Integrated Performance Measurement Research Articles

Determinants and impact of strategy-driven manufacturing accounting techniques on organisational competitiveness: a structural equation modelling approach

Purpose This study aims to investigate contextual factors affecting the deployment of strategy-driven manufacturing accounting techniques (SMAT), as well as the impact of SMAT usage on organisational competitiveness. Seven major SMAT were investigated, namely, benchmarking, integrated performance measurement, environmental management accounting, strategic costing, strategic pricing, strategic investment and life cycle costing. Design/methodology/approach By using multi-informant strategy, structured questionnaire was used to gather survey data from 129 senior accounting, finance and production personnel of publicly quoted manufacturing companies in Nigeria. Data was analysed using structural equation modelling and propensity score matching. Findings Result shows that the usage rate of the SMAT is generally moderate. Market orientation and deliberate strategy formulation are notable determinants of SMAT usage. The inability of competition intensity and perceived environmental uncertainty to notably affect SMAT usage suggests that external environmental pressure to use SMAT is weak. Practical implications Although the impact of SMAT usage on organisational competitiveness is positive and statistically significant, it is conceivable that the impact of SMAT could have been more assuming SMAT recorded extensive usage. Thus, the lack of competitiveness of manufacturing companies in Nigeria may not be unconnected to the superficial usage of SMAT. Originality/value The study contributes to knowledge in three ways. First, it extends studies on the contingency theory that contextual factors influence the adoption of management accounting innovations. Second, it exposes the contextual factors affecting the adoption of SMAT in a developing country. Third, it provides evidence on the value relevance of management accounting innovation in enhancing organisational competitiveness.

Allocating Robots/Cobots to Production Systems for Productivity and Ergonomics Optimization

Collaboration between humans and robots has great promise in manufacturing systems. The utilization of cobots in a manufacturing system can improve both productivity and ergonomics. In this paper, we study the problem of how to allocate limited cobot/robots to manufacturing systems with multiple workstations so that an integrated performance measure, considering both productivity and ergonomics is optimized. Previous work on cobot/robot allocation in manufacturing systems focus on the decomposition of tasks for a single workstation into multiple work elements, and then split them between human and robots, rather than studying multi-machine systems. To bridge this gap, we consider the allocation of cobots/robots to a multi-stage manufacturing system. Specifically, we establish an integrated performance measure and formulate cobot/robot allocation into a constraint integer programming problem. With this formulation, we obtain the optimal allocation of one available cobot/robot in simulated production systems, based on the integrated performance measure of productivity and ergonomics. Furthermore, the allocation problems of production systems with multiple cobots/robots is considered and solved with a scalable algorithm. <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">Note to Practitioners</i> —Collaborative robots and independent robots are increasingly applied to manufacturing production systems. However, how to optimally allocate both types of robots considering both productivity and ergonomics influence has not been well studied. In this article, we established a practical optimization method to allocate cobots/robots to different workstations and split the work between cobot and human in one workstation when there are multiple workstations and a limited number of available cobots/robots in the manufacturing systems. Based on various real-world scenarios, we inferred useful insights for the robot/cobot allocation problem. To deal with the computational load when the number of workstations is large, a scalable optimization algorithm is also adopted. The case study results demonstrated the effectiveness of the proposed approach.

Proposal of an innovative MCDA evaluation methodology: knowledge discovery through rank reversal, standard deviation, and relationship with stock return

Financial performance analysis is of vital importance those involved in a business (e.g., shareholders, creditors, partners, and company managers). An accurate and appropriate performance measurement is critical for decision-makers to achieve efficient results. Integrated performance measurement, by its nature, consists of multiple criteria with different levels of importance. Multiple Criteria Decision Analysis (MCDA) methods have become increasingly popular for solving complex problems, especially over the last two decades. There are different evaluation methodologies in the literature for selecting the most appropriate one among over 200 MCDA methods. This study comprehensively analyzed 41 companies traded on the Borsa Istanbul Corporate Governance Index for 10 quarters using SWARA, CRITIC, and SD integrated with eight different MCDA method algorithms to determine the position of Turkey's most transparent companies in terms of financial performance. In this study, we propose "stock returns" as a benchmark in comparing and evaluating MCDA methods. Moreover, we calculate the "rank reversal performance of MCDA methods". Finally, we performed a "standard deviation" analysis to identify the objective and characteristic trends for each method. Interestingly, all these innovative comparison procedures suggest that PROMETHEE II (preference ranking organization method for enrichment of evaluations II) and FUCA (Faire Un Choix Adéquat) are the most suitable MCDA methods. In other words, these methods produce a higher correlation with share price; they have fewer rank reversal problems, the distribution of scores they produce is wider, and the amount of information is higher. Thus, it can be said that these advantages make them preferable. The results show that this innovative methodological procedure based on 'knowledge discovery' is verifiable, robust and efficient when choosing the MCDA method.

