Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior

Lan GUO, Wong On Wing BERNARD, Man Ching, Gladie LUI

Research output: Book Chapters | Papers in Conference ProceedingsBook ChapterResearchpeer-review

2 Citations (Scopus)

Abstract

The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process. A case-based experiment was conducted among 74 full-time employees. The results suggest that when incentives are linked to both outcome and driver measures of SPMS, compared with when they are outcome-based and not linked to the SPMS, managers are more proactive in communicating strategy-related issues to top management. In addition, this effect of SPMS-based incentives on middle managers' proactivity is mediated by their autonomous extrinsic motivation to achieve strategic goals. The results are in general consistent with postulates of the self-determination theory of motivation. This chapter also has practical implication. Specifically, recent evidence suggests that most SPMS adopters fail to validate causal business models underlying their formulated strategies (Ittner, 2008; Inner and Larcker, 2003, 2005). Middle managers' proactive strategic behavior may be one means to prompt top management to inspect formulated strategies and their underlying business models.
Original languageEnglish
Title of host publicationAdvances in management accounting, volume 20
Pages209-240
Number of pages32
DOIs
Publication statusPublished - 1 Jun 2012

Fingerprint

Strategic behavior
Incentives
Performance measurement system
Middle managers
Business model
Top management
Proactivity
Strategic goals
Strategy formulation
Employees
Self-determination theory
Extrinsic motivation
Experiment
Managers

Cite this

GUO, Lan ; BERNARD, Wong On Wing ; LUI, Man Ching, Gladie. / Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior. Advances in management accounting, volume 20. 2012. pp. 209-240
@inbook{8e8e5f5d96d643aaa139812afe65b438,
title = "Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior",
abstract = "The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process. A case-based experiment was conducted among 74 full-time employees. The results suggest that when incentives are linked to both outcome and driver measures of SPMS, compared with when they are outcome-based and not linked to the SPMS, managers are more proactive in communicating strategy-related issues to top management. In addition, this effect of SPMS-based incentives on middle managers' proactivity is mediated by their autonomous extrinsic motivation to achieve strategic goals. The results are in general consistent with postulates of the self-determination theory of motivation. This chapter also has practical implication. Specifically, recent evidence suggests that most SPMS adopters fail to validate causal business models underlying their formulated strategies (Ittner, 2008; Inner and Larcker, 2003, 2005). Middle managers' proactive strategic behavior may be one means to prompt top management to inspect formulated strategies and their underlying business models.",
author = "Lan GUO and BERNARD, {Wong On Wing} and LUI, {Man Ching, Gladie}",
year = "2012",
month = "6",
day = "1",
doi = "10.1108/s1474-7871(2012)0000020015",
language = "English",
isbn = "9781780527543",
pages = "209--240",
booktitle = "Advances in management accounting, volume 20",

}

Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior. / GUO, Lan; BERNARD, Wong On Wing; LUI, Man Ching, Gladie.

Advances in management accounting, volume 20. 2012. p. 209-240.

Research output: Book Chapters | Papers in Conference ProceedingsBook ChapterResearchpeer-review

TY - CHAP

T1 - Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior

AU - GUO, Lan

AU - BERNARD, Wong On Wing

AU - LUI, Man Ching, Gladie

PY - 2012/6/1

Y1 - 2012/6/1

N2 - The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process. A case-based experiment was conducted among 74 full-time employees. The results suggest that when incentives are linked to both outcome and driver measures of SPMS, compared with when they are outcome-based and not linked to the SPMS, managers are more proactive in communicating strategy-related issues to top management. In addition, this effect of SPMS-based incentives on middle managers' proactivity is mediated by their autonomous extrinsic motivation to achieve strategic goals. The results are in general consistent with postulates of the self-determination theory of motivation. This chapter also has practical implication. Specifically, recent evidence suggests that most SPMS adopters fail to validate causal business models underlying their formulated strategies (Ittner, 2008; Inner and Larcker, 2003, 2005). Middle managers' proactive strategic behavior may be one means to prompt top management to inspect formulated strategies and their underlying business models.

AB - The present research examines the effect of incentivizing both outcome and driver measures of SPMS on middle managers' proactivity in influencing the strategy formulation process. A case-based experiment was conducted among 74 full-time employees. The results suggest that when incentives are linked to both outcome and driver measures of SPMS, compared with when they are outcome-based and not linked to the SPMS, managers are more proactive in communicating strategy-related issues to top management. In addition, this effect of SPMS-based incentives on middle managers' proactivity is mediated by their autonomous extrinsic motivation to achieve strategic goals. The results are in general consistent with postulates of the self-determination theory of motivation. This chapter also has practical implication. Specifically, recent evidence suggests that most SPMS adopters fail to validate causal business models underlying their formulated strategies (Ittner, 2008; Inner and Larcker, 2003, 2005). Middle managers' proactive strategic behavior may be one means to prompt top management to inspect formulated strategies and their underlying business models.

UR - http://commons.ln.edu.hk/sw_master/2338

U2 - 10.1108/s1474-7871(2012)0000020015

DO - 10.1108/s1474-7871(2012)0000020015

M3 - Book Chapter

SN - 9781780527543

SP - 209

EP - 240

BT - Advances in management accounting, volume 20

ER -