Performance Measurement Practices in Small and Medium Size Manufacturing Enterprises in Australia

Abstract

This study examines the use of financial and non-financial performance measures in small and medium size manufacturing enterprises (SMEs) in Australia. The paper argues that SMEs in general make greater use of financial than non-financial measures of performance, and also non-owner managed firms make greater use of formal measurement systems than owner-managed firms. This study is based on data collected in 2004 from a survey of 86 manufacturing SMEs and semi-structured interviews conducted with managers in eight SMEs in Western Sydney metropolitan area in Australia. The data were analysed using two sample t-tests, regression analysis and chi-square test. The study found that SMEs place a greater reliance on financial measures of performance, although with increase in size there is a tendency to make more use of non-financial measures. Also, SMEs with non-owner managers make greater use of multiple performance measures than those with owner managers. It also reveals that for planning, control, and decision making purposes, SMEs use information generated from performance measurement systems (PMSs) to varying degrees. Time and resource constraints were noted by the respondents as the main factors that inhibit effective use of PMSs.