An Exploration of Prediction Performance Based on Projection Pursuit Regression in Conjunction with Data Envelopment Analysis: A Comparison with Artificial Neural Networks and Support Vector Regression

Data envelopment analysis (DEA) is a leading approach in performance analysis and discovering newer benchmarks, and the traditional DEA models cannot forecast the future efficiency of decision-making units (DMUs). Machine learning, such as the artificial neural networks (ANNs), support vector machine/regression (SVM/SVR), projection pursuit regression (PPR), etc., have been viewed as beneficial for managers in predicting system behaviors. PPR is especially suitable for small and non-normal distribution samples, the usual cases in DEA analysis. This paper integrates DEA and PPR to cover the shortcomings we faced while using DEA and DEA-BPNN, DEA-SVR, etc. This study explores the advantages of combining these complementary methods into an integrated performance measurement and prediction model. Firstly, the DEA approach is used to evaluate and rank the efficiency of DMUs. Secondly, we establish two DEA-PPR combined models to describe the DEA efficiency scores (also called the production function) and the DEA-efficient frontier function. The first combined model’s input variables are input–output indicators in the DEA model, and the output variable is the DEA efficiency. In the second model, its input variables are input or output indicators in the DEA model, and the output variable is the optimal input indicator for input-oriented DEA or the output indicator for output-oriented DEA. We conducted positive research on two examples with actual data and virtual small, medium-sized, and large samples. Compared with the DEA-BPNN and DEA-SVR models, the results show that the DEA-PPR combined model has more vital global optimization ability, better convergence, higher accuracy, and a simple topology. The DEA-PPR model can obtain robust results for both small and large cases. The DEA-BPNN and DEA-SVR models cannot obtain robust results for small and medium-sized samples due to overfitting. For large samples, the DEA-PPR model outperforms DEA-BPNN, DEA-SVR, etc. The DEA-PPR combined model possesses better suitability, applicability, and reliability than the DEA-BPNN model, the DEA-SVR model, etc.

The Management Accounting Usage in Automotive Servitized Companies: An Initial Attempt

Purpose : Prior literature suggests a further exploration on the usage of management accounting (MA) techniques in the servitization context. Servitization is a movement in which companies consciously develop service offerings, which support their products to gain competitive advantage. There are still limited studies of this topic in the context of Indonesian manufacturing companies, thus this paper aims to provide evidence on the usage of MA in servitized manufacturing companies in Indonesia.&#x0D; Method : We employed a qualitative approach as well as a preliminary survey to a number of selected managers and accountants from four different automotive companies.&#x0D; Findings : The result shows that target costing is very crucial to the automotive manufacturing companies nowadays. We discover that competitive position monitoring, quality costing, integrated performance measurement, and brand management accounting are relevant to company’s strategic position. Therefore, we find the connection between the usage of MA and company’s strategic planning.&#x0D; Novelty : From practical point-of-view, our study provides the evidence on the usage of MA in Indonesian servitized-manufacturing business. Also, we build a framework, which represents the relationship between the MA techniques and servitization, that could benefit business through a better understanding about the interconnections between MA usage and servitization level.&#x0D; Keywords : Management Accounting; Servitization; Automotive Companies; Indonesia

Integrated performance measurement system for Slovak heating industry: A balanced scorecard approach

The prerequisite for businesses’ success, competitiveness, and non-bankruptcy is their performance. An effective performance measurement system is a suitable tool for measuring and improving business performance. The development in performance measures moved from financial measures focused on company profitability to measurement systems combining different methods, approaches, and tools. The paper aims to identify key performance indicators for Slovak heating companies based on the developed integrated performance measurement system. The analysis sampled 292 Slovak companies within SK NACE 35 (heating industry). The performance measurement system was built on balanced scorecard principles, while the least absolute shrinkage and selection operator (Lasso regression) method was used to select financial indicators. Based on the combination of the above methods, a performance measurement system framework for the analyzed sample of businesses was created. The results show that when managing performance, the analyzed businesses should focus on the following financial performance indicators: Receivables turnover ratio, Return on equity, Return on costs, Total debt to total assets, Material intensity, Labor to revenue ratio, Netto cash flow to assets, Net working capital to total assets, and Short-term liabilities to assets. When building performance measurement system based on balanced scorecard principles, financial indicators were supplemented by non-financial ones. In addition to the original balanced scorecard principles, the performance measurement system was extended by environmental constituents. Also, the paper’s deliverable combines Lasso regression and balanced scorecard principles in order to select key performance indices. AcknowledgmentThis paper is prepared within the grant scheme VEGA No. 1/0741/20 (the application of variant methods in detecting symptoms of possible bankruptcy of Slovak businesses in order to ensure their sustainable development).

