Impact of the changing business environment on performance measurement and management practices

Abstract

While there is abundant literature in the field of performance measurement systems and performance management practices (PMM), there is little research into how the current highly volatile, uncertain and ambiguous operating environment are affecting the way organisations measure and manage performance. The literature suggests that business trends are indeed affecting the way organisations are managed in general, but their effect on PMM is rarely investigated. Thus, the purpose of this paper is to explore how current business trends are impacting PMM. A literature review reveals five business trends and develops an analytical framework based on organisational control theory. This framework is then used to explore the impact of these business trends through fine-grained case studies across four diverse organisations. Findings suggest that emerging technologies enable collaborative networks creating opportunities for co-creating value while, at the same time, fostering innovation. The findings are theorised using organisational control dimensions that lead to a number of propositions concerning: how the use and purpose of PMM is changing; how strategic objectives are expressed and deployed with particular differences in strategic and turbulent environments; changes in the focus and scope of how performance is measured and reviewed. The paper contributes to existing knowledge by explaining the changing nature of PMM from an organisational control perspective and also by presenting a framework to inform future studies investigating the impact of new business trends on PMM. The paper also reveals practical insights for improving performance measurement systems and performance management practices in organisations.