| This study examines the way the decision-facilitating and decision-influencing roles of performance measurement information interact to influence managerial decision making. While there are extensive literatures addressing the normative design attributes of decision-facilitating performance measurement systems (e.g. the Balanced Scorecard literature) and the decision impacts of measures used in evaluation and incentives (e.g. the contracting literature), the two roles are rarely studied simultaneously. Using a structural equation model, we test for the information use and performance consequences of commonality between measures that facilitate decision making and those used in evaluation. We find that the degree of commonality between measures identified as decision-facilitating and those used in evaluation is significantly associated with the use of decision-facilitating measures. In turn, the extent to which decision-facilitating measures are actually used impacts on the adaptive capability of the organization and its performance. We predict moderating effects of subjectivity, information asymmetry, and decision rights allocation in performance evaluation, but find no supporting evidence. Overall the results suggest that to encourage managers to use the multiple leading, lagging, financial and non-financial performance indicators increasingly incorporated in performance measurement systems it is imperative that performance evaluations schemes are also designed to reflect these measures. To the extent performance evaluation schemes do not reflect such decision-facilitating measures it is less likely managers will use these indicators to effectively manage performance. |
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| Contact information: |
| Paolo Perego | Anna Nöteberg | | Email | Email |
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