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

Abstract

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

Suggested Citation

Masschelein, Stijn, Performance Pay, Performance Measurement, and Decision Delegation in German Manufacturing Firms (December 10, 2013). AAA 2014 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2312656 or http://dx.doi.org/10.2139/ssrn.2312656

Stijn Masschelein (Contact Author)

University of Western Australia ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

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