Strategic priorities, performance measures and performance: an empirical analysis in Dutch firms
Article Type: Abstracts From: Strategic Direction, Volume 25, Issue 9
Verbeeten F.H.M. and , Boons A.N.A.M. European Management Journal (UK), April 2009, Vol. 27 No. 2, Start page: 113, No. of pages: 16
Purpose – Investigates relationships between strategy, performance measures and performance. Design/methodology/approach – Differentiates between accounting-based, economic/profit and non-financial performance measures, lists a range of objectives managers are expected to achieve,distinguishes between financial-performance and growth goals, and argues that what specific goals and priorities are pursued depends on the firm’s competing and financial positions at a particular point in time. Hypothesizes that economic profit measures are positively related to the importance of financial priorities and negatively related to the importance of growth priorities, links non-financial measures to lower prioritization of financial performance and higher prioritization of growth performance, and postulates that aligning strategic performance measures to strategic priorities increases performance. Tests the hypotheses by questioning financial managers of 45 Dutch companies, ascertains if the companies are market/customer-oriented, assesses if strategies are aimed at sales growth, profit, profit margin,return-on-investment, cash flow, innovation, quality or personnel/human capital development, and classes measures according to their focus on employees,customers, processes, quality, innovation, shareholders, economic value-added and return-on-capital. Findings – Finds that focus on financial priorities is associated with use of traditional accounting measures, return-on-capital being dominant, records that organizations with cultures aimed at building employee ownership generally used economic/profit measures, confirms that firms with growth priorities tended to use non-financial performance measures, but reports no support for the hypothesis that performance-measure/strategic-priority alignment increased performance. Originality/value – Warns against over-emphasis on one type of performance measure.Article type: Research paper ISSN: 0263-2373 Reference: 38AH873
Keywords: Business development, Corporate strategy,Financial performance, Netherlands, Organizational performance, Performance measurement, Profit