One Framework to Rule Them All: An Integrated, Multi-level and Scalable Performance Measurement Framework of Sustainability, Circular Economy and Industrial Symbiosis

There is an overall established agreement on the need for the industry to transition towards a more ecological and ethical approach to business. Numerous ways to engage into this transition exist, such as Sustainability, Circular Economy and Industrial Symbiosis; yet the proliferation of alternative paradigms creates confusion and generates limited applications in industries. The measurement of performance appears indispensable to foster the implementation of improving actions, benchmark results and effectively communicate them to different stakeholders. Despite the emerging interest, a proper system for the measurement of performance related to the ecological and ethical transition is still missing. By means of selection mechanisms specifically developed, indicators retrieved from the extant literature have been organized in a novel integrated, multi-level and scalable framework of performance measurement systems. The framework presents some features of great relevance, in particular: i) integration of Sustainability, Circular Economy and Industrial Symbiosis paradigms; ii) possibility to be applied at different levels of application, i.e. the single firm, the supply chain or the district; iii) adaptability to firms with different characteristics (firm size and awareness), thanks to the development of two different (Full and Core) scalable systems. The framework has been then validated in four manufacturing firms against its capacity to represent each paradigm, its usefulness, and its ease of use. Besides the positive feedbacks obtained considering the three axes of analysis, the framework was appreciated for its capability to overcome tensions among the three paradigms and encourage firms to consider performance beyond their own boundaries, including the supply chain or district, and its scalability as for different sizes. This research advances the knowledge on the ecological and ethical transition and on the related paradigms, contributing on theoretical and practical levels and offering several insights for future research, especially empirical ones.

How The Reliance on Integrative Strategic Performance Measurement affects Organizational Performance, and Employee Motivation: The Mediatory Role of Business Strategy

How The Reliance on Integrative Strategic Performance Measurement affects Organizational Performance, and Employee Motivation: The Mediatory Role of Business Strategy

Performance measurement of lean supply chain management: a balanced scorecard proposal

The purpose of this paper is to propose a performance measurement framework to evaluate Lean Supply Chain Management (LSCM) performance. A literature review was performed to identify the main goals and performance indicators in LSCM. A questionnaire was designed that included the identified goals and measures. Next, based on data collected from international academics and practitioners with expertise in LSCM, a two-stage Delphi study using Fuzzy Delphi and Fuzzy DEMATEL methods was carried out to refine the most relevant goals and metrics and their interrelationships and establish benchmark values that are useful for managers to evaluate the performance achieved through the deployment of lean principles, practices, and techniques throughout the supply chain. Finally, an integrated performance measurement framework based on the balanced scorecard approach is proposed with a discussion of the academic and practical implications of the proposed framework.

IS IT FAIR TO ASSESS THE PERFORMANCE OF ISLAMIC BANKS BASED ON THE CONVENTIONAL BANK PLATFORM?

Several studies found the weakness of using conventional performance measurement tools such as CAMELS and RGEC in Islamic banking and the lack of performance measurement tools following the characteristics of Islamic banks. The findings showed the need for a performance measurement system that integrates the objectives of sharia and the business objectives of sharia banking. This study explored the application of Maqashid shariah values in Islamic banking and initiated a Sharia Integrated Performance Measurement (SIPM) structure. The researchers used Grounded Theory and library research. Data were collected through in-depth interviews with practitioners, experts, and academics of Islamic banking, while secondary data was taken from the literature and previous research that discussed the measurement of Islamic banking performance. The data were analyzed through several stages: data reduction, data display, and concluding with the help of the Atlas.ti application version 8. This study would like to contribute to the idea of building a Sharia Integrated Performance Measurement (SIPM) platform through three components: Islamic commercial performance, Islamic social performance, and Islamic macroeconomics performance in Islamic banking.

