulent activities. ...
"Fraud is a worldwide concern that may jeopardize an organization’s reputation and performance. A robust control system may be put in place to prevent the issue. This paper provides a conceptual view of how the levers of control can provide a pathway to preventing fraud in an organization. Understanding the levers of control and control systems from the employee’s perspective and how employees would behave in the given situation would be advantageous to guarantee that the established control system can fulfill its intended goal. The presence or absence of employees has an impact, whether positive or negative, on an organization. Organizations can utilize the knowledge of fraud diamond theory when establishing an appropriate setting in the control levers to help prevent fraudulent activities."
... In particular, for SMEs, the managing director or CEO plays a critical position in the relationship between MCS and technological innovations. In that sense, the interactive use of MCS, particularly concerning customer relationships, promotes technological innovations in the case of SMEs (Pešalj et al., 2018). This previous study also highlighted the critical role of the CEO in balancing the diagnostic and interactive MCS continuously. ...
Previous literature showed mixed results about the impact of CEOs’ financial literacy (CFL) on small and medium-sized enterprises’ (SMEs) innovation. This relationship can be motivated by relevant variables, which are missing in the previous literature and make a difference as mediators. In this sense, based on the theoretical framework related to upper echelon theory and resource-based view, this study focuses on the mediating effect of risk-taking attitude and management control systems (MCS) variables. Empirical data from 310 SMEs gathered using a qualitative research questionnaire are analyzed using structural equation modeling methodology. Specifically, estimations are carried out considering the partial least square method. Findings show that MCS and managers’ risk attitudes fully mediate the relationship between financial literacy (FL) and innovation. Between these two mediating variables, the implementation of MCS stands out because it also enables the mediating effect of CEOs’ risk-taking in the CFL–technological innovation relationship. As the results do not support the significant direct relationship between FL and risk attitude, they confirm an indirect effect through MCS. Furthermore, based on the study findings, SMEs’ directors and owners, business associations, and public authorities can improve SMEs’ technological innovation by implementing training programs and policies to foster CFL. They can also acknowledge the interdependency between organizational factors and individual characteristics to enhance SMEs’ technological innovation.
... In the present case, the interviewees stated that this fact was due, on the one hand, to the lack of funds to carry out these measurements. This supports the results of research carried out by Pešalj, Pavlov and Micheli (2018). On the other hand, many of these owners did not perceive the usefulness or benefits of making these measurements. ...
Existing literature in the field of sustainable tourism highlights a number of barriers that impede the implementation of practices in this area. However, few studies have addressed the case of adventure tourism. Adopting a case study approach, this paper discusses a number of drivers of success identified by adventure tourism enterprise owners in Basque Country to contribute to the implementation of sustainable tourism practices. Adventure tourism has important social, economic, and environmental impacts on sustainability. The study focuses on learning how sustainable practices have changed in these companies because of the COVID-19 crisis.
La literatura existente en el campo del turismo sostenible destaca una serie de barreras que dificultan la implementación de prácticas sostenibles en esta área. Sin embargo, encontramos escasos estudios que se centren en el caso del turismo activo. A través de un estudio de caso, este trabajo analiza un número de impulsores o facilitadores de éxito, identificados por los propietarios de empresas de turismo activo en el País Vasco, que contribuyen a la implementación de prácticas sostenibles. El turismo activo tiene importantes impactos en la sostenibilidad económica, social y medioambiental. El estudio se centra en conocer cómo han cambiado las prácticas sostenibles en estas empresas debido a una crisis como la del COVID-19.
... De igual manera otra variable que inciden sobre la gestión de la organización, de acuerdo con Pešalj, Pavlov, & Micheli (2018) La gestión de la organización vista como un modelo, representa la forma como ésta se estructura para llevar a cabo sus operaciones y lograr sus objetivos, lo cual involucra los recursos tanto tangibles como intangibles de los cuales dispone o requiere la empresa, creando una relación directa con las capacidades estratégicas que se generan por las interacciones que ésta hace con los recursos, así como los aprendizajes que se dan a partir de las operaciones rutinarias y que constituyen una base para el conocimiento organizacional y para los procesos de innovación. ...
... Para el caso de las microempresas, los sistemas de medición del desempeño deben ser dinámicos y flexibles de manera a responder a las necesidades de estas empresas, pero también deben ser estructurados para promover la planificación activa (Garengo et al., 2005). En un trabajo realizado a partir de estudios comparativos llevados a cabo por Garengo et al. (2007) y Taticchi et al. (2008a;2008b), se muestra un diagnóstico detallado de las fortalezas y debilidades de cada uno de los marcos de referencia citados en las tablas 1 y 2. Las prácticas gerenciales deben permitir la interacción de los sistemas de control y deben ayudar a las organizaciones a administrar las tensiones internas para el logro de sus objetivos (Pešalj et al., 2018). Además, existen algunos modelos de gestión de calidad, que, aunque no están diseñados específicamente para medir el desempeño, actúan como herramientas de gestión del desempeño ISSN: 2344-9195 http://www.redpymes.org.ar/index.php/nuestra-revista ...
Resumen Los sistemas de medición del desempeño son ampliamente utilizados por las grandes empresas, pero muy poco difundidos en el sector de las microempresas. Estos sistemas constituyen herramientas necesarias para tomar decisiones informadas de una manera correcta y racional. El objetivo de este estudio es determinar los indicadores necesarios para medir el desempeño de las microempresas participantes. En este artículo se presenta una revisión bibliográfica sobre los sistemas de medición del desempeño y sobre los modelos específicos disponibles para las microempresas. Además, a partir de los resultados de un estudio previo sobre las necesidades administrativas de gerentes y propietarios de microempresas, se plantea un modelo adaptado para la medición del desempeño administrativo antes y después de la implementación de un sistema informático de gestión, a través de instrumentos que fueron desarrollados en base a la identificación y análisis de necesidades. Como resultado de esta investigación se obtienen 51 indicadores para 8 dimensiones a ser incluidos en el instrumento de medición para la fase previa a la implementación, y otros 23 indicadores para 5 nuevas dimensiones que son incorporadas para la medición en la fase posterior a la implementación de un sistema informático de gestión en las microempresas participantes. Palabras Clave: microempresas; gestión administrativa; medición del desempeño Códigos JEL: M1, M10 Abstract Although performance measurement systems are widely used by large companies, their use is not widespread in the microenterprise sector. These systems are necessary tools to make informed decisions in a correct and rational manner. The aim of this study is to determine the indicators needed to measure the performance of the participating microenterprises.
... Thus, international entrepreneurship requires the entrepreneurs of SMEs to maintain some level of control over their internationalisation processes (Boyd et al., 2012). However, only very few studies explore the degree to which SMEs use control mechanisms, and how they apply them (except for Pešalj et al., 2018;Broccardo et al., 2017). ...
... Prior studies have noted that MCS play a key role in managing firm strategy [61]. Simons [93, p. 5] described them as "formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities" and suggested the LoC framework as both a tool for strategic management and a theoretical framework for comprehending how these systems manage business strategy ( [81]; [77]). Accordingly, we used Simons' LoC framework [93], [94] to investigate our research questions. ...
This article empirically examines the impact of management control systems (MCS) on managing supply chain resilience (SCR) to enhance organizational competitiveness under environmental uncertainty. Drawing on the dynamic capabilities view (DCV) theory and levers of control (LoC) framework, an industrial survey has been conducted. Analyses performed on the collected data from 405 manufacturing firms reveal that the effects of MCS on SCR and organizational competitiveness depend on the nature and use of mobilized controls. Different from conventional wisdom, the study suggests that belief, boundary and interactive systems enable firms to achieve SCR and these systems have positive effects on organizational competitiveness through SCR. Moreover, interestingly, diagnostic systems seem to play no role in strengthening SCR and organizational competitiveness. The study thus argues that firms should employ the enabling characteristics of belief and interactive systems, along with the controlling features of boundary systems to manage SCR and ultimately be more organizational-competitive. The research also uncovers that environmental uncertainty positively moderates the indirect effects of MCS on organizational competitiveness through SCR. Indeed, the study indicates that firms evolving in highly uncertain and dynamic environments tend to increase the use of different MCS to generate detailed information that is essential to strengthen SCR. Overall, this theory based empirical research provides novel insights regarding how MCS would contribute to improving SCR and organizational competitiveness.
