Performance Management at a Distance: Plant-Level Evidence from US Census Data
We provide, to our knowledge, the first representative evidence of the relation between distance, delegation of decision-making authority and performance management for a large sample of US
manufacturing plants. We use new and comprehensive data based on mandatory responses to the Census Bureau’s Management and Organizational Practices Survey (MOPS), the Annual Survey
of Manufactures (ASM) and the Census of Manufactures (CMF) for a stratified sample of more than 30,000 US manufacturing plants, not limited to a particular industry, geography, size, or corporate type including both publicly and privately held firms. We test five hypotheses related to the management accounting tools used to manage distant plants’ performance: the use and strength of bonus and promotion incentives, the collection and provision of hard information and various characteristics of the target setting process (increased communication of targets, the use of stretch targets, targets set on company-level performance measures and the use of long-term targets). Furthermore, we find that the usage of these performance management tools increases as decision-making authority is delegated to the distant plant’s managers. Lastly, using within-plant data, we document how plant managers at a distance from headquarters who have discretionary authority incentivize their own staff.