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Performance measurement systems : an examination of the influence of the contextual factors and their impact on performance with a specific emphasis on the balanced scorecard approach

Zuriekat, Majdy Issa Khalil (2005) Performance measurement systems : an examination of the influence of the contextual factors and their impact on performance with a specific emphasis on the balanced scorecard approach. Doctoral thesis, University of Huddersfield.

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    Abstract

    In an attempt to understand the performance measurement systems, this study utilises the contingency
    theory theoretical framework to examine the contingent relationships between several contextual
    factors and the usage of financial and non-financial performance measures for performance
    measurements and evaluation purposes. The contextual factors consist of business strategy,
    organisational structure, perceived environmental uncertainty, intensity of competition, organisation
    size, total quality management and just in time manufacturing approaches. This study also
    investigates the implications of fit (internal consistency) between the above contextual factors and the
    extent of performance measurement diversity usage on organisational effectiveness (i.e.
    organisational performance and level of satisfaction). Nine performance measurement categories are
    investigated including: financial, customer, operational, innovation, employee, supplier, environment,
    quality and community categories. During the 1990s and until recently, considerable publicity and
    interest has been given to the balanced scorecard approach (BSC). This study also gathers empirical
    data to investigate various issues relating to BSC approach. The major aims of the study are to
    examine how the manufacturing companies are dealing with this approach and to determine the extent
    to which the above contextual factors influence the extent of balanced scorecard usage.

    The findings are based on a questionnaire mailed to a target sample of 900 UK manufacturing
    companies with an annual sales turnover in excess of £50 million. A total of 163 usable responses
    were received representing a response rate of 19.7%. For the purpose of data analysis, the study
    utilises descriptive statistics and multivariate statistics (i.e. structural equation modelling using EQS
    5.7 and multiple regression).

    The results of the descriptive analysis show that financial, customer, operational and quality
    performance categories are extensively used for performance measurements and evaluation purposes.
    Other non-financial performance categories (i.e. innovation, supplier, employee, and environment)
    are also used but to a lesser extent. Despite the popularity of the balanced scorecard (BSC) approach,
    only a minority of companies (30%) reported using it in their performance measurement systems. The
    findings also emphasise the inconsistency between companies following the BSC approach,
    particularly the number and types of perspectives used. The results of structural equation modelling
    suggest a strong support for the cost strategy, formalisation, regulatory aspects of perceived
    environmental uncertainty, size, aspects relating to the intensity of competition and the extent of the
    use of both total quality management and just in time manufacturing approaches have a significant
    influence on the extent of performance measurement diversity usage (i.e. financial and non-financial
    performance measures). The results also indicate that the different approaches to fit utilised in this
    study (i.e. bivariate and systems approaches), based on structural equation modelling, result in
    insightful findings relating to the contingent relationships between the anticipated contextual factors,
    the extent of performance measurement diversity usage and organisational effectiveness. The results
    using multiple regression indicate that formalisation, raw material aspects of perceived environmental
    uncertainty, size and the extent of the use of total quality management significantly influence the
    extent of balanced scorecard usage.

    A distinguishing feature of this study is that it extends previous BSC studies in determining the extent
    of balanced scorecard usage. The results suggest that using financial and non-financial performance
    measures does not necessarily imply that the companies are really balanced scorecard users. This
    finding therefore raises implications for future balanced scorecard researchers, and by drawing off
    contingency theory literature, it overcomes some of the deficiencies of previous research relating to
    balanced scorecard approach. Finally, this study contributes to the literature by utilising the structural
    equation modelling method, which has several advantages over other multivariate data analysis.

    Item Type: Thesis (Doctoral)
    Additional Information: EThOS Persistent ID uk.bl.ethos.417300
    Subjects: H Social Sciences > HF Commerce
    H Social Sciences > HG Finance
    Schools: The Business School
    Depositing User: Graham Stone
    Date Deposited: 03 Jun 2009 14:05
    Last Modified: 28 Jul 2010 19:37
    URI: http://eprints.hud.ac.uk/id/eprint/4613

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