Efficient reliability computation of a multi-state flow network with cost constraint

The reliability and cost integrated performance measure R(d,b) of a multi-state flow network, defined as the probability of sending a flow of d units from the source to the sink with the total transmission cost no more than b, can be computed by means of (d, b)-minimal paths ((d, b)-MPs). The existing methods search for (d, b)-MPs by solving a large Diophantine system or several Diophantine subsystems that are shown to be NP-hard, then the computational efforts are prohibitive. This paper proposes a new search method for (d, b)-MPs, and major contributions include: (1) a correlation between (d, b)-MPs and minimum cost circulations is established, enabling the solution of (d, b)-MPs to be accomplished via minimum cost circulations; (2) a distinctive method merging the well-known capacity scaling algorithm and a decomposition technique is presented to find (d, b)-MPs. In contrast to the existing methods, the presented algorithm seeks for (d, b)-MPs without depending upon the solutions of Diophantine system and generating any duplicate (d, b)-MPs. An illustration of the proposed algorithm is presented, and computational results indicate the advantage of our algorithm over the existing methods.

Exploring sustainability balanced scorecard for performance evaluation of humanitarian organizations

Performance measures are vital in assessing the disaster relief operations and mitigate the losses that occur during disaster. It is imperative to benchmark and monitor the growth of humanitarian organizations (HOs). The purpose of this research is to explore the performance measures for HOs based on a sustainability balanced scorecard (SBSC). This study identifies and finalizes 31 performance measures through literature and brainstorming session conducted with the experts. Finalized performance measures are classified into five humanitarian supply chain management (HSCM) performance perspectives using SBSC. The best worst method (BWM) is applied to prioritize the performance measures, and the additive ratio assessment (ARAS) is applied to evaluate the performance of HOs. The outcome of this research reveals that “beneficiaries’ and donors’ perspectives” is the most significant HSCM performance perspectives. The findings help to identify the relative importance of each performance measure for performance evaluation of HOs. The proposed framework can help HOs on the aspects of performance improvement relevant to both donors and beneficiaries group that facilitates stakeholders in the benchmarking and network design of HOs. This study explores the SBSC in HSCM to analyze the performance measures and evaluate the performance of HOs that enable an integrated performance measurement system. HOs monitored their logistics performance effectively, which further lead to process improvement for betterment.

The influence of strategic management accounting on value creation in government linked companies

This study aims to examine the connection between strategic management accounting (SMA) practices and the elements of value creation. 215 data from state and federal government linked companies (GLCs) in Malaysia were collected through a questionnaire survey. Respondents for this study were selected through purposive sampling. These data were analysed using SPSS and AMOS to test the relationship between the SMA variables such as benchmarking, integrated performance measurement, strategic costing, strategic pricing, brand valuation, quality costing and competitors' performance evaluation. This study found that the practitioners are aware of the advantages of adopting SMA practices and their impact on business management and performance by creating value in their organisations. SMA techniques provide strategic planning and non-financial information that encourage competition and the adoption of best practices, which helps GLCs to perform better and achieve a sustainable competitive advantage, which directly reflects in generating value creation.

Integrated Performance Measures for Bus Rapid Transit System and Traffic Signal Systems Using Trajectory Data

Bus rapid transit (BRT) systems have been implemented in many cities over the past two decades. Widespread adoption of General Transit Feed Specification (GTFS), the deployment of high-fidelity bus GPS data tracking, and anonymized high-fidelity connected vehicle data from private vehicles have provided new opportunities for performance measures that can be used by both transit agencies and traffic signal system operators. This paper describes the use of trajectory-based data to develop performance measures for a BRT system in Indianapolis, Indiana. Over 3 million data records during the 3-month period between March and May 2022 are analyzed to develop visualizations and performance metrics. A methodology to estimate the average delay and schedule adherence is presented along a route comprised of 74 signals and 28 bus stations. Additionally, this research demonstrates how these performance measures can be used to evaluate dedicated and non-dedicated bus lanes with general traffic. Travel times and reliability of buses are compared with nearly 30 million private vehicle trips. Results show that median travel time for buses on dedicated bi-directional lanes is within one minute of general traffic and during peak periods the buses are often faster. Schedule adherence was observed to be more challenging, with approximately 3% of buses arriving within 1 minute on average during the 5AM hour and 5% of buses arriving 6 - 9 minutes late during the 5PM hour. The framework and performance measures presented in this research provide agencies and transportation professionals with tools to identify opportunities for adjustments and to justify investment decisions.

