The association between controls, performance measures and performance

Kevin Baird, Sophia Su*

*Corresponding author for this work

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to contribute to the contingency-based literature examining the effectiveness of the intensity of control, which represents the combined use of Simons’s (1995) four levers of control: beliefs, boundary, diagnostic use of controls and interactive use of controls. Specifically, the study examines the association between the intensity of control with multidimensional performance measures (financial, customer, learning and growth, quality and internal business processes) and organisational performance (cost, delivery and flexibility).

Design/methodology/approach: A survey questionnaire was distributed to either the chief financial officers or financial controller within 645 Australian manufacturing organisations identified in the Onesource online database. Structural Equation Modelling was used to analyse the association between the intensity of control with multidimensional performance measures, and the association between multidimensional performance measures with organisational performance. The mediating effect of multidimensional performance measures on the association between the intensity of control and organisational performance was tested using the bootstrapping with bias-correct confidence intervals method.

Findings: The intensity of control is associated with the extent of use of multidimensional performance measures with the latter found to mediate the association between the intensity of control and performance (cost, delivery and flexibility). Additional analysis suggests that the extent of use of financial and quality measures mediates the association between the intensity of controls and cost performance; the extent of use of internal process and quality measures mediates the association between the intensity of controls and delivery performance; and the extent of use of internal process measures mediates the association between the intensity of controls and flexibility performance. 

Practical implications: The findings imply that management should employ a broader perception towards the use of performance measures both as a means of supporting the implementation of controls and facilitating enhanced organisational performance.

Originality/value: The study addresses the concern raised that the existing management control systems (MCSs) literature remains “piecemeal” due to the lack of recognition of the interdependency between different controls and the inability of researchers to examine MCSs as a holistic package. Specifically, this study provides insights into how the combined use of the four levers of controls and multidimensional performance measures can enhance specific aspects of organisational performance.

Original languageEnglish
Pages (from-to)967-984
Number of pages18
JournalInternational Journal of Productivity and Performance Management
Volume67
Issue number6
DOIs
Publication statusPublished - 1 Jan 2018

Keywords

  • Intensity of controls
  • Mutidimensional performance measures
  • Organisational performance

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