Strategy, Choice of Performance Measures, and Performance

Posted: 2 Aug 2010 Last revised: 31 May 2011

Wim A. Van der Stede

London School of Economics & Political Science (LSE)

Chee W. Chow

San Diego State University

Thomas W. Lin

University of Southern California - Leventhal School of Accounting

Date Written: May 28, 2011

Abstract

We examine the relationship between quality-based manufacturing strategy and the use of different types of performance measures, as well as their separate and joint effects on performance. A key part of our investigation is the distinction between financial and both objective and subjective nonfinancial measures. Our results support the view that performance measurement diversity benefits performance as we find that, regardless of strategy, firms with more extensive performance measurement systems, especially those that include objective and subjective nonfinancial measures, have higher performance. But our findings also partly support the view that the strategy-measurement fit affects performance. We find that firms that emphasize quality in manufacturing use more of both objective and subjective nonfinancial measures. However, there is only a positive effect on performance from pairing a quality-based manufacturing strategy with extensive use of subjective measures, but not with objective nonfinancial measures.

Keywords: performance measurement, nonfinancial performance, subjectivity, manufacturing strategy

Suggested Citation

Van der Stede, Wim A. and Chow, Chee W. and Lin, Thomas W., Strategy, Choice of Performance Measures, and Performance (May 28, 2011). Behavioral Research in Accounting, Vol. 18, pp. 185-205, 2006. Available at SSRN: https://ssrn.com/abstract=891888

Wim A. Van der Stede (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 7955 7420 (Fax)

Chee W. Chow

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Thomas W. Lin

University of Southern California - Leventhal School of Accounting ( email )

Los Angeles, CA 90089-0441
United States

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