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.
|Title of host publication||Advances in management accounting, volume 20|
|Number of pages||32|
|Publication status||Published - 1 Jun 2012|
GUO, L., BERNARD, W. O. W., & LUI, M. C. G. (2012). Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior. In Advances in management accounting, volume 20 (pp. 209-240) https://doi.org/10.1108/s1474-7871(2012)0000020015