An analysis of the extent of integrated thinking reflected in key performance indicators: evidence from South Africa

Claudia Ferreira, Dusan Ecim and Warren Maroun

Sustainability Accounting, Management and Policy Journal, 2024, vol. 16, issue 3, 736-766

Abstract: Purpose - This study aims to develop an index to evaluate the extent to which key performance indicators (KPIs) align with the principles of integrated thinking. Design/methodology/approach - Prior academic research, complemented by reporting and governance standards, is used to develop an index to gauge the extent to which KPIs take an integrated approach to performance evaluation. A mixed methods approach is adopted. A qualitative content analysis of organisations’ extra-financial reports is used to gain insights into the level of integrated thinking in performance evaluation structures using the index. Results are then calibrated using well-established integrated thinking proxies. Findings - Ten indicators are identified, which point to an integrated approach to performance evaluation or the application of an underlying integrated thinking logic. The index is applied to a sample of companies from 2013 to 2021. The results point to companies increasingly incorporating integrated thinking into their KPIs. KPIs, which used to address only financial dimensions, are becoming more pluralistic and may be better described as “integrated performance indicators” (IPIs). Research limitations/implications - The index is applied to KPI disclosures of a sample of companies in a single jurisdiction only. Practical implications - Those charged with governance and management can use the index to structure, implement and evaluate IPIs. Investors can use the index to gauge the operationalisation of integrated thinking. Assurance providers may find the index useful when conducting risk assessments, particularly given the increased focus on the assurance of extra-financial information. Social implications - Regulators can use the index for benchmarking organisations, compliance monitoring and identifying gaps between regulatory expectations and corporate behaviour. More broadly, the index could be used to promote alignment with sustainability frameworks and sustainable development goals at the national level. Originality/value - This study outlines the dimensions of integrated thinking, which can be applied in the context of performance evaluation structures.

Keywords: Extra-financial reporting; Integrated performance indicators; Integrated thinking; Key performance indicators; Performance evaluation structures (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-10-2023-0753

DOI: 10.1108/SAMPJ-10-2023-0753

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