طراحی سیستم اندازه گیری ـ عملکرد و تاثیر تصمیم استراتژیک کاربردی : نقش ویژگی های معیار عملکرد

Although conceptual research in the accounting literature suggests that the use of performance-measurement systems affects the influence of organizational actors, empirical evidence for this suggestion is largely limited to anecdotal evidence and a few qualitative case studies. Drawing on institutional theory, we develop predictions that link the use of performance measures to the influence of functional subunits in strategic decision making. Our research model tests the effects of two types of performance-measure use on functional strategic decision influence: (1) decision-facilitating use and (2) use for accountability. Moreover, we propose that the effects of using performance measures for these two purposes depend on the reliability and functional specificity of the measures the functional subunits use. We empirically test our hypotheses and a research question with survey data from 192 marketing directors of German firms. We find that the effect of performance-measure use on functional strategic decision influence depends on the two properties of the performance measures. We find no significant effects when these properties are not considered. However, decision-facilitating use of performance measures has a positive effect on functional strategic decision influence when the measures are specific to the functional subunit. With respect to the use of performance measures for accountability we find countervailing effects, as the effect on functional strategic decision influence is positive when the measures are more reliable but negative when they are more specific to the functional subunit. We discuss these findings in light of existing evidence and theory.

Research in managerial accounting suggests that important links exist between the use and design of accounting systems and strategic decision making within organizations (Abernethy and Vagnoni, 2004, Chenhall and Langfield-Smith, 1998, Lillis and van Veen-Dirks, 2008 and Luft and Shields, 2003). In particular, one major research stream explores how the use of accounting information relates to organizational actors’ influence on the strategic priorities of organizations. Conceptual work has studied this research issue intensively, stating, for example, that influence in strategic decision making derives from using accounting information that allows adaptation to uncontrollable events (Bariff and Galbraith, 1978 and Saunders, 1981). Other studies assert that power structures depend on accounting information to confer legitimacy on decisions and actions and to shape attitudes and beliefs about their rationality (Ansari and Euske, 1987 and Markus and Pfeffer, 1983). Surprisingly, however, only limited empirical research has followed up the rich body of conceptual spadework, and extant investigations rely primarily on anecdotal evidence and a few qualitative case studies (Abernethy and Chua, 1996, Markus and Pfeffer, 1983 and Wickramasinghe, 2006). In particular, prior research does not address two important issues. First, ambiguity remains as to what association, if any, exists between the use of accounting systems and the distribution of strategic decision influence within organizations (Abernethy & Vagnoni, 2004). Second, both conceptual and empirical investigations widely neglect the role of information characteristics for the associations in question. As information characteristics affect both decision-making quality (Ittner & Larcker, 2001) and evaluators’ judgments of performance information (Lipe & Salterio, 2000), an important question is whether the use of accounting information affects influence structures per se or whether its impact depends on specific information properties. We study these research issues in the context of the distribution of power among functional subunits in profit-oriented organizations, such as the marketing, operations, or research and development functions. These functions represent central organizational actors and they often pursue countervailing interests in important strategic decision areas (Bariff and Galbraith, 1978 and Ortega, 2003), with the primary arena of functional competition for strategic influence being the top management team, which includes the company’s most senior decision makers (Fligstein, 1987 and Jensen and Zajac, 2004). The most widely observed top management team structure entails a functionally differentiated assignment of responsibilities among the most senior executives representing each function as, for instance, the Vice President (VP) Marketing, the VP Operations, or the VP Finance (Carpenter, 2011 and Henri, 2006). In the struggle for strategic influence, the heads of each function strive to gather support for their strategic initiatives from their functional peers and from the Chief Executive Officer (CEO), who presides over the management board (Hambrick & Mason, 1984). The focal construct of our study is functional strategic decision influence, which refers to the extent to which a functional subunit, represented at the top executive level by the functional VP, has influence over the organization’s strategic priorities and the use of strategic resources (Abernethy & Vagnoni, 2004, p. 216). Functional subunits represent important organizational actors that often pursue opposing interests in important strategic decision areas (Ortega, 2003), and the question of how much a particular function can influence strategic decision making has major implications for the organization’s strategic trajectory and approach to market challenges. For instance, the R&D function might lobby for a strategic emphasis on product sophistication and quality, whereas the operations function might advocate focusing on production costs and efficiency. Drawing on institutional theory as a theoretical foundation, we propose that the use of performance measures for various purposes and with different properties in a given function may affect the functional VP’s influence over strategic decision making at the top executive level. In particular, we consider two types of performance-measure use. First, prior literature has identified a decision-facilitating demand for managerial accounting information ( Demski, 2008 and Demski and Feltham, 1976), which refers to the need for accounting information for planning and decision making. Second, investigators have found both analytical and experimental evidence for an accountability demand, which refers to the need for accounting information to document performance and contribution to organizational value ( Birnberg et al., 2008 and Evans et al., 1994). Our study investigates how the use of performance measures for decision facilitation and accountability within a particular functional subunit affects the functional subunit’s strategic decision influence. Moreover, we investigate whether and how performance-measure properties affect the associations between performance-measure use and functional strategic decision influence. We analyze two properties that seem particularly relevant in a functional context: performance-measure reliability and functional specificity. We empirically test our predictions using a cross-industry sample of 192 marketing directors of German firms. Results support our expectation that the purported effects depend on the properties of the performance measures the functions employ. While model estimations show no significant effects without taking interaction effects into account, we find evidence that the effect of decision-facilitating use of performance measures on functional strategic decision influence is positive and significant for high levels of performance-measures’ functional specificity. With respect to the use of performance measures for accountability, we find that the effect is significantly positive for high levels of reliability and negative for high levels of functional specificity. Our investigation extends the scant body of extant empirical research on the relationship between performance-measurement system design and power structures within organizations. We find that performance-measure properties play an important role that prior studies have overlooked. Further, in light of analytical and experimental support for the accountability demand for accounting information (Birnberg and Zhang, 2010, Birnberg et al., 2008 and Evans et al., 1994), our study provides evidence for the importance of the accountability demand for functional power structures, thus extending this nascent stream of empirical research to an examination in an organizational context. Finally, our study substantially broadens the empirical basis of prior research in this area of inquiry by relying on a large sample of business companies across several industries.

