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Do comprehensive performance measurement systems help or hinder managers' mental model development?

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  • Hall, Matthew

Abstract

This study examines whether and how the process of updating and changing mental models (learning) helps to explain how performance measurement systems (PMS) affect individual performance. Although prior studies (e.g., Hall, 2008; Burney and Widener, 2007; Burney et al., 2009) highlight the important role of particular cognitive and motivational mechanisms, such as role clarity and organizational justice, they do not consider how PMS can improve performance by helping individuals to update their mental models and develop learning capabilities. As such, this study investigates relations among comprehensive PMS, two types of learning at the managerial (individual) level (mental model confirmation and mental model building), and managerial performance. Results show that a more comprehensive PMS helps managers to confirm their mental models of business unit operations. In contrast, findings show that a more comprehensive PMS can help managers to build new mental models of business unit operations, but only in specific settings, that is, for managers with a short organizational tenure and/or from a small-sized strategic business unit. Importantly, results also show that both mental model confirmation and mental model building have positive associations with managerial performance.

Suggested Citation

  • Hall, Matthew, 2011. "Do comprehensive performance measurement systems help or hinder managers' mental model development?," LSE Research Online Documents on Economics 36703, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:36703
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    File URL: http://eprints.lse.ac.uk/36703/
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    References listed on IDEAS

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    1. repec:eee:joacli:v:37:y:2016:i:c:p:19-35 is not listed on IDEAS
    2. repec:spr:jmgtco:v:28:y:2018:i:4:d:10.1007_s00187-017-0254-9 is not listed on IDEAS
    3. Macinati, Manuela S. & Bozzi, Stefano & Rizzo, Marco Giovanni, 2016. "Budgetary participation and performance: The mediating effects of medical managers’ job engagement and self-efficacy," Health Policy, Elsevier, vol. 120(9), pages 1017-1028.
    4. Maurizio Massaro & Filippo Zanin & Roland Bardy, 2014. "Levers of control and knowledge sharing in alliances among Large Firms and Small Firms in the pharmaceutical industry," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2014(2), pages 121-142.
    5. Sebastian Goebel & Barbara E. Weißenberger, 2017. "Effects of management control mechanisms: towards a more comprehensive analysis," Journal of Business Economics, Springer, vol. 87(2), pages 185-219, February.
    6. Sharul Effendy Janudin & Farahaini Mohd Hanif & Noor Shafeeza Zainuddin, 2016. "Developing Contemporary Performance Measurement System Performance Model for Co-operatives in Malaysia: Is it Necessary?," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(11), pages 436-448, November.

    More about this item

    Keywords

    learning; managerial performance; mental models; performance measurement; survey;

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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