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Does Mandatory Measurement and Peer Reporting Improve Performance?

Author

Listed:
  • Susanna Gallani

    (Harvard Business School, Accounting and Management Unit)

  • Takehisa Kajiwara

    (Kobe University - JapanKobe University - Japan)

  • Ranjani Krishnan

    (Michigan State University)

Abstract

We examine the effect of mandated measurement and peer disclosure of new information on the persistence of performance improvements in a setting without performance incentives. Value of information (VOI) theory posits that information can improve the accuracy of posterior beliefs and thereby have a decision facilitating effect. These effects are more pronounced when the information is new versus an update. Using data from the Japanese National Hospital Organization, we analyze performance trends following regulation requiring standardized measurement and peer disclosure of absolute and relative patient satisfaction performance. After controlling for ceiling effects and regression to the mean, mandatory patient satisfaction measurement and peer disclosure introduce positive and significant mean shifts in performance with larger improvements for poorly performing hospitals. The largest positive effects occur when the information is new. Our study provides empirical evidence of the decision facilitating value of information without confound from its decision influencing value.

Suggested Citation

  • Susanna Gallani & Takehisa Kajiwara & Ranjani Krishnan, 2015. "Does Mandatory Measurement and Peer Reporting Improve Performance?," Harvard Business School Working Papers 16-018, Harvard Business School, revised Mar 2017.
    • Handle: RePEc:hbs:wpaper:16-018
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    References listed on IDEAS

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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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