The use of performance information in strategic decision making in public organizations

• Published date: 12 October 2015
• Pages: 528-549
• DOI: https://doi.org/10.1108/IJPSM-06-2015-0114
• Date: 12 October 2015
• Author: Ahmed Abdel-Maksoud,Said Elbanna,Habib Mahama,Raili Pollanen
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

The use of performance

information in strategic decision

making in public organizations

Ahmed Abdel-Maksoud

College of Business and Economics, United Arab Emirates University,

Al-Ain, United Arab Emirates

Said Elbanna

College of Business and Economics, Qatar University, Doha, Qatar

Habib Mahama

College of Business and Economics, United Arab Emirates University, Al-Ain,

United Arab Emirates, and

Raili Pollanen

Sprott School of Business, Carleton University, Ottawa, Canada

Abstract

Purpose –The purpose of this paper is to investigate how the importance of different components

of strategic performance measurement systems (SPMS) and their deployment influence the use of

performance information from the SPMS in making strategic decisions.

Design/methodology/approach –Data were collected through a survey of 143 managers of

Canadian public organizations.

Findings –The findings indicate that two SPMS components, namely, the importance of non-financial

performance measures and the use of operational efficiency measures, have significant positive

associations with performance information use for strategy implementation and strategy assessment

decisions. The extent to which SPMS models were used is found to be positively associated with

performance information use for strategy implementation, but not for strategy assessment, decisions.

Furthermore, the relationships between SPMS variables and strategic decision making are moderated

by information systems/data limitations and management’s commitment to attaining strategic goals.

Managerial skills acquired through training or experience with SPMS also contribute positively to

such relationships.

Research limitations/implications –The results are affected by limitations associated with the

survey method used.

Practical implications –The findings could be useful for supporting public policy, strategic

decision making, public service improvement, operational efficiency, and effectiveness.

Originality/value –The study contributes to public management and performance measurement

literature by investigating multiple determinants of performance information use in a cross-section of

Canadian public organizations.

Keywords Public sector, Canada, Performance information, Strategy implementation,

Strategic performance measurement systems, Strategy assessment

Paper type Research paper

International Journal of Public

Sector Management

Vol. 28 No. 7, 2015

pp. 528-549

©Emerald Group Publishing Limited

0951-3558

DOI 10.1108/IJPSM-06-2015-0114

Received 16 June 2015

Revised 1 September 2015

Accepted 6 September 2015

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0951-3558.htm

The authors are grateful for the two years research grant received from the National Research

Foundation, United Arab Emirates (UAE-NRF No.: RSA-1108-00788) which enabled this

research study to be carried out. The authors are also grateful to those who attended the British

Accounting and Finance Association Annual Conference 2013, Newcastle, UK for their

constructive comments on an early draft of this paper.

528

IJPSM

28,7

Introduction

Since the pioneering work of Kaplan and Norton (1992) on the balanced scorecard and

their later work on strategy maps, academic and practitioner interest in, what has

become known as, strategic performance measurement systems (SPMS) and the

roles they play in organizational strategy has grown. The potential role of SPMS in

organizational strategy has been espoused and debated in literature. In principle, SPMS

are said to be an important mechanism for translating strategy into objectives and

measures which can be clearly communicated (Bisbe and Malagueno, 2012), facilitating

the implementation of strategy, tightly aligning management actions with strategic

goals, and enhancing organizational performance (Bisbe and Malagueno, 2012; Micheli

and Manzoni, 2010). Academic researchers have examined whether and how these

potential benefits can be realized in practice, mostly in private-sector organizations.

Yet, SPMS are also arguably relevant and applicable to public organizations, albeit

typically with some modifications that take into account fundamental contextual

differences between the public and private sectors.

Prior research on the potential role of SPMS has focussed primarily on examining

the extent to which these systems are adopted and the factors associated with their

successful implementation (Micheli and Manzoni, 2010). Prior studies implicitly assume

that, after a system has been implemented, it functions in intended ways to generate

organizational impact. Consequently, they fail to examine the links between SPMS and

practical activities of strategizing, with the implicit assumption that performance

improvement can be explained by SPMS implementation. As Bisbe and Malagueno

(2012) argued, little attention has yet been paid in empirical studies to the other roles

that SPMS can play beyond mere strategy implementation in public organizations.

As strategic management practices in public organizations may differ from those

in private organizations in many respects (Boyne, 2002), the use of performance

information from the SPMS in public organizations warrants further study. Firs t,

public organizations are said to be more bureaucratic resulting in more formal and less

flexible decision processes compared to their private-sector counterparts (Boyne, 2002;

Bozeman and Kingsley, 1998). As the decision processes differ, the use of performance

information for strategic decisions may also differ. Second, compared to private-sector

organizations that are focussed on profit maximizing in competitive environments,

public organizations are focussed on following rules and procedures in the service of

diverse and often conflicting stakeholder interests (McAdam et al., 2005). Third, public

organizations are argued to have vague and often conflicting goals imposed through

political processes (Boyne, 2002). Public policy ambiguity may imply that strategic

decision processes may not follow the same trajectory in the private and public sectors.

For example, Courtney et al. (2009) provided evidence of strategic planning in public

organizations being used both as a legitimacy device to convey accountability to

oversight and regulatory bodies and as means of setting rational objectives, in line

with the arguments of “new public management”(Hood, 1995). Similarly, Chang (2009)

described how political pressures for short-term understandable results overshadowed

managerial intentions to use performance measures for rational management reforms.

Given these fundamental differencesand the calls for further researchon performance

measurement in the public sector, in particular research related to the contingent role of

various organizational factors (Boyne et al., 2006), this study focusses on the use of

performance information in strategic decision making in public organizations.

Although considerable recent research on performance information use exists in public

management literature, in particularresearch related to the determinants of performance

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Performance

information

and strategic

decision making