... According to the initial findings of the study, it is revealed that the impact of MCS on the financial performance of SME firms in Thailand has been significant and favorable; therefore the hypotheses have been accepted. A management control system or mechanism is an important technical system of an organization that enables the firm to collect data and then use this data to examine the performance of the company (Pešalj, Pavlov, & Micheli, 2018). The impact of MCS is so significant in the financial performance of the firm because MCS effectively controls all the aspects of the firm that generate huge benefits for the company. ...
Simons a framework of levers controls revealed that effective use and control of the management system (MCS) can significantly contribute to increased financial performance as well as operational performance. However, the main objective and aim of this research study are to evaluate the financial performance of SME firms in Thailand through the role of the effective use of management control systems. This research paper also examines the direct relationship between MCS and the financial performance of the sector. The research model of this study also investigates the mediating role of product and process innovation in improving the relationship between the financial performance of the sector and MCS. To find the impact of MCS on the firm performance this study collects most of the data from selected employees and managers of different SME firms of Thailand with the help of the survey questionnaire. The results that are calculated with the help of structural equation modeling indicate that MCS significantly influence the financial performance of the firm and also made a significant contribution in enhancing the operational performance of the sector. Furthermore, the findings of this study also demonstrate that product innovation improves the relationship between MCS and financial performance.
... Thus, international entrepreneurship requires the entrepreneurs of SMEs to maintain some level of control over their internationalisation processes (Boyd et al., 2012). However, only very few studies explore the degree to which SMEs use control mechanisms, and how they apply them (except for Pešalj et al., 2018, Broccardo et al., 2017. ...
The present chapter illuminates aspects of managerial behaviour concerning the internationalisation of SMEs in emerging markets through the lens of two related phenomena: the "illusion of control" and the "deprivation of control". The chapter takes inspiration from management control literature, which points to existing tensions in the behavioural patterns shown by managers during organisational processes. We adapt ideas from the management control literature to an international entrepreneurship context with a focus on SME entrepreneurs and their practices in an emerging market. More specifically, the chapter highlights how such entrepreneurs juggle trust and control during the internationalisation process to shape the appropriate practices and strategies for their market expansion. Based upon a case study from Norwegian SMEs with long-standing international operations in Russia, the chapter provides the following learning points: firstly, "illusion of control" and "deprivation of control" represent distinct managerial mindsets, which are embodied in the entrepreneurial practices of SME entrepreneurs. Secondly, these mindsets can be conducive to the development of their international operations in emerging markets over time when they instigate a necessary change from purely trust-based practices towards a mix of trust and control. Thirdly, the mindsets of SME entrepreneurs can also be detrimental to the growth and performance strategies in Russia when trust-based practices remain dominant over time even though important market dynamics and political-institutional changes push the entrepreneurs towards more control-based practices. The chapter concludes that SME entrepreneurs need to find an appropriate balance of trust and control in a globalised setting to avoid detrimental configurations of an "illusion of control" and to take the necessary corrections through a "deprivation of control". 2
... However, studies focused on measuring AIS success are very limited, especially in the SMEs context of the least developed countries (LDCs) such as Yemen. Pešalj et al. (2018) further observed that these enterprises had received little attention in the literature related to the use of management control systems. Other recent research has also disclosed that the investigation of IT/IS success, especially AIS in LDCs, is still very limited Aboaoga et al., 2020;Andoh-Baidoo, 2016;Homaid, 2021). ...
In today’s competitive market, SMEs need to realize that accounting information system (AIS) can enhance management control effectiveness (MCE) - one of the areas necessary for their survival and success. This paper aimed to measure the influence of AIS success on MCE among SMEs of Yemen, a less developed country, as research and knowledge are very limited in such context. Data were collected from 315 SME owners and managers via a questionnaire. SmartPLS 3 software was employed for data analysis. The results concluded positive links between AIS success and MCE. Specifically, the results revealed that AIS information quality, system quality, and usage positively impact MCE; quality of information and system are essential drivers of AIS usage and satisfaction; user satisfaction positively influences AIS usage. Interestingly, the quality of service showed to be insignificant in the context of AIS. Moreover, user satisfaction showed no significant impact on MCE. This research is deemed one of the first to introduce empirical evidence on the influence of AIS success on MCE among SMEs in Yemen, as a less developed country context.
... Although archival data are widely used to study SME and venture outcomes (for a review, refer to Soto-Simeone et al., 2020), such archival data may be subject to errors of omission and errors of commission. Errors of omission, or false negatives, in reporting of archival performance data, may stem from less developed accounting and control systems, limited accounting and financial literacy of the owners, or more generally the liabilities of newness that drive the limited availability of materially strong systems that can ensure accurate reporting (Pešalj et al., 2018). Less developed accounting and control systems may also drive errors of commission or false positives in reporting. ...
Benford's law states that in collections of numbers, the leading digit is likely to be small. Drawing on this law, which is a widely used tool in forensic accounting, we ask whether small and medium‐sized enterprises (SMEs) that violate Benford's law on the reporting of key accounting items are more likely to fail. Using a sample of 220,583 Portuguese SMEs (2010–2018), those companies violating Benford's law in reporting cash had the highest odds of failure, followed by net income, current liabilities, assets, and sales. The findings indicate that myopic strategic manipulation in financial reporting may lead to SME failure.
... Thus, international entrepreneurship requires the entrepreneurs of SMEs to maintain some level of control over their internationalisation processes (Boyd et al., 2012). However, only very few studies explore the degree to which SMEs use control mechanisms, and how they apply them (except for Pešalj et al., 2018, Broccardo et al., 2017. ...
The present chapter illuminates aspects of managerial behaviour concerning the internationalisation of SMEs in emerging markets through the lens of two related phenomena: the "illusion of control" and the "deprivation of control". The chapter takes inspiration from management control literature, which points to existing tensions in the behavioural patterns shown by managers during organisational processes. We adapt ideas from the management control literature to an international entrepreneurship context with a focus on SME entrepreneurs and their practices in an emerging market. More specifically, the chapter highlights how such entrepreneurs juggle with trust and control during the internationalisation process in order to shape the appropriate practices and strategies for their market expansion. Based upon a case study from Norwegian SMEs with long-standing international operations in Russia, the chapter provides the following learning points: firstly, "illusion of control" and "deprivation of control" represent distinct managerial mind-sets, which are embodied in the entrepreneurial practices of SME entrepreneurs. Secondly, these mind-sets can be conducive to the development of their international operations in an emerging market over time when they instigate a necessary change from purely trust-based practices towards a mix of trust and control. Thirdly, the mind-sets of SME entrepreneurs can also be detrimental to the growth and performance strategies in Russia when trust-based practices remain dominant over time even though important market dynamics and political-institutional changes push the entrepreneurs 2 towards more control-based practices. The chapter concludes that SME entrepreneurs need to find an appropriate balance of trust and control in a globalised setting to avoid detrimental configurations of an "illusion of control" and to take the necessary corrections through a "deprivation of control".
... Ramy LOC odegrały znaczącą rolę w badaniach nad MC i PM (Pešalj, Pavlov i Micheli, 2018, s. 2170. ...
This chapter provides a comprehensive literature review on the implementation of performance measurement systems (PMS). It begins by tracing the history of management accounting and control systems, explaining the evolution towards modern, integrated PMS. The discussion continues by highlighting key features of popular PMS models as well as their strengths and weaknesses.
Purpose
This study presents evidence of the role of performance measurement and management (PMM) in sustainable supply chain governance. This study tests a model hypothesizing whether it is the PMM itself or the mediating effect of supply chain governance that is essential for both business and sustainability performance.
Design/methodology/approach
This study builds on a survey of 274 SMEs in Finland.
Findings
The findings indicate that PMM does not directly contribute to SMEs’ business or sustainability performance. Supply chain governance mediates the relationship between PMM and business performance. Business performance also enhances sustainability.
Practical implications
These findings can guide managers in managing company relationships with customers and suppliers. The mediating role of supply chain governance highlights the potential of PMM to enhance performance. Without supply chain governance, the PMM, while efficient in traditional business practices, may lose its effectiveness because of the pressure to advance sustainability values within firm operations.
Originality/value
The role of PMM in enhancing supply chain sustainability is frequently overlooked in the existing research, necessitating an empirical evaluation of PMM’s impact on supply chain sustainability. This study addresses this gap by focusing on the SME context, where the pressure to adopt sustainable practices is increasing, yet SMEs employ PMM less frequently than larger firms.
