The Effect of multiple measures-based performance evaluation on managers' performance

the role of procedural fairness and interpersonal trust

Mahfud Sholihin, Ainun Na'im, Chong M. Lau

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

The objective of this study is to investigate whether multiple measures-based performance evaluation affects managers' performance; and if so, whether the effects are indirect through procedural fairness and interpersonal trust. This study hypothesizes that multiple measures-based performance evaluation has indirect effects on managers' performance through procedural fairness and interpersonal trust. In addition, it also hypothesizes that procedural fairness has indirect effects on managers' performance through interpersonal trust. In order to test these hypotheses, this study employs a path analytical model to analyze the data collected from 70 managers of various Indonesian manufacturing companies. The results indicate that the hypotheses are supported. The effect of multiple measures-based performance evaluation on managers' performance is partially mediated by procedural fairness and interpersonal trust. This means that in addition to indirect effect via procedural fairness and interpersonal trust, the use of multiple measures for performance evaluation in itself has a direct effect on managers' performance. With respect to the indirect effect of procedural fairness on managers' performance, this study finds that interpersonal trust fully mediates the effect of procedural fairness on managers' performance. Hence it can be concluded that procedural fairness has no direct effect on managers' performance.
Original languageEnglish
Title of host publicationPerformance measurement and management control
Subtitle of host publicationsuperior organizational performance
EditorsMarc J. Epstein, Jean-François Manzoni
Place of PublicationOxford, United Kingdom
PublisherElsevier
Pages235-258
Number of pages24
ISBN (Print)0762311223
Publication statusPublished - 2004
Externally publishedYes

Publication series

NameStudies in managerial and financial accounting
PublisherElsevier
Volume14
ISSN (Print)1479-3512

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