Moderating effects of performance measurement use on the relationship between organizational performance, measurement diversity and product innovation
This study sets'out to address the question of whether the effect of organizational'performance measurement diversity on product innovation will differ dependingon how organizational performance measures are used.There is strong empirical evidence that many companies who are successfultoday are less likely to be successful in the future because they fail to innovate. Itis surprisingly then, that when everyone stresses the importance of innovation,there are many organizations adopting performance measurement systems, whichmay constrain their innovativeness.Currently, there are three differing perspectives on the effect of measurement ona firm's propensity to innovate. Moreover, each of these has empirical evidenceto support its argument. The first perspective views measurement as constraininginnovation because it impedes creativity, experimentation, and search in firms.The second perspective views measurement as helping innovation because ittriggers search, facilitates decision-making, and increases risk-taking. The thirdperspective views measurement as having insignificant or little impact oninnovation because it is used primarily for signalling.A possible explanation of the contradiction in the empirical findings of thesestudies is that they generally ignore how measurement is used. Therefore, usingthe behavioural theory of innovation, I argue that one possible way of resolvingthe contradictory findings is by incorporating measurement use as a moderatingvariable.Using data from a cross-sectional, large-scale, probability sample survey of 145UK manufacturing firms, I show that organizational performance measurementdiversity interacts with performance measurement use to determine productinnovation. My findings suggest that the extent to which a firm offers newproducts will be more positively (negatively) associated with performancemeasurement diversity when diagnostic use is high (low) holding interactive useconstant and will be more negatively (positively) associated with performancemeasurement diversity when interactive use is high (low) holding, diagnostic useconstant.
Year of publication: |
2007
|
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Authors: | Yaghi, Bassil A. |
Other Persons: | Neely, Andrew (contributor) |
Publisher: |
Cranfield University |
Saved in:
freely available
Saved in favorites
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