This research explores in depth the non-financial performance measurement mechanism at one of the private universities (PTS) in Bali Province, including the supporting and inhibiting factors in implementing this mechanism. This research is a qualitative research with a case study approach. Institutional theory is used as the main theory of research and is correlated with the levers of control framework. Data was collected by interviews and document analysis and analyzed using narrative, content and discourse analysis methods. The results show that PTS is categorized as a highly regulated institution that creates legitimacy, which is the focus of institutional theory. In the levers of control framework, supporting and inhibiting factors for this mechanism are identified through belief systems, boundary systems, diagnostic control systems, and interactive control systems. This research provides an overview of the mechanism for measuring non-financial performance in private universities which has not been carried out in much previous research.
The motivation behind this work was to explore the management accounting practices in Small Medium Enterprices (SMEs) in Indonesia, using primary data captured across Jakarta, Bogor, Depok, Tangerang and Bekasi (Jabodetabek). The research compiled primary data using personally administered questionnaries. Using 185 completed questioneries from respondents. PLS was used to perform analysis of the research, with uniqnes of financial resources and technological literacy as moderating variables. This research indicate three interesting findings that are in line with previous researchs. The budgeting system, performance measurement system and strategic management accounting influence firm performance positively. While the technology literacy and financial resources fail to strengthen their influence towards firm performance. Costing system and decision support system do not influence firm performance, and further technology and financial resource were not able to make the influence strengthened.
For years, problems related to health-care efficiency have been at the top of the priorities of many hospitals systems and governments. The growing cost of health care, and particularly hospitals, is a significant factor in the increasing pressure for improvement of hospitals’ efficiency while maintaining a high quality of services. Hospitals are recognized as organizations in which waste, unnecessary administrative burdens, failures of care coordination, failures in execution of care processes, and even fraud and abuse are frequently identified as causes.
Adoption of management control as a response to hospital problems is consistent with the conviction that control is a critical management function that has the greatest impact on organizational performance. Research proves that the lack of adequate control, adapted to modern organizational solutions, causes many harmful consequences, such as faulty services, dissatisfied patients and employees, inability to effectively compete on market, low flexibility and innovativeness, and, consequently, poor performance of the organization.
This book comprehensively presents issues related to management control and develops a breakthrough theory about management control in hospitals. It is the result of many years of research and outlines the concept of control and related theories, which are discussed in detail, taking into account the unique characteristics of medical services, the health-care market, and hospitals as public organizations.
Research has shown that the main elements of management control in hospitals are information systems, diagnostic control, interactive control, innovativeness, manager’s trust in physicians, and perceived uncertainty. And that proper relationships between these elements positively influence the hospital’s performance. This book describes how the success of the entire control process is based on the hospital’s top management and its interaction with clinical managers, department heads, and directors of other medical departments as well as clinicians. After reading this book, the implementation of the solutions suggested will help hospitals improve their performance, including the quality and effectiveness of the provided medical services and patient care.
The use of technology can assist microenterprises in increasing their productivity, competitiveness, and effectiveness, as well as improving customer satisfaction. The goal of this study was to compare the administrative performance of participating microenterprises before and after implementing a computerized management system. Thirty-two microenterprise owners and managers were selected for this case study and participated in four phases of the action research method: an exploratory phase to identify needs, a planning phase during which the first performance measurement was conducted, an implementation phase, and finally a post-implementation evaluation phase in which a new performance measurement was performed. Based on the specific needs identified in the exploratory phase, a tailor-made management software was designed and implemented in the participating microenterprises. The Student’s T-test results show a statistically significant positive change. Most of the participants agree that the implementation has contributed to a significant improvement in administrative tasks and processes, making their overall work more efficient, more accurate and with greater speed. This indicates that a correct implementation of information and communication technologies based on specific needs has a positive impact on the administrative performance of microenterprises. The method used in this study could be useful for successful technology adoption in similar organizations.
Purpose
The paper is a proof of concept (PoC) intervention study aimed for developing performance management (PM) practices in manufacturing small and medium-sized enterprises (SMEs) with the longer-term aim enabling the SMEs to improve their productivity. The intervention was designed and deployed by a collaborative quartet of academics, management consultants, accountancy firm and a commercial bank manager.
Design/methodology/approach
The paper firstly musters a set of initialising PM practices aligned to productivity improvement. These are utilised to design a knowledge transfer intervention for deployment with a set of manufacturing SMEs incorporating some associated productivity tools. The evaluation of the intervention utilised a case study approach founded on a logic model of the intervention to assess the development of the PM practices.
Findings
The intervention contributed to a partial development of the mustered practices and the productivity diagnostic based on the multi-factor productivity (MFP) abstraction and a data extraction protocol had the strongest impact. The study revealed the importance of the three interlaced factors: Depth of engagement, feedback opportunities and the intervention gradient (the increase of independent action from the participating SME's and the diminishment of the external intervention effort).
Research limitations/implications
The case study is based on a limited number of individual SME's, and within just the manufacturing sector.
Practical implications
SME businesses will require a more sustained programme of interventions than this pilot to develop PM capability, and depth of engagement within the SME is critical. Professional stakeholders can be utilised in recruitment of firms for intervention programmes. Business can start developing PM capability prior to PMS implementation using the tools from this programme.
Originality/value
The productivity diagnostic tool, based on a synthesis of MFP and the performance pyramid, an array of potential initialising practices for PM capability and discovery of potential mechanisms for PM practice development.
Książka kompleksowo prezentuje zagadnienia związane z kontrolą menedżerską w szpitalach publicznych. Wdrożenie wskazanych w opracowaniu rozwiązań pomoże szpitalom poprawić uzyskiwane wyniki, w tym jakość i efektywność dostarczanych usług medycznych, a co za tym idzie – zapewnić lepszą opiekę zdrowotną pacjentom.
Publikacja jest rezultatem wieloletnich badań w polskich i zagranicznych szpitalach. Autor przyjął założenie, że powodzenie całego procesu kontroli opiera się w znacznym zakresie na dyrektorze i jego prawidłowej interakcji z menedżerami średniego szczebla, czyli kierownikami (ordynatorami) oddziałów szpitalnych i innych działów medycznych oraz profesjonalistami medycznymi.
Szczegółowo omówiono koncepcję kontroli i związane z nią teorie, uwzględniając cechy rynku ochrony zdrowia, usług medycznych i szpitali jako organizacji publicznych. Przeanalizowano również główne elementy kontroli menedżerskiej i ich wzajemne relacje oraz ich związki z wynikami – w tym finansowymi – szpitali publicznych.
Publikacja jest przeznaczona zarówno dla menedżerów ochrony zdrowia, jak i dla pracowników naukowych oraz studentów kierunków związanych z zarządzaniem w placówkach medycznych.
Purpose
Although there is a growing research stream on Performance Measurement and Management Systems (PMMS) in Ecosystems literature, current research offers limited theoretical insights into how PMMS deal with two types of strategies in uncertain ecosystems: ecosystem-based strategy – EBS (at the focal firm level) and ecosystem strategy – ES (at the ecosystem level). This study aims at identifying how PMMS are employed to deal with different types of strategies in uncertain ecosystems.
Design/methodology/approach
The authors employed an inductive, rich multiple case approach in five focal firms with platform ecosystems. Data collection involved multiple sources of information (primary and secondary data), combing retrospective and longitudinal perspectives. Data analysis combined replication and comparison logic with coding.
Findings
This study identifies four major distinctive dimensions of Ecosystem PMMS under uncertainty: (1) Integrative Performance (considering the different ecosystem actors’ performance), (2) Interdependence Performance (mutual, yet not necessarily convergent amongst ecosystem partners), (3) Regulative Performance (paradoxical in nature, having to cope with both flexibility and stability) and finally (4) Phased Learning Performance (non-linear).
Research limitations/implications
Our primary contribution is a new framework for PMMS literature: a performance measurement and management system for dealing with strategies in ecosystems. This framework enables managing performance regarding both types of strategies (EBS and ES) and their interplay in uncertain ecosystems.
Practical implications
The ecosystem management requires focal firms to measure and manage the overall ecosystem’s performance, and it varies according to the type of strategy adopted in each case. Our framework provides dimensions that guide firms to build and implement PMMS for an ecosystem consistent with the ES. Therefore, it may improve performance, especially in uncertain business contexts.
