A Research Of The Behavioral Effects And Consequences Of Business Internal Performance Measurement

The study on performance measurement is a multi-disciplinary theme. Accounting researchers concern mainly on the construct of the performance measurement systems. Since the 1990s, development of knowledge-based economy and change of global socio-economic environment require more importance put on the intangible assets, the value of enterprise and the drivers of value. The methodology of management accounting research which developed based on practice pays more attention on the application of new management accounting technologies, such as nonfinancial measures, EVA, Balanced Scorecard and Performance Prism etc. How to establish a comprehensive performance measurement system is a popular topic in recent accounting research. While after a brief review of the history of performance measurement study process, two prominent features are shown up:Firstly, researchers put their effort on the external and enterprise performance measurement as a whole, or concern on the executives' performance measurement while ignore the study on internal performance measurement in some degree. Secondly, research achievements are manifested by the continuous innovation and improvement of the performance systems or in other words, the performance measures, while there is relatively inadequate attention on the effects and consequences of the systems and the measures. In view of this, the dissertation examined the behavioral responses to performance measurement systems balancing multiple performance measures. Behavioral accounting research was the major paradigm employed in this study which combines the use of empirical research and normative research method. The structure and main contents are as follows:According to the issue, the dissertation analyzed from four aspects including theoretical basis, core theory, empirical research and exploratory analysis which followed by progressive. Chapter one was an introduction. It introduced the backround, motivation and meaning of choosing the topic. Structure, contents and innovations were also mentioned. Chapter two and chapter three constituted the theoretical basis. Chapter two introduced and commented the referred documents related to behaviroal study. Chapter three defined the scope of the study, behavioral connotation of the concept performance measurement, set up the theoretical framework for behavioral analysis in the following chapters, which included the traditional performance measurement theories and the behavioral analytic theories. Chapter four was the core theory and an overall design, made clear of the behavior factors, paths and patterns, defined the behavioral effect variables, the behavioral response variables and the performance outcome variables. Based on chapter four, empirical research and exploratory analysis were conducted. Chapter five was the main body of this dissertation, empirically analyzed the behavioral responses to individual incentive plans balancing multiple performance measures. This dissertation employed SEM (Structural Equation Modeling) for the empirical analysis. The results showed that some hypothesis were confirmed while others were not. Chapter six belonged to the exploratory part. As far as the dual agent position was concerned, the managers were affected by the comprehensive measurement system from two angles. Chapter seven was conclusion, summarized the main ideas of this dissertaiton. Shortages and the next directions of further study were also pointed out. Conclusions from the above chapters are as follows:In chapter two and chapter three, the dissertation analyzed the concept and connotation horizontally, surveyed the development process and development features vertically, based on the referred documents, the theoretical framework was established. Conclusions of the theoretical parts are as below:firstly, performance is a basic concept. Behavior-orientation and outcome-orientation are the two ways to define performance drawn from the analysis of etymology, multiple discipline and different interpreters. As definition, performance is the quantification of the efficiency and effectiveness of past actions. Features of the concept are shown as agent-based, targeted, measurable and past. After the discussion of the relationship of individual performance, process performance and organizational performance, making clear of the category of different performance measurement, the behavioral connotation of internal performance measurement of enterprise is put forward, that is, enterprise internal performance measurement is essentially a kind of management decision-making behavior. It is the behavioral process of the evaluator to measure the efficiency and effectiveness of the evaluatee's past actions through acquisition, collation, sorting, analysis, interpretation and dissemination of appropriate data. Purpose of this measurement process is to ensure decision-making and take appropriate actions. Secondly, according to the performance measures, we can divide the development process of enterprise internal performance measurement into three stages:cost indicators, financial indicators, and comprehensive strategic indicators. Comprehensive performance measurement systems are the focus of the researchers and enterprises. Characteristics of the systems are systematic, strategic and comprehensive. Correspondingly, theoretical research emphasize the establish of the system itself and the methodology is up-bottom and based on the organization. This trend provides new directions for the further study. Thirdly, the theoretical framework is constitutive of traditional performance measurement theories and the behavioral analytic theories, which are integrated by the performance measurement system. Agent theory, stakeholder theory, budgeting theory and incentive theory are the components of the traditional performance measurement theories. Model-of-man, motivation theory and role theory are the main construct of the behavioral analytic theories. This theoretical framework is the basis for the following empirical research and exploratory analysis.This dissertation employed field study and archival study method in the empirical resarch, examined and confirmed the following conclusions by way of SEM. Firstlty, measurement diversity in incentive plan is positively correlated with the level of role ambiguity experienced by the subordinate. Secondly, role ambiguity experienced by the subordinate is negatively correlated with individual performance. Thirdly, individual performance is positively correlated with job-satisfaction. Fourthly, subordinates with higher (lower) value commitment experience lower (higher) role conflict in response to the measurement diversity in incentive plan. Fifthly, subordinates with higher (lower) value commitment experience lower (higher) role ambiguity in response to the measures diversity in incentive plan. Sixth, measurement diversity in incentive plan is not correlated with the level of role conflict experienced by the subordinate. And role conflict experienced by the subordinate is not correlated with individual performance. The reasons why the two hypothesis were not confirmed maybe attribute to the imperfect measurement models, while on the other hand, there is theoretical rationality for the results.The exploratory analysis study the managers whose position are special within an organization. Managers are evaluators and at the same time are evaluatees. According to the dual agent status, we reach the following conclusions:Firstly, as evaluatees, managerial performance requires a more comprehensive performance system which provides a broad set of measures related to the important parts of the organization, the integration of measures with strategy and valued organisational outcomes, and the integration of measures across functional boundaries and the value chain. With the comprehensive system, managers were provided with more comprehensive performance information, i.e., measures fully describe the strategic business unit's operations and link to strategy and across the value chain. So we predict that there is a positive relation between comprehensive performance measurement system and role clarity. And there is a positive relation between role clarity and managerial performance. Secondly, as evaluators, managers are restricted by the cognitive ability, decision-making ability and emotions etc, as a result, they prefer the outcome measures, financial measures, objective measures and common measures. Furtherly, subjectivity performance measurement maybe positively related to performance evaluation bias, and result in problems in personnel decisions and future incentives.This dissertation makes some contributions to discussed issues, theoretical basis and the research method. The study on behavioral responses is still immature in the performance measurement field. Introducing of the new theory and new method will urge the development of research in performance measurement. Definitely, there's a long way to go in order to improve the method concerning the sample, the measurement model etc, while it is the shortcomings that make the research progress.