Strategy communication and measurement systems

Pascal Courty

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Organizations often face the challenge of communicating their strategies to local decision makers. The difficulty presents itself in finding a way to measure performance wich meaningfully conveys how to implement the organization's strategy at local levels. I show that organizations solve this communication problem by combining performance measures in such a way that performance gains come closest to mimicking value-added as defined by the organization's strategy. I further show how organizations rebalance performance measures in response to changes in their strategies. Applications to the design of performance metrics, gaming, and divisional performance evaluation are considered. The paper also suggests several empirical ways to evaluate the practical importance of the communication role of measurement systems.

Keywords: Measurement systems; firm objective; performance measurament; communication (search for similar items in EconPapers)
JEL-codes: D21 L21 (search for similar items in EconPapers)
Date: 1997-10
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:330

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