Originality/value
The findings enrich PMMS literature in an ecosystem context related to the ES in uncertain environments.
This study aims to carry out a bibliometric mapping of the scientific production built around organizational tensions, one of the central subjects of the international management literature. With the help of the Biblioshiny software (RStudio), a bibliometric analysis of the publications indexed in Scopus during the last 20 years was performed. The main results indicate an expected growth of academic production in the last five years. There is a predominance of qualitative and theoretical research, covering almost all analyzed studies. In addition, the work presents the most influential authors, countries, journals, and articles, highlighting motor and fundamental themes, trend topics, gaps, and research opportunities in the investigated field.
Si au premier stade de développement, les PME sont une projection de leurs dirigeants fondateurs, le contrôle et la coordination sont réalisés par le biais d’interactions fréquentes et informelles. La présente recherche objective de mettre en évidence la nature du pilotage par différents modes de contrôle au sens d’Ouchi (1980). La démarche est qualitative exploratoire sur un échantillon de cinq PME de divers secteurs d’activité. Les résultats mettent en évidence trois modes d’organisation et un contrôle bivalent dominé par le contrôle bureaucratique suivit du contrôle par le marché. Plus il y a existence de promiscuité, absence d’organigramme plus le contrôle clanique s’impose.
The ability to transfer knowledge effectively in the networks of small and medium-sized firms (SMEs) is paramount for supporting firm competitiveness. Our research is the first one that explores the joint effect of trust and control mechanisms on knowledge transfer in the case of networks of SMEs. We use a multiple case study approach based on six Italian networks of SMEs. We analyse the joint impact of different ethical based trustworthiness factors—namely benevolence and integrity—and the levers of control (LOCs)—namely, belief, boundary, diagnostic and interactive LOCs—on knowledge transfer between SMEs in networks. We find that trust substitutes for the implementation of boundary, diagnostic, and belief tools, while it works jointly with interactive tools in order to support knowledge transfer. These insights not only provide a rich foundation for follow-up research, but also inform SME managers about how to increase the effectiveness and efficiency of knowledge transfer with their network partners.
Purpose
The purpose of this paper is to examine the influences of performance measurement (PM) on not-for-profit (NFP) organizations’ stakeholders by studying how PM practices interact with understandings of legitimate performance goals. This study invokes institutional logics theory to explain interactions between PM and stakeholders.
Design/methodology/approach
An in-depth case study is conducted in a large NFP organization in the UK. Managers, employees, and external partners are interviewed and observed, and performance-related documents analyzed.
Findings
Both stakeholders and PM practices are found to have dominant institutional logics that portray certain goals as legitimate. PM practices can reinforce, reconcile, or inhibit stakeholders’ understandings and propensity to act toward goals, depending on the extent to which practices share the dominant logic of the stakeholders they interact with.
Research limitations/implications
A theoretical framework is proposed for how PM practices first interact with stakeholders at a cognitive level and second influence action. This research is based on a single case study, which limits generalizability of findings; however, results may be transferable to other environments where PM is aimed at balancing competing stakeholder objectives and organizational priorities.
Practical implications
PM affects the experience of stakeholders by interacting with their understanding of legitimate performance goals. PM systems should be designed and implemented on the basis of both their formal ability to represent organizational aims and objectives, and their influence on stakeholders.
Originality/value
Findings advance PM theory by offering an explanation for how PM influences attention and actions at an individual micro level.
Purpose – The purpose of this paper is to present a framework for improving innovation capability through performance measurement in small- and medium-sized enterprises (SMEs). The development of an organisation’s innovation capability is considered increasingly important in the current literature. Developing such capability is essential, as innovation plays a key role in the survival and growth of organisations. A review of current literature highlights the need for a framework on the development of innovation capability, especially in SMEs.
Design/methodology/approach – A literature review was used to form an understanding of previous work in the research area. Previous literature was used to define the key concepts and further to build the conceptual framework.
Findings – As a result of the study, a framework for improving innovation capability through performance measurement in SMEs is presented. Key issues that must be addressed are highlighted and discussed.
Practical/implications – The paper contains suggestions for improving innovation capability through performance measurement. Using the results of this study, practitioners can enhance their innovation capability by measurement and by taking better account of different situations regarding the development of innovation capability. The framework clarifies the issue of how innovation capability and its determinants can be managed through measurement, and therefore it assists especially SMEs in their attempts to cope with the increasing need for innovation as an asset of their business performance.
Originality/value – There are very few examples in the current literature of frameworks for the issue, especially for SMEs. The role of performance measurement in developing innovation capability is also ignored in the current literature. The paper is relevant for academics, as it clarifies the existing body of knowledge and provides a platform for future research.
During the last two decades, the use of the BSC has been widely spread in all sectors such as manufacturing and services; small and large firms; public and private sector. The idea of this paper is to investigate the contribution made by the Balanced Scorecard in both large firms and SMEs. This paper critiques the Balanced Scorecard from different points of view such as generations of the BSC, performance measures used, benefits of using BSC, scope of BSC, the design of BSC and strategy deployment. Finally, these different points of view were analyzed in order to reflect the implementation and application of BSC in large firms and SMEs.
The Balanced Scorecard (BSC) is a performance measurement and strategic management system which appearssuitable for use by all types and sizes of business. The BSC’s greatest strength for most businesses comes fromits innate ability to integrate financial and non-financial measures together by measuring both strategic andbusiness performance across four interrelated perspectives. Many studies have shown that the BSC can besuccessfully implemented within large-scale companies and organizations. However, there is limited empiricalevidence regarding the use of the BSC within small companies. This study adds to the existing literature byreporting the results of a comparative investigation of BSC awareness and use within small companies located inthe UK and Cyprus. In addition, the study examines the reasons for non-adoption by small companies andwhether these companies use performances measures that are similar to those typically contained within the BSCmodel. The research data was collected from self-completed questionnaires that were distributed to 500companies in the UK and Cyprus. The findings of the survey suggest that the majority of small companies,especially in the UK, are unaware of the BSC, and consequently levels of BSC usage are extremely low. Certainrespondents believed that BSC is an unsuitable tool for small companies and that its implementation is beyondthe resources available to such entities. However, the findings also suggest that even though very few smallcompanies actually use the BSC, many such companies appear to use performances measures and indicatorssimilar to those typically included within a BSC model.
Performance measurement and management (PMM) is a management and research paradox. On one hand, it provides management with many critical, useful, and needed functions. Yet, there is evidence that it can adversely affect performance. This paper attempts to resolve this paradox by focusing on the issue of “fit”. That is, in today's dynamic and turbulent environment, changes in either the business environment or the business strategy can lead to the need for new or revised measures and metrics. Yet, if these measures and metrics are either not revised or incorrectly revised, then we can encounter situations where what the firm wants to achieve (as communicated by its strategy) and what the firm measures and rewards are not synchronised with each other (i.e., there is a lack of “fit”). This situation can adversely affect the ability of the firm to compete. The issue of fit is explored using a three phase Delphi approach. Initially intended to resolve this first paradox, the Delphi study identified another paradox – one in which the researchers found that in a dynamic environment, firms do revise their strategies, yet, often the PMM system is not changed. To resolve this second paradox, the paper proposes a new framework – one that shows that under certain conditions, the observed metrics “lag” is not only explainable but also desirable. The findings suggest a need to recast the accepted relationship between strategy and PMM system and the output included the Performance Alignment Matrix that had utility for managers.
This paper builds on principles and techniques developed in measurement science, as currently understood in physical sciences and engineering, to improve the theory and practice of performance measurement. To do so, it firstly discusses three fundamental positions on measurement, characterized as metaphysical, anti-metaphysical and relativistic. Subsequently, it lays the foundations of a pragmatic epistemology of measurement in both physical and social sciences. Finally, these insights are integrated through the examination of possible advances in both the theory and practice of performance measurement in organizations.
The role of Performance Management (PM) systems has become crucial for steering Small-Medium Enterprises (SMEs) to successfully compete during the ongoing critical economic transition. To improve decision-maker strategic learning processes, traditional PM frameworks need to be combined with System Dynamics (SD) modeling. This paper shows how to design and use a Dynamic Performance Management (DPM) approach to assess and support SMEs competitiveness. The emerging framework is applied to a real case of a small business to analyze the empirical effectiveness of the approach hereby suggested.
