Relationships between strategic performance measures, strategic decision-making, and organizational performance: empirical evidence from Canadian public organizations

ABSTRACT

This study investigates the role of strategic performance measures (SPM) in strategic decision-making and their impact on organizational performance. Based on 143 online survey responses from senior administrators across Canadian public organizations, the study found that SPM of efficiency and effectiveness are positively associated with performance, as well as, the former with both strategy implementation and strategy assessment decisions. The study extends prior research by linking both SPM and their use in strategic decision-making to organizational performance.

KEYWORDS:

• Organizational performance
• strategic performance measures (SPM)
• strategy implementation
• strategy assessment
• Canadian public sector

Acknowledgments

Data collection for this study was carried out at Carleton University, Canada, in accordance with the university’s approved research ethics protocol. Some preliminary results were presented at the 2015 Conference of Asia–Pacific Management Accounting Association, Bali, Indonesia, 26–29 October, 2015.

Disclosure statement

No potential conflict of interest related to this study exists for any of the four authors.

Notes

1. In general, different strands of complexity theory deal with organizational change associated with complex interactions of various parts of dynamic organizational systems. They emphasize systems development nonlinearly, subject to various feedback mechanisms. These notions fit well with “modern ideas of complex decision-making, complex strategies and processes, and the emergent characteristics of processes and institutions in public administration theory” (Klijn 2008, 314).

2. Extraction method: principal component analysis based on Eigenvalues greater than 1; rotation method: Varimax with Kaiser normalization and maximum iteration for convergence of 25. The first factor, consisting of the first six items, was labelled, “SPM of efficiency” (Cronbach Alpha = 0.854; factor loadings range 0.505–0.827; total variance explained = 31.0%). The second factor, consisting of the remaining five items was labelled, “SPM of effectiveness” (Cronbach Alpha = 0.799; factor loadings range 0.463–0.686; total variance explained = 25.8%).

3. The first six items fit together in one factor which relates to the “use of SPM information for strategy implementation decisions” (Cronbach Alpha = 0.952; factor loading range 0.808–0.884; total variance explained = 42.4%). The remaining five items loaded onto the second factor which relates to the ‘use of SPM information for strategy assessment decisions’ (Cronbach Alpha = 0.864; factor loadings range 0.629–0.830; total variance explained = 32.1%).

Additional information

Funding

The authors are grateful for the 2-year research grant received from the National Research Foundation, United Arab Emirates (UAE-NRF#: RSA-1108-00788), which enabled this research study to be carried out as part of a broader research programme.

Notes on contributors

Raili Pollanen

Raili Pollanen, PhD, CPA (CMA) is an Associate Professor, Accounting, Sprott School of Business, Carleton University, Canada. Her research focuses on performance measurement, management, and governance in the public sector and it has been published in numerous academic journals, books, and international conference proceedings. She has also served on several professional committees, including a taskforce on Canadian public performance reporting.

Ahmed Abdel-Maksoud

Ahmed Abdel-Maksoud, PhD, is an Associate Professor of Management Accounting, Accounting Department, College of Business and Economics, United Arab Emirates University, UAE. His research interests are in the fields of strategic performance measurement systems, eco-control systems, and neuroaccounting. He received research grants from various universities/research centers worldwide and published in numerous reputable journals, books and international conferences.

Said Elbanna

Saïd Elbanna is an Associate Professor at Qatar University. His research interests are in the areas of decision-making, strategic planning and internationalization of SMEs. He published in journals such as Strategic Management Journal, Long Range Planning, Tourism Management and Public Management Review. He received several research awards including the JMS Best Paper Award for 2007.

Habib Mahama

Habib Mahama is an Associate Professor of Accounting at the United Arab Emirates University. He serves on the editorial boards of a number of international journals. His research interest is in the area of management accounting with specific focus on management accounting controls in interfirm relationships, management control of operational risk and behavioural management accounting. His research has been published in reputable international academic journals, books and conference proceedings.