This paper aims to understand the evolutionary paths of performance measurement (PM) from the 1980s to the present.
The paper is a narrative review. The sources of literature reviewed are from diverse academic disciplines (e.g. operations management, strategic management, management accounting and organisational behaviour). Three main types of literature were selected, namely scientific literature, professional journals, and books. The authors' approach is illustrative and selective. It is based on the belief that societal and organisational contexts provide the clues for the appropriateness in design and use of a managerial innovation. It describes the transition in performance measurement, incorporating a number of PM innovations as illustrative exemplars.
Management needs, arriving from the evolving business ecology and focused on creating and sustaining competitive advantage, drive the destiny of PM systems during their evolutionary progression. Performance measurement has evolved from various perspectives. The evolution took place in four major paths, from operations to strategic, measurement to management, static to dynamic and economic‐profit to stakeholder focus.
The evolutions embody trends in development and use of PM systems over the long periods that point the way for future PM to develop and evolve.
The contemporary evolution of PM exhibited in the connection with its evolving contexts that is not explicitly acknowledged in the literature gives the raison d'être to this review.