Balanced scorecard usage and organizational effectiveness: evidence from manufacturing sector

PurposeThis study aims to investigate the drivers and impact of balanced scorecard (BSC) usage on organizational effectiveness in manufacturing companies. The objectives of the paper were to assess the organizational factors affecting the usage intensity of the BSC; the relative benefits of BSC determining its adoption speed; and the extent to which BSC usage enhances organizational effectiveness.Design/methodology/approachThe study adopted a survey research design. Data collection was through a structured questionnaire administered on senior accounting/ finance personnel of 300 manufacturing companies that are members of the Manufacturers Association of Nigeria. Binary logistic regression analysis, discriminant analysis and structural equation modeling (maximum likelihood estimation method) were used to analyze survey data obtained from 104 BSC adopters.FindingsResult shows that the three organizational factors affecting BSC usage intensity are affiliation to a foreign entity, availability of specialist skills and business strategy (strategic pattern). The strongest predictor is, however, the availability of specialist skills. The strongest determinants of the BSC adoption speed are the need for financial stability and the importance of customer feedbacks. The impact of BSC usage on organizational effectiveness is positive, statistically significant but weak. The inability of BSC usage to contribute appreciably to organizational effectiveness is attributable to the lack of integration among the performance measures in the BSC framework and the shallow usage rate of BSC.Practical implicationsAlthough it is commendable that financial stability and customer satisfaction strongly drive BSC adoption speed, the low rating recorded by other factors related to product development, employee development and process improvement suggests that the performance measures in the BSC framework are not used in an integrative manner. This also confirms that the BSC, like other innovative management accounting techniques, is applied at a rudimentary level by organizations in Nigeria.Originality/valueThe current study contributes to knowledge by exposing the organizational factors and relative benefits driving BSC adoption. It provides empirical evidence on why the BSC may not deliver the optimal benefit of improving organizational effectiveness despite its popularity and potential as an integrated performance measurement (IPM) apparatus that can add value to organizations. The paper adds to the scarce literature on IPM in developing countries. Drawing from the result that availability of specialist skills is the strongest predictor of BSC usage intensity, the practice of enmeshing the management accounting function with general accounting/finance should be discouraged.

Management control systems in response to social and environmental risk in large Nordic companies

This empirical study investigates the relationships between management control systems and social and environmental risks. Building on Simons’ Levers of Control conceptual framework, this study proposes that companies facing social and environmental risks will enhance the quality of their management control systems by integrating social and environmental elements into management control systems in order to manage the related risks. The study uses a longitudinal dataset of the 1179 largest listed Nordic companies for the period 2014–2018. The multivariate regression confirms a negative relationship between the social and environmental integration and social and environmental risks. The results indicate that the social and environmental integrated performance measurement system and strategy implementation are not congruent with the social and environmental risks that the companies face. Nordic companies have not adopted the social and environmental integrated measurement system and strategy in response to social and environmental risks. When the number of social and environmental incidents increase and companies meet high levels of social and environmental risks, their management control systems do not match the related risks. Such social and environmental integration should be improved in order to prevent wider negative implications of the incidents on the natural environment and society in large.

Measuring performance of professional role substitution models of care against traditional medical care in healthcare-A systematic review.

To identify outcome measures used to evaluate performance of healthcare professional role substitution against usual medical doctor or specialist medical doctor care to facilitate our understanding of the adequacy of these measures in assessing quality of healthcare delivery. Using a systematic approach, we searched Medline, Cochrane Central Register of Controlled Trials, Embase, CINAHL, and Web of Science from database inception until May 2020. Studies that presented original comparative data on at least one outcome measure were included following screening by two authors. Findings were synthesized, and outcome measures classified into six domains which included: effectiveness, safety, appropriateness, access, continuity of care, efficiency, and sustainability which were informed by the Institute of Medicine dimensions of healthcare quality, the Australian health performance framework, and Levesque and Sutherland's integrated performance measurement framework. One thirty five articles met the inclusion criteria, describing 58 separate outcome measures. Safety of role substitution models of care was assessed in 80 studies, effectiveness (n=60), appropriateness (n=40), access (n=36), continuity of care (n=6), efficiency and productivity (n=45). Two-thirds of the studies that assessed productivity and efficiency performed an economic analysis (n=27). The quality and rigour of evaluations varied substantially across studies, with two-thirds of all studies measuring and reporting outcomes from only one or two of these domains. There are a growing number of studies measuring the performance of non-medical healthcare professional substitution roles. Few have been subject to robust evaluations, and there is limited evidence on the scientific rigour and adequacy of outcomes measured. A systematic and coordinated approach is required to support healthcare settings in assessing the value of non-medical role substitution healthcare delivery models.