This paper contributes to the research on management control systems (MCS) in product development (PD) by exploring the performance effects and the interplay of the levers of control (LOC), i.e., interactive, diagnostic, beliefs, and boundary control systems. We use data from a survey of 468 senior managers from the manufacturing industry and identify the direct and indirect effects of the LOC on PD performance and organizational performance. Therefore, we first scrutinize the possible types of interplay of the levers by comparing by structural equation modeling a base model of unrelated LOC (additive model) with (a) a model of mutual association of LOC (interdependence model), (b) a model of joint use of LOC (interaction model), and (c) a combined model of mutual association and joint use of LOC (combined interdependence/interaction model). The results show that the interdependence model is the most suitable in terms of fit to the data and parsimony, providing evidence of the fact that the LOC move together and influence PD performance and organizational performance both directly and mediated through each other. Interestingly, PD performance is positively affected by both the beliefs system and the diagnostic use of performance measures, as these LOC have a significant direct effect and generate the largest total effects on PD performance. However, the boundary system and the interactive use of performance measures, the last being praised in previous literature for its suitability for PD, have no significant direct effects, show lower total effects than beliefs and diagnostic control systems, but have rather meaningful indirect effects on PD performance. These results hold across different industries and firm sizes. The paper contributes to research and practice by uncovering the interdependence of the LOC in PD, thus clarifying the role of each of the levers for PD performance and organizational and therefore providing suggestions for a more successful design of LOC for PD. Furthermore, it directs the attention of researchers to the consequences of potential misspecifications of LOC models.
Recent research has indicated that the degree of strategic planning in organisations is likely to have a direct impact on business performance and business evaluation. However, these findings leave small and medium-sized businesses (SMEs) in particular, with the challenge of matching the requirement for an improved strategic planning processes with the competitive advantage associated with being a "simple" and highly responsive organisation. In response to that challenge this paper discusses the potential benefits to SMEs in adopting the Balanced Scorecard methodology and the underlying management processes most relevant to SMEs. It also makes observations about how use and value may differ between Balanced Scorecard application in large and smaller enterprises.
This article proposes an analytical framework for conceptualising performance management reviews (PMRs). Drawing on multiple literatures, the article applies Pettigrew et al.'s (Pettigrew, A., Whipp R., and Rosenfield R., 1989. Competitiveness and the management of strategic change processes. In: A. Francis, and P.K.M. Tharakan, eds. The competitiveness of European industry: country policies and company strategies. London: Routledge) framework to develop our understanding of the context, process and content of PMR. The process elements of PMRs are the levers for managerial intervention as they determine the immediate outcome of PMR. They accomplish this task by acting on the content elements, transforming the subject of PMR into specific outcomes. The scope of the intervention, however, is constrained by factors in the organisation's context. This framework sheds light on various functions of PMRs, most notably strategy implementation.
There is an ongoing debate within the academic literature about the value of the business plan in the development of the small firm. On closer inspection of the research, there appear to be clear benefits in the use of business planning as a process within the smaller business. This is in contrast to the production of a business plan as an output focused predominantly on convincing and acquiring resources from other organisations and individuals. As a process, business planning can be both formal and informal. It is also focused on understanding and responding to the context within which the business operates. Strategic awareness capability, as both a bundle of activities and a core competence, helps to make sense of this context, and serves as a means of managing interactions between the firm and its environment. It also allows for a more sensitive reading of the limitations and strengths of the planning process in markets that are, for the small business, generally unpredicatable and complex. When combined, strategic awareness capability and planning effectiveness can be used to develop a typology of business types that provides insight into the processes by which business development can be supported. In addition, strategic awareness capability can be considered a core competence of the small business and conceptualised in terms of different levels of experience, and expertise. As a result, small firms with varying levels of experience face different challenges and needs when using and developing strategic awareness capability.
Issues in the area of performance management and management control systems are typically complex and intertwined, but research tends to be based on simplified and partial settings. Simplification has made the work easier to carry out, but it has come at the price of increased ambiguity and conflicting findings from different studies. To help mitigate these issues, this paper puts forward the performance management systems framework as a research tool for describing the structure and operation of performance management systems (PMSs) in a more holistic manner. The framework was developed from the relevant literature and from our observations and experience. In particular, it elaborates the 5 questions of Otley's [Otley, D., 1999. Performance management: a framework for management control systems research. Management Accounting Research 10, 363–382] performance management framework into 12 questions and integrates aspects of Simons’ levers of control framework.Anecdotal evidence suggests that the extended framework provides a useful research tool for those wishing to study the design and operation of performance management systems by providing a template to help describe the key aspects of such systems. It allows an holistic overview to be taken while making this a feasible task. The paper uses material from two field studies to illustrate how the framework can be used to provide an overview of the major performance management issues within an organization.
The main purpose of this paper is to develop a conceptual framework for understanding the literature on the consequences of contemporary performance measurement (CPM) systems and the theories that explain these consequences. The framework is based on an in-depth review of 76 empirical studies published in high-quality academic journals in the areas of accounting, operations, and strategy. The framework classifies the consequences of CPM into three categories: people's behaviour, organizational capabilities, and performance consequences. This paper discusses our current knowledge on the impact of CPM, highlighting inconsistencies and gaps as well as providing direction for future research.
Organisations devote time and effort to the development of strategic performance measurement (SPM) systems. Many articles have been written on how to design and implement this type of system. However, few studies have addressed the issue of why some organisations are better able to “manage through measures” than others. Why do some organisations struggle to ensure that action follows measurement, whilst others systematically use their metrics to inform their decision-making processes, and their subsequently actions? Specifically, it is unclear what critical factors play a role in enabling organisations to effectively use their SPM system. To gain an understanding of these factors, 24 practitioners were interviewed. This paper presents the analysed evidence from those interviews and its implications for practice.
Purpose
Scholars in the field of performance measurement tend to use the term business performance measurement (BPM) systems without explaining exactly what they mean by it. This lack of clarity creates confusion and comparability issues, and makes it difficult for researchers to build on one an each other's work. The purpose of this paper is to identify the key characteristics of a BPM system, by reviewing the different definitions of a BPM system that exist in the literature. This work aims to open a debate on what are the necessary and sufficient conditions of a BPM system. It is also hoped that a greater level of clarity in the performance measurement research arena will be encouraged.
Design/methodology/approach
The performance measurement literature is reviewed using a systematic approach.
Findings
Based on this research, a set of conditions of a BPM system has been proposed from which researchers can choose those which are necessary and sufficient conditions for their studies.
Research limitations/implications
The analysis in this paper provides a structure and set of characteristics that researchers could use as a reference framework to define a BPM system for their work, and as a way to define the specific focus of their investigations. More clarity and precision around the use of the BPM systems phrase will improve the generalisability and comparability of research in this area.
Originality/value
By reviewing the different definitions of a BPM system that exist in the literature this paper will hopefully stimulate a debate on the necessary and sufficient conditions of a BPM system and encourage a greater level of clarity in the performance measurement research arena.
Describes research undertaken to evaluate the appropriateness of strategic performance measurement (PM) system development processes for small- and medium-sized enterprises (SMEs). An evaluation is undertaken of ten PM approaches found in the literature. To facilitate this evaluation a typology is presented which synthesises current theory. This evaluation resulted in the identification of a process, based on its congruency to the theoretical model, which is used for an empirical investigation. Empirical data from SMEs is collected and analysed using the typology. This indicates a discontinuity between current theory and the requirements of practitioners in small companies. The paper concludes with a number of recommendations to facilitate the development of appropriate PM processes for SMEs.
This paper addresses issues met when designing, implementing, using and continuously updating performance measurement systems in manufacturing companies. The paper develops, from theory, a framework for analysing the implementation of a performance measurement system and uses this framework to interpret three longitudinal case studies. The paper concludes that specific processes are required to continuously align the performance measurement system with strategy. When these processes are combined with a well defined model of strategic success, the measurement system can enhance the strategic management process by challenging the assumptions and the strategy itself.
