The Influence of Performance Measurement on the Processual Dynamics of Strategic Change

Abstract

We draw on a five-year longitudinal data set to investigate the influence of performance measurement in the processual dynamics of strategic change, particularly in enacting effective strategic change. Our model examines the role of performance measurement in driving strategy-consistent operational changes and in ensuring that the desired objectives of the strategic change process are achieved. We investigate these roles for performance measurement over time and empirically document lags between changes in strategic priorities, changes in operational processes, and subsequent changes in firm performance. We find that performance measurement supports the implementation of strategic change by influencing the extent to which changes to operational tasks and activities are made in response to new strategic priorities, as well as influencing the quality and impact of these operational changes, as reflected in improved contemporaneous and future firm performance.

Keywords: Performance Measurement, Strategic Change, Firm Performance