Comparison of patient- and clinician-reported outcome measures in lower back rehabilitation: introducing a new integrated performance measure (t2D)

PurposePatient- and clinician-reported outcome measures (PROMs, CROMs) are used in rehabilitation to evaluate and track the patient’s health status and recovery. However, controversy still exists regarding their relevance and validity when assessing a change in health status.MethodsWe retrospectively analyzed the changes in a CROM (Fingertip-To-Floor Test – FTF) and PROMs (ODI, HAQ-DI, NPRS, EQ5D) and the associations between these outcomes in 395 patients with lower back pain (57.2 ± 11.8 years, 49.1% female). We introduced a new way to measure and classify outcome performance using a distribution-based approach (t2D). Outcome measures were assessed at baseline and after 21 days of inpatient rehabilitation.ResultsOverall, the rehabilitation (Cohens d = 0.94) resulted in a large effect size outcome. Medium effect sizes were observed for FTF (d = 0.70) and PROMs (d > 0.50). Best performance rating was observed for pain (NPRS). We found that 13.9% of patients exhibited a deterioration in the PROMs, but only 2.3%, in the FTF. The correlation between the PROMs and FTF were low to moderate, with the highest identified for HAQ-DI (rho = 0.30–0.36); no significant correlations could be shown for changes. High consistency levels were observed among the performance scores (t2D) in 68.9% of the patients.ConclusionsDifferent and complementary assessment modalities of PROMs and CROMs can be used as valuable tools in the clinical setting. Results from both types of measurements and individual performance assessments in patients provide a valid basis for the meaningful interpretation of the patients’ health outcomes.Trial registration. This clinical study was entered retrospectively on August 14, 2020 into the German Clinical Trials Register (DRKS, registration number: DRKS00022854).

A Systematic Literature Review of Performance Pyramids System Implementation in the Manufacture Industries

The prevailing literature and empirical studies on organizational performance management stress the increasing importance of non-financial performance measures and propose companies implement an integrated performance measurement system. The purpose of our research is to investigate the characteristics of performance measurement and management in various industries. This paper discusses the published literature related to the Performance Pyramids System (PPS), focusing on the latest progress in the 18 years, starting from 2002 until 2020. This paper involves the study review of 50 articles related to PPS implementation of available database search, including Google Scholar, Elsevier, Science Direct, and other publishers in the world. This literature review contains results from a variety of different perspectives. The perspective includes the industry's focus, the focus of the number of distribution by country, the year of publication, and the number of publishers. This is useful for all types of manufacturing industries to find solutions to problems. The paper also provides advantages for researchers next to add to the literature. The aims of this study are: (i) to identify the most discussed approaches in the literature to evaluate the organizational performance, and (ii) to carry out a diagnosis of how small and medium enterprises with economic activity in several countries measure and operationalize the evaluation of their performance. To meet the study's objectives, we analyzed published studies in scientific journals and conducted twelve interviews in SMEs. The results indicate that, in addition to the majority of the studied organizations not having a formal process of their strategy, they also do not measure their products in an integrated system that would allow them to evaluate according to their strategic goals.

Is the Use of Integrated Performance Measurement System by Banks Really “Integrated”? A Structural Equation Modeling Approach

This paper investigates the implementation of integrated performance measurement (IPM) system, the extent of integration among four performance measures proposed by the balanced scorecard as an IPM framework (namely financial, customer, internal business process, and learning and growth perspectives) and the impact of non-financial disclosure on financial performance. The study employed ex post facto research design. A self-designed disclosure checklist containing forty-eight (48) items across financial (18), customer (18), internal business (4), and learning and growth (8) perspectives was used to analyze performance disclosure for a 3-year period of 2012–2014. Structural equation modeling was used to explore the interaction among the performance measures, as well as the impact of non-financial disclosure on financial performance post-IPM implementation. The study concludes that banks do not adopt an integrative approach to performance measurement and disclosure, as performance appears to be communicated in a haphazard manner. Failure to embrace an integrative approach to performance disclosure appears to be responsible for the low impact of non-financial disclosure on financial performance. The originality of the current study stems from the awareness that it developed a disclosure checklist that can be used by other studies to assess the quality of performance disclosure in annual reports. To the researchers’ knowledge, the study is the first, in the Nigerian context, to assess the level of integration among performance measures in an IPM system using secondary data. The excessive focus on the financial measures implies that firms are not leveraging on the synergistic benefits of an integrative approach to performance measurement and disclosure.