It is argued that many businesses fail to achieve their growth potential because of the way people are managed. A key factor to consider when identifying a companys growth potential is the founding entrepreneurs willingness and capacity to cope with softer management issues: people, style, culture and values. To successfully grow their businesses, many founding entrepreneurs are required to learn how to reshape their company culture and adopt somewhat different approaches to leadership. Referring to their wider longitudinal research and consultancy work with over thirty companies and two case studies, the researchers report on their findings when working with top team managers to stimulate their personal learning and cultural change within their organisations. Firstly, it is argued that many businesses fail to grow because many founding entrepreneurs and top managers are unwilling to admit they need to reshape the company culture and/or adopt new ways of managing people at an early but critical point in the companys history. Secondly, it is argued that interventions to stimulate the professional development of managers should occur early in the life of a firm and before negative aspects of the otherwise rapidly evolving organisational culture and leadership behaviour assume dominance.
Purpose
– Existing research evaluating the effect of performance measurement (PM) on performance produces conflicting results, indicating that the effect is poorly understood. This paper aims to address this problem by proposing a theoretical model of the effects of PM on performance.
Design/methodology/approach
– The paper reviews the PM and MCS literature, extracting the factors that help to explain the effect of PM on performance. Then it applies the organizational routines perspective as an analytical lens to tie these factors into a coherent explanatory model.
Findings
– A theoretical model shows that PM has three distinct effects on the organizational processes that deliver performance – the trigger, guidance, and intensification effects.
Originality/value
– The paper employs the organizational routines perspective, moving beyond the description of the effects of PM on performance to offer a theoretical model explaining these effects. As such, it responds to a number of contemporary challenges in the PM field – most importantly, the broad need for a solid organizational foundation for the studies of PM and the explanation of the mechanism through which PM affects organizational performance.
Purpose
The literature recognises the importance of the interplay between performance measurement, performance management, employee engagement and performance. However, the nature of this phenomenon is not well understood. Analysis of the literature reveals two dimensions of organisational control, technical and social, that are used to develop a conceptual framework for studying this phenomenon.
Design/methodology/approach
We conducted explorative action research involving pilot and control groups from two departments of a UK bank.
Findings
We show that an intervention on the social-controls has led to changes in technical-controls of the performance measurement system resulting in significant improvement in employee engagement and performance.
Research limitations/implications
The research was undertaken with two cases from a single organisation. Further fine-grained, longitudinal research is required to fully understand this phenomenon in a wider range of contexts.
Practical implications
Our work contributes to the theory on performance measures and gives guidance on how organisations might design their performance measurement systems to enhance employee engagement and performance.
Originality/value
Our study makes three contributions. First, we introduce a new theoretical framework based the organisational control theory providing a basis for future research. Second, through nine propositions we establish a causal relationship between performance measurement, performance management, employee engagement and performance. Third, we identify a gap in knowledge concerning design of organisational controls in the context of the process that is being managed.
Both control and creativity are important drivers of organizational success (Gilson, Mathieu, Shalley, and Ruddy 2005; Hirst, van Knippenberg, Chen, and Sacramento 2011). However, they are often regarded as conflicting. We use the Levers of Control (LoC) framework to examine the relationships between a system of controls, empowerment, and creativity. Using survey data from 233 business unit managers, a structural equation model shows that the intensity of use of a LoC system of controls is positively associated with both empowerment and creativity. This suggests that the LoC system provides an environment that is rich with information and motivates employees to take action in purposeful, directed ways. This environment facilitates employees’ perception that they have the ability to take actions, make decisions, and produce novel ideas. We conclude that there is not a conflict between control and creativity per se. Rather, paradoxically, creativity can flourish in the presence of control.
- This paper describes the process of inducting theory using case studies from specifying the research questions to reaching closure. Some features of the process, such as problem definition and construct validation, are similar to hypothesis-testing research. Others, such as within-case analysis and replication logic, are unique to the inductive, case-oriented process. Overall, the process described here is highly iterative and tightly linked to data. This research approach is especially appropriate in new topic areas. The resultant theory is often novel, testable, and empirically valid. Finally, framebreaking insights, the tests of good theory (e.g., parsimony, logical coherence), and convincing grounding in the evidence are the key criteria for evaluating this type of research.
Purpose
The purpose of this paper is to extend the knowledge of the use of performance measurement systems (PMS) in situations where the benefits of both vertical and horizontal integration strategies are sought simultaneously.
Design/methodology/approach
This is a single case study, the purpose of which is to build a contextual theory.
Findings
The main results highlight three competing and partly contradictory tendencies in the development and use of PMS in organizational integration. In addition, the authors have identified features of PMS that may benefit or hinder integration. Grounded on empirical findings the paper presents a more complete theoretical framework of PMS for integration.
Research limitations/implications
The propositions of the framework need to be tested in different contexts with case and field studies or a large sample of data using statistical techniques to improve external validity. The causal relationships explored in this study may be further developed using longitudinal studies.
Practical implications
In acquisition situations there exists the need for vertical integration to control the growing complexity but at the same time for horizontal control to advance customer-centred production. Performance measurement is the key issue to examine the execution and results of such integrations.
Originality/value
Case study findings are used to develop a more comprehensive theory of PMS design and use in situations where both vertical and horizontal integration are sought. Contrary to current understandings, the central statement of this study is that horizontal organization is not an alternative to vertical organizational structure but they can be effectively coupled.
Purpose: This paper investigates the mediating role of comprehensive performance measurement systems (PMS) – i.e. measurement systems that comprise financial and non-financial indicators, and which also consist of indicators related to different aspects of an organisation’s operations – in the relationship between strategy and company performance.
Design/methodology/approach: Survey data of top managers of large European companies were collected and analysed by means of exploratory factor analyses and hierarchical regressions in order to validate the proposed hypotheses.
Findings: This research shows that different strategies lead to the use of different types of performance indicators. Also, it finds that the utilisation of a comprehensive PMS enables the implementation of both differentiation and cost-leadership strategies. Specifically, a comprehensive PMS positively mediates the effect of differentiation strategy on organisational and innovative performance, and of cost-leadership strategy on organisational performance.
Research implications/limitations: Further research could be undertaken in other contexts and consider additional factors, such as the structure, maturity and different uses of PMS, and the cost of measuring performance. Qualitative studies could examine the role of PMS in dynamic environments, as well as the evolution of PMS during strategic transitions.
Practical implications: Greater consideration should be given to the utilisation of different types of performance indicators when implementing and re-formulating strategy.
Originality/value: This study clarifies the links between strategy and performance measurement, and it is the first to identify the mediating effect of comprehensive PMS between strategy and company performance
While there is extensive management and academic literature on the topic area of high performance management internationally, research on high performance management practices in the Australian context is limited. Furthermore, research on high performance management practices has focused predominantly on large organisations and is largely a new direction for research in SMEs. This study attempts to fill some of the gaps in existing studies by considering a wide range of high performance management practices in Australian SMEs. Owing to the dearth of national data on high performance management in Australian SMEs, the results of this study are used to determine whether there is any evidence of a ‘high performing’ scenario in relation to management practices in Australian SMEs. The results, reporting a national study (N = 1435) on employee management in Australian SMEs, reveal a moderate take-up of high performance management practices. The findings by themselves do not support a ‘high’ performing scenario in relation to management practices in SMEs; however the low application of participative practices in the context of low unionization, and a low incidence of collective relations, indicates that many SMEs need a makeover if they are to meet the demands of competition. It is evident from the findings in this study that high performance practices in SMEs stand to benefit from modernisation and improvement.
This study examines the relationship between the extent of a flexible culture and the emphasis placed on the Levers of Control (LoC) Framework. We use a structural equation model to investigate whether the extent a firm emphasizes a flexible culture is related to the emphasis placed on beliefs, boundary, diagnostic and interactive controls. We also examine whether a key contingency variable, size, moderates our proposed model. Using survey data from 267 top managers of medium-sized firms, we find, as expected, that the more firms emphasize a flexible culture, the more they emphasize the use of beliefs controls. We show that this finding is robust to firm size. Thus, we conclude that the emphasis placed on beliefs control is an important control mechanism in organizations that emphasize a flexible culture. We also conclude that size moderates the associations among the control levers. Relative to the subsample of smaller firms, in the subsample of larger firms the beliefs and boundary control uses of performance measures are more reinforcing of each other while the diagnostic use of performance measures and boundary control act more as replacements for each other.
