The influence of perceived environmental uncertainty, firm size, and strategy on multiple performance measures usage

The balanced scorecard (BSC) is regarded as the most popular performance measurement system in providing a superior combination of financial and non-financial performance measures. This study empirically investigates the influence of perceived environmental uncertainty, firm size, and business strategy on the use of multiple performance measures among 120 Malaysian manufacturing firms. The balanced scorecard's four dimensions were used to operationalise the multiple performance measures. Data used in this study was obtained from mailed questionnaires sent to the top managers of randomly selected manufacturing firms. The results suggest that perceived environmental uncertainty negatively influences the extent of use of financial and internal processes measures, while prospector strategy positively influences the extent of use of innovation and learning and overall balanced scorecard ( BSC) measures. The results also reveal that analyzer strategy has a significant and positive impact on the use of time-focused customer measures, while firm size has a significant and positive impact on the use of innovation and learning measures.

[1]  R E Miles,et al.  Organizational strategy, structure, and process. , 1978, Academy of management review. Academy of Management.

[2]  L. Bourgeois.  STRATEGIC GOALS, PERCEIVED UNCERTAINTY, AND ECONOMIC PERFORMANCE IN VOLATILE ENVIRONMENTS , 1985 .

[3]  V. Govindarajan.  Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable☆ , 1984 .

[4]  Christopher John Guilding,et al.  Competitor-focused accounting: an exploratory note , 1999 .

[5]  John H. Waterhouse,et al.  A contingency framework for management accounting systems research , 1978 .

[6]  Charles K. Warriner,et al.  Organizations and their environments : essays in the sociology of organizations , 1985 .

[7]  Gregory G. Dess,et al.  Porter's (1980) Generic Strategies as Determinants of Strategic Group Membership and Organizational Performance , 1984 .

[9]  Kelvin F. Cross,et al.  Measure Up!: Yardsticks for Continuous Improvement , 1991 .

[10]  J. Hage,et al.  Theories of organizations , 1980 .

[11]  B. S. Sahay,et al.  Balanced Scorecard in Indian Companies , 2005 .

[12]  J. Hair.  Multivariate data analysis , 1972 .

[13]  Henry Mintzberg,et al.  The structuring of organizations : a synthesis of the research , 1980 .

[14]  John A. Parnell,et al.  Generic Strategy and Performance: an Empirical Test of the Miles and Snow Typology , 1993 .

[15]  P. H. Friesen,et al.  Innovation in Conservative and Entrepreneurial Firms: Two Models of Strategic Momentum , 1982 .

[16]  Lokman Mia,et al.  The Role Of Mas Information In Organisations: An Empirical Study , 1993 .

[17]  R. Sitgreaves.  Psychometric theory (2nd ed.). , 1979 .

[18]  J. Slocum,et al.  Uncertainty: Measures, Research, and Sources of Variation , 1975 .

[19]  D. Larcker,et al.  Are nonfinancial measures leading indicators of financial performance? An analysis of customer satisfaction , 1998 .

[20]  Adam S. Maiga,et al.  Balanced Scorecard, Activity-Based Costing and Company Performance: An Empirical Analysis , 2003 .

[21]  Robert W. Ruekert,et al.  Marketing's Role in the Implementation of Business Strategies: A Critical Review and Conceptual Framework , 1987 .

[22]  M. Ezzamel.  The impact of environmental uncertainty, managerial autonomy and size on budget characteristics , 1990 .

[23]  Andy Neely,et al.  A framework of the factors affecting the evolution of performance measurement systems , 2002 .

[24]  James Guthrie,et al.  Strategy, Size and Performance , 1989 .

[25]  Vincent K. Chong,et al.  Strategic Choices, Environmental Uncertainty and SBU Performance: A Note on the Intervening Role of Management Accounting Systems , 1997 .

[26]  Paul M. Swamidass,et al.  Manufacturing strategy, environmental uncertainty and performance: a path analytic model , 1987 .

[27]  Universite’LavaE.  THE EFFECT OF STRATEGY AND ORGANIZATIONAL STRUCTURE ON THE ADOPTION AND IMPLEMENTATION OF ACTIVITY-BASED COSTING * , 2003 .

[28]  J. Dutton,et al.  The Adoption of Radical and Incremental Innovations: An Empirical Analysis , 1986 .

[29]  Varun Grover,et al.  Strategic Information Systems Revisited: A Study in Sustainability and Performance , 1994, MIS Q..

[30]  Christopher S. Chapman,et al.  Reflections on a contingent view of accounting , 1997 .

[31]  A. Neely.  The performance measurement revolution: why now and what next? , 1999 .

[32]  D. Larcker,et al.  Quality strategy, strategic control systems, and organizational performance , 1997 .

[33]  Walter F. Stenning,et al.  AN EMPIRICAL STUDY , 2003 .

[34]  Michael Aiken,et al.  Organizational Structure, Work Process, and Proposal Making in Administrative Bureaucracies , 1980 .

[35]  S. Shortell,et al.  Perceptual and archival measures of Miles and Snow's strategic types: a comprehensive assessment of reliability and validity. , 1990, Academy of Management journal. Academy of Management.

[36]  Sujatha Perera,et al.  Customer-focused manufacturing strategy and the use of operations-based non-financial performance measures: A research note , 1997 .

[37]  Joan C. Woodward.  Industrial Organization: Theory and Practice , 1966 .

