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.
Introduction
Strategic performance measures (SPM) are considered to be important for translating strategy into measurable objectives and, if appropriately designed and communicated, can facilitate strategy implementation, align management decisions and actions with strategic goals, and enhance organizational performance (Bisbe and Malagueno 2012; Franco-Santos, Lucianetti, and Bourne 2012; Micheli and Manzoni 2010). A few studies have investigated the extent to which SPM are deployed and their influence on organizational performance in public organizations (Micheli and Manzoni 2010). They have mainly focused on the deployment of SPM, rather than on strategic use of SPM and its longer-term performance effects, and implicitly assumed that, after SPM are deployed, they function in intended ways to generate organizational benefits. Furthermore, previous studies have not examined joint relationships between SPM deployment and practical activities of strategizing, although strategic planning processes are also associated with public-sector performance (Andrews et al. 2009; Jung and Lee 2013; Poister, Pasha, and Edwards 2013). This void has resulted in recent calls for further research on the use of SPM in strategic decision-making in the public sector (Hammerschmid, van de Walle, and Stimac 2013). This study contributes to filling this gap by investigating the use of SPM in strategic decision-making and its relationships with performance in public organizations.
Discussion and conclusions
This study set out to examine the role of SPM in strategic decision-making and their impact on organizational performance. Consistent with prior studies (e.g., Cavalluzzo and Ittner 2004; Hoque and Adams 2011; Franco-Santos, Lucianetti, and Bourne 2012), the results corroborate the hypothesized positive relationships between SPM and organizational performance. These findings suggest that organizations can benefit from the appropriately implemented and used SPM. Furthermore, SPM use in strategic decision-making can amplify organizational performance, also supporting links between strategic processes and organizational performance found in prior studies (e.g., Andrews et al. 2009; Jung and Lee 2013; Poister, Pasha, and Edwards 2013). However, a significant relationship in this study was found only for strategy implementation but not for strategy assessment. A reason for the absence of significant results for strategy assessment could be that a longer time span is needed to capture the effects of strategy assessment decisions on organizational performance. These findings highlight the importance of developing appropriate types and mix of SPM for different purposes, even for different functions of strategic planning.
