THE EFFECTS OF USING PERFORMANCE MEASUREMENT SYSTEMS (PMSS) ON ORGANIZATIONS’ PERFORMANCE

Abstract

The current business environment proposes great pressure and challenges on organizations to sustain and prosper. Performance measurement systems (PMSs) are considered one of the most accepted and widely used tools that organizations adopt to help them implementing their strategies, monitoring their performance towards achieving their strategic goals, and gathering important and useful information to improve their performance frequently. Previous literature has theoretically suggested that using PMSs will affect the organizational performance; nevertheless, the empirical studies found different results regarding these effects, some of these results supported the suggested benefits, while some did not. In this paper, recent empirical pieces of evidence studying the effects of using these systems on organizational performance have been collected and reviewed, covering a wide variety of industries in different regions. All reviewed articles were published in peer-reviewed journals in the period between 2014 and 2020. Almost all of the reviewed articles support the theoretical claims of having different positive impacts on organizational performance. However, the effects of these systems were not always direct, they vary between being direct, indirect, mediating, or moderating. PMSs affect various aspects of organizations; for example, they affect the overall organizational performance, financial and non-financial performance, employees’ behavior, and many other aspects of organizations.

Keywords

• performance measurement systems
• organizational performance
• efficiency
• effectiveness