[38]  Anil K. Gupta,et al.  Linking control systems to business unit strategy: impact on performance , 1985 .

[39]  Lawrence A. Gordon,et al.  A contingency framework for the design of accounting information systems , 1976 .

[40]  Eric M. Olson,et al.  The balanced scorecard, competitive strategy, and performance , 2002 .

[41]  Frances J. Milliken.  Three Types of Perceived Uncertainty About the Environment: State, Effect, and Response Uncertainty , 1987 .

[42]  C. Fornell,et al.  Customer Satisfaction, Market Share, and Profitability: Findings from Sweden , 1994 .

[43]  Robert A. Simons.  The role of management control systems in creating competitive advantage: New perspectives☆ , 1990 .

[44]  Mason A. Carpenter,et al.  Top Management Teams, Global Strategic Posture, and the Moderating Role of Uncertainty , 2001 .

[45]  D. Hambrick.  Some tests of the effectiveness and functional attributes of Miles and Snow's strategic types. , 1983, Academy of Management journal. Academy of Management.

[46]  Anisya S. Thomas,et al.  THE PERFORMANCE IMPACT OF STRATEGY - MANAGER COALIGNMENT: AN EMPIRICAL EXAMINATION , 1991 .

[47]  Judith R. Blau,et al.  Ideas, Complexity, and Innovation. , 1979 .

[48]  Stanley F. Slater,et al.  Product‐market Strategy and Performance: An Analysis of the Miles and Snow Strategy Types , 1993 .

[49]  F. Gul,et al.  The effects of management accounting systems, perceived environmental uncertainty and decentralization on managerial performance: A test of three-way interaction , 1994 .

[50]  Ramji Balakrishnan,et al.  New directions in management accounting research , 1997 .

[51]  P. Khandwalla.  The Effect of Different Types of Competition on the Use of Management Controls , 1972 .

[52]  P. Khandwalla.  Effect of Competition on the Structure of Top Management Control , 1973 .

[53]  Lawrence A. Gordon,et al.  Management accounting systems, perceived environmental uncertainty and organization structure: An empirical investigation , 1984 .

[54]  Elaine Romanelli,et al.  Inertia, environments and strategic choice: a quasi-experimental design for comparative-longitudinal research , 1986 .

[55]  Barbara W. Keats,et al.  A Causal Model of Linkages Among Environmental Dimensions, Macro Organizational Characteristics, and Performance , 1988 .

[56]  J.P. Rooney,et al.  Customer satisfaction , 1994, Proceedings of Annual Reliability and Maintainability Symposium (RAMS).

[57]  C Delphine.  The impact of manufacturing flexibility on management control ... , 2007 .

[58]  R. Duncan.  Characteristics of Organizational Environments and Perceived Environmental Uncertainty. , 1972 .

[59]  J. Parnell.  New Evidence in the Generic Strategy and Business Performance Debate: A Research Note , 1997 .

[60]  Thomas W. Lin,et al.  Strategy, Choice of Performance Measures, and Performance , 2006 .

[61]  Maurice Gosselin.  The effect of strategy and organizational structure on the adoption and implementation of activity-based costing , 1997 .

[62]  P. Lawrence,et al.  Organization and environment , 1967 .

[63]  David Otley,et al.  Performance Management: A Framework for Management Control Systems Research , 1999 .

[64]  P. Varadarajan,et al.  Strategic types, distinctive marketing competencies and organizational performance: A multiple measures‐based study , 1990 .

[65]  J. Nunnally.  Psychometric Theory (2nd ed), New York: McGraw-Hill. , 1978 .

[66]  W. D. Schulte.  The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. , 2005 .

[67]  Robert A. Simons.  Accounting control systems and business strategy: An empirical analysis , 1987 .

[68]  C. C. Snow,et al.  Strategy, Distinctive Competence, and Organizational Performance. , 1980 .

[69]  Andy Neely,et al.  Performance measurement system design , 1995 .

[70]  Juhani Iivari,et al.  Why do individuals use computer technology? A Finnish case study , 1995, Inf. Manag..

[71]  Anne M. Lillis,et al.  The impact of manufacturing flexibility on management control system design , 1995 .

[72]  R. Banker,et al.  An Empirical Investigation of an Incentive Plan that Includes Nonfinancial Performance Measures , 2000 .

[73]  S. Widener,et al.  Managing Value Creation within the Firm: An Examination of Multiple Performance Measures , 2004 .

[74]  Zahirul Hoque,et al.  Linking Balanced Scorecard Measures to Size and Market Factors: Impact on Organizational Performance , 2000 .

[75]  W. Martz.  Evaluating Organizational Effectiveness , 2008 .

[76]  Zahirul Hoque,et al.  MARKET COMPETITION, COMPUTER-AIDED MANUFACTURING AND USE OF MULTIPLE PERFORMANCE MEASURES: AN EMPIRICAL STUDY , 2001 .

[77]  M. Moch,et al.  Size, Centralization and Organizational Adoption of Innovations , 1977 .

[78]  James W. Kolari,et al.  Marketing Strategy Implications of the Miles and Snow Strategic Typology , 1987 .

[79]  R. Kaplan,et al.  The balanced scorecard--measures that drive performance. , 2015, Harvard business review.

[80]  Peter. Brownell.  The Role of Accounting Information, Environment and Management Control in Multi-National Organizations , 1987 .