Reducing Strategy Surrogation: The Effects of Performance Measurement System Flexibility and Environmental Dynamism

Wang, KK; Cheng, MM; Chang, LJ

Reducing Strategy Surrogation: The Effects of Performance Measurement System Flexibility and Environmental Dynamism

Wang, KK Cheng, MM Chang, LJ

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Publisher:: AMER ACCOUNTING ASSOC
Publication Type:: Journal Article
Citation:: ACCOUNTING REVIEW, 2023, 98, (4), pp. 435-456
Issue Date:: 2023-07

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Field	Value	Language
dc.contributor.author	Wang, KK
dc.contributor.author	Cheng, MM
dc.contributor.author	Chang, LJ
dc.date.accessioned	2024-03-08T03:46:23Z
dc.date.available	2024-03-08T03:46:23Z
dc.date.issued	2023-07
dc.identifier.citation	ACCOUNTING REVIEW, 2023, 98, (4), pp. 435-456
dc.identifier.issn	0001-4826
dc.identifier.issn	1558-7967
dc.identifier.uri	http://hdl.handle.net/10453/176351
dc.description.abstract	<jats:title>ABSTRACT</jats:title> <jats:p>Prior research shows that individuals exhibit a propensity to surrogate performance measures for their underlying strategy, resulting in suboptimal strategic decisions. We investigate whether the incorporation of flexibility in contemporary performance measurement systems (PMSs) reduces surrogation propensity in the context of product innovation and whether this effect varies depending on environmental dynamism. We conduct a 2 × 2 experiment and find that PMS flexibility significantly lowers managers' surrogation propensity when the business environment is more dynamic and when the investment decisions have opportunity costs. Our study contributes to the literature by identifying a viable way to reduce managers' surrogation propensity.</jats:p>
dc.language	English
dc.publisher	AMER ACCOUNTING ASSOC
dc.relation.ispartof	ACCOUNTING REVIEW
dc.relation.isbasedon	10.2308/TAR-2019-0523
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability
dc.subject.classification	Accounting
dc.subject.classification	3501 Accounting, auditing and accountability
dc.subject.classification	3502 Banking, finance and investment
dc.title	Reducing Strategy Surrogation: The Effects of Performance Measurement System Flexibility and Environmental Dynamism
dc.type	Journal Article
utslib.citation.volume	98
utslib.for	1501 Accounting, Auditing and Accountability
pubs.organisational-group	University of Technology Sydney
pubs.organisational-group	University of Technology Sydney/Faculty of Business
pubs.organisational-group	University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2024-03-08T03:46:21Z
pubs.issue	4
pubs.publication-status	Published
pubs.volume	98
utslib.citation.issue	4

Abstract:

ABSTRACT Prior research shows that individuals exhibit a propensity to surrogate performance measures for their underlying strategy, resulting in suboptimal strategic decisions. We investigate whether the incorporation of flexibility in contemporary performance measurement systems (PMSs) reduces surrogation propensity in the context of product innovation and whether this effect varies depending on environmental dynamism. We conduct a 2 × 2 experiment and find that PMS flexibility significantly lowers managers' surrogation propensity when the business environment is more dynamic and when the investment decisions have opportunity costs. Our study contributes to the literature by identifying a viable way to reduce managers' surrogation propensity.

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http://hdl.handle.net/10453/176351