Executives know that a company's measurement systems strongly affect employee behaviors. But the traditional financial performance measures that worked for the industrial era are out of sync with the skills organizations are trying to master. Frustrated by these inadequacies, some managers have abandoned financial measures like return on equity and earnings per share. "Make operational improvements, and the numbers will follow,"the argument goes. But managers want a balanced presentation of measures that will allow them to view the company from several perspectives at once. In this classic article from 1992, authors Robert Kaplan and David Norton propose an innovative solution. During a yearlong research project with 12 companies at the leading edge of performance management, the authors developed a "balanced scorecard;" a new performance measurement system that gives top managers a fast but comprehensive view of their business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements those financial measures with three sets of operational measures related to customer satisfaction, internal processes, and the organization's ability to learn and improve-the activities that drive future financial performance. The balanced scorecard helps managers look at their businesses from four essential perspectives and answer Some important questions. First, How do customers see us? Second, What must we excel at? Third, Can we continue to improve and create value? And fourth, How do we appear to shareholders? By looking at all of these parameters, managers can determine whether improvements in one area have come at the expense of another. Armed with that knowledge, the authors say, executives can glean a complete picture of where the company stands-and where it's headed.
The impact of the Levers of Control (LOC) framework on the accounting literature is undeniably large. The framework, however, has also been criticized for being vague and ambiguous. One of the central, but unclear, concepts in the LOC framework is the notion of balance. That is, the framework holds that control systems must be in balance in order to manage competing tensions such as that found between predictable goal achievement on the one hand and innovation on the other. The goal of our study is to examine the concept of balance and to provide empirically informed insights on different balancing arrangements that exist in a cross-section of business units. We develop a survey and administer it in person to a convenience sample of business unit managers. Using responses from 217 managers, cluster analysis reveals a stable solution with four distinct patterns of balance, which we interpret using configurational thinking. We label the clusters strategic vigilance, strategic exploitation, strategic responsiveness, and strategic stability respectively, and examine organizational and contextual factors that validate and help explain the observed patterns of balance. By identifying empirical manifestations of balance, our study sheds light on one of the key concepts in the LOC framework, providing an empirically informed starting point for future theoretical analysis and interpretation.
Purpose-The 2008-2009 financial crisis has renewed concerns about managerial short-termism and its negative effects. Based on intertemporal choice theory, this chapter aims to identify the role that performance measurement and compensation systems can play in orienting managers toward building long-term performance potential in addition to achieving short-term results. Findings-The findings suggest that certain types of measures used-in particular broader, more inclusive financial indicators, risk-adjusted measures, and key nonfinancial value drivers-as well as the timing of measurement and payment of rewards can lead to reduced time discounting and a lower devaluation of the future, and consequently to a prioritized managerial attention focus on long-term company goals. Research implications-This chapter contributes to a better understanding of the institutional determinants of managerial long-term orientation and the influence of organizational systems on goal prioritization in managerial intertemporal choice processes. Practical implications-The findings have practical relevance for the design of incentive systems that aim to place an emphasis on ensuring long-term value creation. Social implications-Systems that guide managerial behavior toward the long term can help to increase economic and societal sustainability. Originality/value-Despite the emergence of more integrated performance measurement approaches, time horizon has not been in the main focus of research in the field yet. This review provides a first structured overview of the temporal effects of different elements of performance measurement and compensation systems.
Managing Business Performance offers a unique blueprint for achieving organisational excellence through improved productivity, efficiency, engagement, and morale. With a unique approach that acknowledges the human aspect of performance management, this book combines technical and social know-how to give you a solid framework for designing, configuring, and managing performance improvement initiatives with sustainable results. You'll find practical models, techniques, and tools that take you beyond management theory into advice that you can use, with clear explanations that steer you toward the customisations that would best suit your organisation. International case studies from the US, Europe, the Middle East, and China illustrate these ideas in action, providing an intimate look at how cultural differences impact management strategies, and insight into how they can be managed.
Organisational performance tools and techniques are well established, but many organisations will never realise their full benefit. This book helps you get more out of your performance strategy by showing you how the organisation's complex social nature impacts real-world outcomes, and how it can be used to drive better performance.
• Blend technical and social management strategies
• Keep people motivated and engaged
• See better results with more staying power
• Get the very best from your organisation
Performance management strategies that fail to take people into account are counterproductive. There's no better way to de-motivate, demoralise, and disengage the people upon whom the organisation depends. Sustainable success requires a blended approach that utilizes the most effective science within the art of people management, and Managing Business Performance gives you a solid foundation for better business performance strategy.
The purpose of this paper is to explore how a company which developed an
environmentally friendly innovation attempted to address diffusion issues. Specifically, the purpose is
to describe the ways in which an electric vehicle (EV) infrastructure company, in partnership with
a major car manufacturer, tried to address barriers to diffusion of an environmentally friendly
innovation during the development stage to improve the likelihood of success and lessons learned from
its failure. The study provides insights on how to incorporate information about
barriers to adoption into product/service design and on the development of organizational-level
diffusion strategy to address changes of customer’s behavior required by certain innovative
sustainable solutions. In addition, the authors speculate potential causes for more recent developments
with the technology that can serve as a lesson for future projects.
In this paper we discuss the importance of management accounting information for the owner-managers of small and medium enterprises (SMEs). We firstly, trace developments in management accounting thoughts and theories, and this is followed by the nature of SMEs and their demand for management accounting information. We then discuss the pressures on small accounting practitioners (SAPs) and their ability to meet SMEs' management accounting needs. The paper ends with opportunities, challenges and future directions for SMEs, SAPs, and researchers in management accounting and control systems (MACS).
Performance measurement (PM) systems have been popularized over the last 20 years and the operations management literature is replete with discussion of metrics and measurement systems. Yet, a comprehensive nomological network relating types of PM system uses to organizational capabilities and performance is lacking. Furthermore, there is scant empirical evidence attesting to the explanatory efficacy of PM systems as it relates to organizational performance. We view PM system uses through the lenses of the Resource Orchestration Theory (ROT) and explore specific relationships of underlying variables by relying on the Organizational Information Processing Theory (OIPT). Resting on the extant literature, we identify two types of uses which include Diagnostic Use (the review of critical performance variables in order to maintain, alter, or justify patterns in an organizational activity) and interactive use (a forward-looking activity exemplified by active and frequent involvement of top management envisioning new ways to orchestrate organizational resources for competitive advantage) and relate them along with their interaction (i.e., dynamic tension) to organizational capabilities. We further link capabilities to target performance, which subsequently impacts organizational performance (operationalized through both perceptual and objective financial performance measures). The nomological network is tested via a cross sectional study (386 Italian firms) while the efficacy of PM systems to explain organizational performance is examined by using longitudinal panel data approaches over a 10 year period. There is sufficient evidence to suggest that the use of PM systems leads to improved capabilities, which then impact performance. Contrary to the extant literature, however, we discovered that Diagnostic Use appears to be the most constructive explanatory variable for capabilities. On the other hand, in light of a longitudinal study, we also uncovered that Diagnostic Use experienced depreciating returns as far as objective financial measures are concerned. Also, when high levels of Diagnostic Use were coupled with low levels of Interactive Use, they produced the lowest levels of organizational capabilities. Conversely, high levels of both types of PM system use generated extraordinary high levels of capabilities. There is sufficient evidence to suggest that organizations cannot rely merely on Diagnostic Use of PM systems. We also learned that the effects of PM systems (measured via adaptation) fade unless high learning rates are applied. We offer detailed recommendations for future research which have theoretical as well as empirical implications.
This study aspires to stimulate the use of the balanced scorecard concept in estimation of comprehensive performance views of small companies with an intention to improve their chances of successfully fulfilling a recovery plan in legal reorganisation proceedings. The study reports results of financial and non‐financial performance views gathered from entrepreneurs and administrators of the 25 small Finnish companies that were interviewed. Companies' financial entrepreneurs than the administrators. However, both the entrepreneurs and administrators had relatively high non‐financial performance views. The data have been collected in Finland in 2008 2009.
Purpose
– This paper aims to investigate the gap between theory and practice in performance management in small and medium‐sized enterprises (SMEs) and analyse it in the light of specific SME characteristics and needs, to identify how SMEs can develop their managerial practice for effective performance management.
Design/methodology/approach
– The design of the study is based on literature review and multiple case studies. Combining both approaches and investigating a spectrum of 37 European SMEs through 232 semi‐structured and face‐to‐face interviews with managers helped the authors to provide theoretical and empirical evidence to offer a more effective performance management process for SMEs.
