Abstract
Performance Measurement Systems (PMS) are widely used, yet the evidence for their effect on productivity is still limited. We gather survey data describing the use of PMS by 246 manufacturing firms in Italy and match it with financial data for the study period 2003-2012. We develop a PMS score to aggregate the survey information and quantify how well a firm implemented and used PMS. We find that multinational firms are more productive than firms that only operate domestically, and that overall, the Italian manufacturing industry exhibits decreasing returns-to-scale. Further, we find many mature firms in the industry and that endogenous growth will likely lead to reduce productivity. We conclude that higher quality PMS positively and significantly correlates with higher productivity.
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