Interdependencies Between Four Attributes of Performance Measurement Systems: Diversity, Collectivity, Subjectivity, and Relativity

While existing management control research demonstrates how and why management control systems depend on each other as complements and substitutes, the present paper shows how the interdependency proposition also applies at a more disaggregated level to gain deeper insights into the inner workings of a single management control system. Specifically, this paper focuses on four attributes characterising performance measurement systems (PMSs) – diversity, collectivity, subjectivity, and relativity, and studies the attributes’ interdependencies regarding a critical control problem for PMSs: performance evaluation. Extant research already discusses the four attributes and their consequences for performance evaluation effectiveness, but primarily in isolation. The question of how the consequences of using the attributes interact when combined in performance measurement system design, that is, how the attributes depend on each other, hardly receives any attention in research. The present paper addresses this gap in research, which is critical because performance measurement system design often combines the attributes, and they frequently serve the same role in performance evaluation. The paper conducts a theoretical analysis in two steps. Based on an outline of functional and dysfunctional consequences of the four attributes related to distortion, risk and manipulation, the paper investigates the interdependencies between the attributes. By exploring the interdependencies, this paper contributes to research with more insight into the types of complementarities and substitutions that can occur between the attributes and how and why they occur. This knowledge is relevant for providing insight into a level of control system interdependencies that have received only scant attention but is critical for PMS effectiveness and underlines the importance of characterising PMSs more holistically by considering the attributes and their interactions.