Findings
– The paper found that SMEs engage with a four‐stage performance management process, although there are some gaps between their practice and the complete process as recommended in literature. SMEs seem to be more focussed on internal and short‐term planning, whereas they pay less attention to long‐term planning. The main challenge for making performance management practice more effective lies in an appropriate, balanced use of strategic and operational practices and relevant measures. Therefore, managerial activities such as vision, mission and values development, internal and external communication, change management and horizon scanning represent recommended areas for improvement.
Originality/value
– The paper suggests a number of ways to improve the SME managerial practice to achieve a more balanced view of the whole performance process, which includes the mechanisms for the development and implementation of good practice in performance management.
Since the seminal article by Eisenhardt (1989), scholarly interest in case research has mushroomed in operations management and organization sciences. Volumes of methodological texts are matched with a massive amount of empirical research that seeks to develop case research as a scientific method. What is missing from this literature is a treatment of the methodological diversity of case research. In this paper, we seek to unveil this heterogeneity by describing three distinct methodological accounts of case study: theory generation, theory testing, and theory elaboration. Each approach has its own idiosyncrasies, in particular when it comes to the interplay between theory and empirics. A typical case research incorporates both existing theories and empirical data to varying degrees. In light of this heterogeneity, we re-interpret key aspects of extant contributions and discuss guidelines for future case research. We propose that ultimately, case research rigor is determined by attention to idiosyncrasy and transparency of reasoning. We conclude by arguing that we have witnessed in the past 25 years in organization research what amounts to the Renaissance of case research.
Innovation studies concentrate on factors contributing to innovation. However, governments seek clearer understanding of innovation outcomes in their appraisal of the costs and benefits of policies to promote innovation in small and medium-sized enterprises (SMEs). This study examines organizational innovation (OI) outcomes in SMEs. Based on company interviews and a mail survey, the findings reveal OI results in enhanced productivity, margin, market leadership, and working environments. However, OI does not lead to operational efficiency and employees’ retention. Organizational innovation leads to companies operating outside their core competency but does not have an adverse environmental impact. Organizational innovation has greater impact on small firms. The paper includes practical and theoretical implications.
The accounting literature frequently publishes articles that establish the adoption rates of accounting information systems, such as the Balanced Scorecard (BSC) or Activity-Based Costing, and subsequently examines the factors that drive this adoption. However, much less is known about the specific purposes for which these systems are used.In this paper, I examine the purposes for which managers use the Balanced Scorecard. Data was collected from a survey administered in 19 Dutch firms which had indicated that they used a BSC. The survey resulted in 224 responses from individual managers. Using exploratory factor analysis on Doll and Torkzadeh's [Doll, W.J., Torkzadeh, G., 1998. Developing a multidimensional measure of system-use in an organizational context. Information and Management 33, 171–185.] instrument of multidimensional MIS usage, I find that managers use the BSC for: (1) decision-making and decision-rationalizing; (2) coordination; and (3) self-monitoring.In the second step, I consider drivers of BSC usage for the three different purposes. These drivers are dimensions of evaluation style, alternative controls that are used in the organizational unit, and the receptiveness of managers to new types of information. I find that BSC usage for decision-making and decision-rationalizing purposes is driven by the degree of action controls used and manager's receptiveness to new information types. BSC usage for coordination purposes is driven by the emphasis placed on managerial evaluation of subordinates and the manager's receptiveness to new types of information. Finally, BSC usage for self-monitoring purposes is driven by the emphasis placed on managerial evaluation.
We examine the relationship between performance measurement systems and short‐termism. Hypotheses are tested on a sample of senior managers drawn from a major telecommunications company to determine the extent to which the diagnostic and interactive uses of financial and non‐financial measures give rise to short‐termism. We find no evidence to suggest that the use of financial measures, either diagnostically or interactively, leads to short‐term behaviour. In contrast, we find a significant association between the use of non‐financial measures and short‐termism. Results suggest that the diagnostic use of non‐financial measures leads managers to make inter‐temporal trade‐off choices that prioritise the short term to the detriment of the long term, while we find interactive use is negatively associated with short‐termism. We find an imbalance in favour of the diagnostic use over the interactive use of non‐financial performance measures is associated with short‐termism. Overall, findings highlight the importance of considering the specific use of performance measures in determining the causes of short‐termism.
The continuing debate on production and operations management (POM)
research has led to a new emphasis on empirical methods. Claims that,
while surveys and case research are increasingly recommended to POM
researchers, action research has been relatively neglected. The distinct
characteristic of action research is the intervention by the researcher
in the situation under study. The nature of the intervention, and of
action research outputs, differs however from consulting or from the
applications reported by APICS. Explains these differences and offers a
simple model of action research. Action research is particularly
valuable for theory building, as has been seen in the fields of
organization behaviour (OB) and management information systems (MIS),
where qualitative methods have often been employed rather than
traditional scientific methods. POM researchers can learn from the
experience of other disciplines and use action research to create new
theory. Since many POM researchers will be unfamiliar with action
research, explores some practical aspects of conducting such
investigations with illustrations from the author's own research
experience. Concludes by showing that a properly conducted action
research project can be as rigorous as other methods.
The tools to reconcile the conflict between creativity and control are discussed. These include the diagnostic control system, belief systems, boundary systems and interactive control systems. Each of these systems has a distinct purpose for managers attempting to harness the creativity of employees. Diagnostic control allows managers to ensure that important goals are being achieved efficiently and effectively. Belief systems encourage individuals to search for new opportunities. Boundary systems establish the rules of the game. Strategic control systems enable managers to focus on strategic uncertainties.
Purpose
The literature emphasizes the important role performance measurement systems (PMS) play in supporting organizational development in small and medium enterprises (SMEs). However, there are very few empirical and theoretical studies on the factors that influence performance measurement practices in SMEs. This paper aims to contribute to filling this gap using both theoretical and empirical approaches.
Design/methodology/approach
A literature review and interviews were used to identify four key contingency factors for PMS in SMEs. A qualitative research design involving a multiple case study methodology was carried out to investigate how these factors influence performance measurement.
Findings
The relationship between the contingency factors and performance measurement were formalized in four theoretical propositions. First corporate governance structure is one of the main factors influencing performance measurement adoption and use. Second, advanced information practices and advanced behaviours on the part of the people involved appear to be a necessary condition for the effective implementation and use of PMS in SMEs. Third, a change in a firm's business model seems to lead to the development of an improved PMS. Finally, the successful implementation of a PMS seems to be driven by an authoritative management style.
Research limitations/implications
Contingency factors were studied independently. Future research might investigate how these factors collectively influence performance measurement practices to make interdependence more explicit.
Practical implications
The theoretical propositions provide useful knowledge for defining a methodology and managerial tool to support performance measurement in SMEs.
Originality/value
This paper defines key contingency factors influencing performance measurement in SMEs; it contributes to clarifying how these factors could influence performance measurement practices in companies.
Notes a broad agreement that small and medium-sized enterprises (SMEs) fulfil a critical role in modern economies, and therefore their ability to survive, remain competitive and produce high quality outputs is of utmost importance at both micro and macro levels. Focuses on total quality management (TQM), a new management paradigm, which is successfully competing with the well-established paradigms such as scientific management. Argues that implementation of TQM principles can potentially help SMEs to enhance their robustness, as well as improve the quality of their final output. However, observes that, by comparison with the large organizations, SMEs have been slow in implementing TQM. Examines the differences between the characteristics of SMEs and large organizations; the relationship between the size of organization and inherent characteristics of TQM; and the effect of organization size on the implementation of TQM using deductive research. Using the case data, develops a ten-step methodology for the implementation of TQM in SMEs.
The relationship between management control systems (MCS) and the strategy process is a largely unexplored area of strategic management. This paper reports the findings of an in-depth, longitudinal case study of a major British-based organization operating within the increasingly globalized telecommunications industry. Informed by Simons' (1991, 1994, 1995) theoretical model of the strategy process–MCS relationship, the study examines the nature and extent of this relationship at middle- and lower-management levels. Of particular interest were the effects that the design and use of three groups of MCS have on the development of new ideas and initiatives. Findings suggest that beliefs systems influence managers' initiation or ‘triggering’ decisions, the use of administrative controls affects the location of strategic initiatives and may lead to the polarization of roles, and simultaneous emphasis on a range of key performance indicators can create a bias towards one set of measures and against another. Copyright © 2002 John Wiley & Sons, Ltd.