The Evolution of Performance Measurement Systems in a Supply Chain: A Longitudinal Case Study on the Role of Interorganisational Factors

Supply chain performance measurement systems are important because they are the central managerial mechanisms for achieving efficient and effective supply chain management. Therefore, it is relevant to add to the many conceptual contributions on the subject to explore how such systems unfold and develop in practice. The objective of the present study is to investigate how forces located outside focal firm boundaries influence the evolution of performance measurement systems in supply chains. An evolutionary and dialectic approach is applied, acknowledging that change may be the result of collective action and of opposing influences and forces. Using a longitudinal case study approach, the emergence, proliferation and reconfiguration of three varied yet interrelated performance measurement systems designed to manage a supply chain in the hearing aid industry are explored. The case shows how the evolution of performance measurement systems in supply chains may be informed by multiple influences, some of which are external to the firm. Specifically, ‘interconnectivity of performance measures’, ‘availability and ownership of performance information’ and ‘performance representations’ are all found to be important factors influencing the evolution of the observed performance measurement systems. The framework of the proposed factors here builds on and extends previous research, which has not explicitly incorporated the potential influences of external entities and the supply chain context. Thus, the findings expand our knowledge on how performance measurement systems develop over time in supply chains. With this new knowledge, managers should be better equipped to develop robust and enduring performance measurement systems in supply chains.