Performance Pay, Performance Measurement, and Decision Delegation in German Manufacturing Firms
29 Pages Posted: 21 Aug 2013 Last revised: 2 May 2014
Date Written: December 10, 2013
In this paper, I examine the complementarity of performance measurement, performance pay for production workers, and delegation of decisions to production workers in German manufacturing. I argue and find that combining the three management practices yields higher financial performance than the individual contribution of each practice to financial performance. This paper is one of the first to report evidence on complimentarities between management accounting and organisational design choices for employees at the lowest level in the firm. The complementarities can explain why firms benefit from adopting a system of management accounting practices.
Keywords: delegation, incentives, performance measures
JEL Classification: M41
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