Although prior investigations make a strong conceptual case for an association between a function’s performance-measurement practice and its influence on strategic decision making (Markus and Pfeffer, 1983, Saunders, 1981 and Wickramasinghe, 2006), empirical research investigating this phenomenon is lacking. Drawing on institutional theory, this study analyzes how the use of performance measures for decision facilitation and accountability in the marketing function affects the function’s influence over strategic decision making. Furthermore, this investigation is the first to consider interaction effects of performance-measure properties, extending prior research in this area of inquiry that has so far neglected the role of information properties. The model was tested using a large sample of top executives across a range of industries, thus meaningfully extending extant empirics. Analysis of the main effects shows that neither decision-facilitating use nor use for accountability has significant associations with functional strategic decision influence when the effects of the properties are not considered. However, including interaction effects shows that the use of performance measures can have either a positive or a negative effect on functional strategic decision influence. We find evidence that the effect of performance-measure use for accountability is positive and significant for high levels of performance-measure reliability. On the other hand, however, the use for accountability has no effect for very low levels of reliability. These findings are consistent with the theoretical rationale of our model, which states that top executives face institutionalized expectations to account for their function’s performance and value contribution. In view of these expectations, employing reliable performance measures for accountability may enhance the function’s legitimacy and perceived image, giving functional VPs more weight in strategic decision making. However, the use of less reliable measures for accountability does not seem to confer legitimacy in the same way. With respect to the functional specificity of performance measures, the data support the hypothesized interaction effect with the use for accountability. Using performance measures for accountability has a positive effect on functional influence when the measures are less specific to the particular function and thus better reflect congruity with organizational goals. These findings echo prior accounting research, which argues that standardized measures offer more meaningful opportunities for relative performance evaluation. Managers outside a particular function may be unable to fully exploit the information found in a diverse set of measures unique to that particular function (Arya et al., 2005). Similarly, our findings are consistent with previous experimental evidence suggesting that top managers evaluating multiple subunits place more weight on measures common to many subunits than on those specific to particular subunits (Lipe & Salterio, 2000). Regarding decision-facilitating use, underlying theory does not clearly point toward the signs of interaction effects with functional specificity. Tests of these interactions show a positive interaction term, indicating that the use of more specific metrics in decision making has a positive effect. This finding lends support to the perspective that customized measures designed specifically for a particular subunit can be better targeted to the subunit’s idiosyncratic needs and are therefore more helpful in supporting the function’s decision processes (Arya et al., 2005). An alternative line of reasoning might argue that outsiders may see the use of specific performance measures in decision making as an indication of a parochial, self-centered perspective of the function’s management practices, resulting in decisions that are less congruent with organizational goals. However, we find no empirical support for this argument. A further interesting insight is that the property of reliability does not exert a significant interaction effect for decision-facilitating use. Thus, employing precise measures in decision making apparently is not required for a positive effect. Although surprising at a first glance, this finding coincides with anecdotal evidence that the use of accounting information for decision making may enhance the legitimacy of individual or group activities, regardless of the actual information value (Markus & Pfeffer, 1983). In other words, for performance-measure use in decision making to confer legitimacy, how decisions and actions were actually affected by the systems may be less relevant. Proponents of institutional theory have also noted that organizational legitimacy may occasionally derive from a superficial adoption of techniques or policies and that for some expectations of the institutional environment, a mere “ceremonial conformity” may placate potential sources of support (Meyer & Rowan, 1977, p. 340; Scott, 2001). This theoretical view might offer a possible interpretation for our results. While reliability is plausibly an important quality for measures used for accountability, which should be beyond debate (Gjesdal, 1981 and Ijiri, 1975), top managers may not attach the same importance to reliability with regard to the use for decision making. In a similar vein, prior studies in the accounting literature conducted in different functional settings argue that reliability of performance measures is less critical for decision-facilitating use because the role of behavioral risk in this context is less relevant (e.g., van Veen-Dirks, 2010). Overall, our findings provide empirical evidence that functional performance-measurement practices may affect the ability of functions’ top managers to promote strategic initiatives at the top management level. Moreover, our study provides evidence that the accountability demand for accounting information (Evans et al., 1994) plays a role for organizational power structures. However, the properties of performance measures need particular attention, as they seem to determine whether the effect of performance-measure use is positive or negative.