Is More Really Better? Environmental Uncertainty, Performance Measure Variety and Organizational Performance

Pall Rikhardsson, Stefan Wendt, Audur Arna Arnardottir, Olaf Sigurjonsson

Research output: Contribution to conferenceConference abstract for conferenceResearchpeer-review

Abstract

Purpose: Previous research shows that when environmental uncertainty rises, managers often respond by adding more performance measures. This paper evaluates this strategy by examining if more variety of performance measures also leads to increased management satisfaction with the performance measurement system and improved firm performance
Design/methodology/approach: An extensive list of performance measures was compiled and used in a web survey of the 300 largest companies in Iceland.
Findings: It is confirmed that increased environmental uncertainty leads to a higher variety of performance measures in use. No link was found between the variety of performance measures, management satisfaction and firm performance. However, there is a positive link between management satisfaction with the performance measurement system and firm performance.
Research limitations/implications: The findings suggest that it is not the variety in itself that increases management satisfaction or improves performance. Other elements of the performance measurement process such as defining performance criteria and acting on performance information are more critical.
Practical implications: Managers who intend to improve performance measurement systems should concentrate on the performance measurement process rather than only on measure variety. Furthermore, they should use measures of management satisfaction with the performance measurement system as a quality indicator as well as a predictor of value created by this system.
Originality/value: Few studies have previously linked environmental uncertainty, performance measure variety and management satisfaction with the performance measurement system and firm performance. This study evaluates a specific design strategy of performance measurement systems in this context.
Original languageEnglish
Publication date2018
Number of pages1
Publication statusPublished - 2018
EventThe 18th European Academy of Management Conference (EURAM) 2018: Research in Action – Accelerating knowledge creation in management - Reykjavik, Iceland
Duration: 19 Jun 201822 Jun 2018
http://euramonline.org/annual-conference-2018

Conference

ConferenceThe 18th European Academy of Management Conference (EURAM) 2018
CountryIceland
CityReykjavik
Period19/06/201822/06/2018
Internet address

Keywords

  • Information
  • Uncertainty
  • Performance

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