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A dynamic performance measurement system: evidence from small Finnish technology companies


  • Laitinen, Erkki K.


The purpose of this paper is (1) to present a new dynamic integrated performance measurement system (IPMS) based on a managerial view, and (2) to present preliminary empirical evidence on the importance of performance measures in small Finnish technology companies using the IMPS as the framework for the survey. The aim is to develop a useful managerial tool for measuring and improving performance in business firms. The system is intended to include a comprehensive set of relevant factors and dimensions, which together form an integrated managerial system of performance measurement. The proposed IPMS is linked to the idea of activity-based costing (ABC). It consists of seven main factors and the causal chain connecting these factors. The factors are classified as two external factors (financial performance and competitiveness) and five internal factors (costs, production factors, activities, products, and revenues). The main idea of the IPMS is to follow the use (transformation) of resources from the point of the very first (elementary) resource allocation to the point when the results of the allocation are realized as revenues. In the causal chain, the factor at any point along the chain is regarded as a determinant of the factor that succeeds it. Moreover, the next resource allocation decision is dynamically affected by the results of the former decisions, thus allowing for learning-by-doing. The IPMS is also used as a framework for a postal questionnaire completed by 93 small Finnish technology firms. These companies put great emphasis on the importance of the employee motivation (production factors dimension), customer satisfaction (products), product profitability (revenues), company profitability, liquidity, and capital structure (financial performance) in the measurement of performance. Factor analysis is used to classify the companies into three groups on the basis of performance measurement.

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  • Laitinen, Erkki K., 2002. "A dynamic performance measurement system: evidence from small Finnish technology companies," Scandinavian Journal of Management, Elsevier, vol. 18(1), pages 65-99, March.
  • Handle: RePEc:eee:scaman:v:18:y:2002:i:1:p:65-99

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    References listed on IDEAS

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    5. Christopher Mcnamara & Steven Mong, 2005. "Performance Measurement and Management: Some Insights from Practice," Australian Accounting Review, CPA Australia, vol. 15(35), pages 14-28, March.
    6. Vincenza Odorici & Manuela Presutti & Marco Savioli, 2016. "Strategic orientation of hotels: evidence from a contingent approach," Working Paper series 16-06, Rimini Centre for Economic Analysis, revised May 2016.
    7. Popa Adina-Simona, 2013. "Performance indicators for SMEs accessing EU funds," Constanta Maritime University Annals, Constanta Maritime University, vol. 19(1), pages 319-322.
    8. Flavia Dana Oltean, 2013. "An Exploratory Research Regarding Customer Orientation And Performance In Hospitality Industry," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 77-84, August.
    9. Benita M. Gullkvist, 2013. "Drivers of change in management accounting practices in an ERP environment," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(2), pages 149-174, September.
    10. Tseng, Fang-Mei & Chiu, Yu-Jing & Chen, Ja-Shen, 2009. "Measuring business performance in the high-tech manufacturing industry: A case study of Taiwan's large-sized TFT-LCD panel companies," Omega, Elsevier, vol. 37(3), pages 686-697, June.
    11. repec:eee:touman:v:32:y:2011:i:1:p:147-157 is not listed on IDEAS
    12. Piangpis Sriprasert Author_Email: & Oraphan Chanin & Rattiya Suttara, 2011. "Exploring The Relationship Between Managerial Functions And The Success Of Home Stay Community Based Tourism In Thailand: A Case Study Of Phomlok, Nakhon Si Thammarat, Thailand," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-320, Conference Master Resources.
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    14. Grigoroudis, E. & Orfanoudaki, E. & Zopounidis, C., 2012. "Strategic performance measurement in a healthcare organisation: A multiple criteria approach based on balanced scorecard," Omega, Elsevier, vol. 40(1), pages 104-119, January.


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