(An) empirical study on the characteristics and effectiveness of performance measurement system

Abstract

Many researchers have argued that reengineering the performance measurement system (PMS) is crucial to support improvement efforts of manufacturing performance. Most studies on PMS, however, have discussed normative criteria for design, rather than evaluation criteria by a structured methodology. The resultant criteria, therefore, could not provide firms practical guidelines to diagnose existing PMS and to solve the problems. One way of overcoming this limitation might be to clarify the characteristics of PMS and to investigate relationships among environmental factors, PMS, and manufacturing competence. From literature reviews, we propose a framework for the analysis of PMS, and a research model and hypotheses are generated using the framework. This research uses hybrid approach: 1) exploratory approach to clarify characteristics and efficiency of PMS 2) confirmative approach to investigate relationships between factors in a framework for the analysis of PMS. Data from 200 companies in various manufacturing industries were collected. Factor analysis is used to clarify characteristics and efficiency of PMS. Also main hypotheses are tested by correlation analysis, ANOVA test, multiple regression analysis. The major findings of this study are summarized as follows. First, characteristics of PMS consist of responsiveness, vertical integration, and horizontal integration. And efficiency of PMS composes of practical usefulness and organizational impact. The relationship between characteristics and efficiency of PMS has strongly positive correlation: The more systematic characteristics of PMS are, the better performance measurement system can be utilized. Second, performance measurement system is affected by environmental factors. Business environment and manufacturing process technology as external factors weakly influence characteristics of PMS. Manufacturing improvement/innovation programs as an internal environment factor strongly influence the characteristics...