The effects of strategic alignment and strategic clarity on multidimensional task performance

Abstract

The alignment of a firm's performance measures with its strategic objectives is fundamental to effective management control, at least in part because performance measures and stated strategy represent separate sources of information that workers can rely on to guide their efforts. We experimentally examine the effects of strategic alignment and strategic clarity (i.e., the specificity with which strategic objectives are communicated) on workers' performance on a multidimensional task. We predict and find that alignment improves performance under a vague strategy statement but impairs performance under a clear strategy statement. These results are consistent with strategic clarity and performance measure alignment magnifying the tradeoff between conflicting performance dimensions, leading to reduced commitment to the firm's strategic objectives. Our results confirm the importance of alignment in strategic performance measurement systems and suggest a substitutive relationship with strategic communication: alignment can overcome the negative effects of strategic vagueness, and strategic clarity can help overcome the negative effects of imperfectly aligned performance measures.