IDEAS home Printed from https://ideas.repec.org/a/eee/techno/v118y2022ics016649722200133x.html
   My bibliography  Save this article

Enhancing external knowledge search: The influence of performance measurement system design on the absorptive capacity of top management teams

Author

Listed:
  • Bedford, David
  • Bisbe, Josep
  • Sweeney, Breda

Abstract

External knowledge search is critical for innovation performance and centers on a firm's absorptive capacity. This study investigates whether and how two dimensions of absorptive capacity at the top management team (TMT) level, potential absorptive capacity and realized absorptive capacity, are influenced by two design choices of the performance measurement system (PMS), broad scope PMS and PMS integration, under different conditions of environmental dynamism. Based on cross-sectional survey data from firms in innovative industries, the results of our empirical study indicate that in more dynamic environments, a broader scope PMS is associated with higher potential absorptive capacity whereas higher PMS integration is associated with lower potential absorptive capacity. These associations are not observable in more stable environments. Moreover, broad scope PMS and PMS integration are both positively associated with realized absorptive capacity, independently of environmental dynamism. These findings highlight the relevance of PMS design choices for absorptive capacity, showing on the one hand the differences between the implications of broad scope PMS and those of PMS integration and, on the other hand, that the implications of PMS design choices for potential absorptive capacity (i.e. acquisition and assimilation of external knowledge) follow different patterns than the implications for realized absorptive capacity (i.e. the transformation and exploitation of such knowledge).

Suggested Citation

  • Bedford, David & Bisbe, Josep & Sweeney, Breda, 2022. "Enhancing external knowledge search: The influence of performance measurement system design on the absorptive capacity of top management teams," Technovation, Elsevier, vol. 118(C).
    • Handle: RePEc:eee:techno:v:118:y:2022:i:c:s016649722200133x
    DOI: 10.1016/j.technovation.2022.102586
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016649722200133X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.technovation.2022.102586?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Grabner, Isabella & Moers, Frank, 2013. "Management control as a system or a package? Conceptual and empirical issues," Accounting, Organizations and Society, Elsevier, vol. 38(6), pages 407-419.
    2. Emilie Ruiz & Sébastien Brion & Guy Parmentier, 2020. "Absorbing knowledge in the digital age: the key role of integration mechanisms in the context of crowdsourcing for innovation," Post-Print hal-01935104, HAL.
    3. Arie Y. Lewin & Silvia Massini & Carine Peeters, 2011. "Microfoundations of Internal and External Absorptive Capacity Routines," Organization Science, INFORMS, vol. 22(1), pages 81-98, February.
    4. Fabien De Geuser & Stella Mooraj & Daniel Oyon, 2009. "Does the Balanced Scorecard Add Value? Empirical Evidence on its Effect on Performance," European Accounting Review, Taylor & Francis Journals, vol. 18(1), pages 93-122.
    5. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    6. Enkel, Ellen & Heil, Sebastian & Hengstler, Monika & Wirth, Henning, 2017. "Exploratory and exploitative innovation: To what extent do the dimensions of individual level absorptive capacity contribute?," Technovation, Elsevier, vol. 60, pages 29-38.
    7. Fosfuri, Andrea & Tribø, Josep A., 2008. "Exploring the antecedents of potential absorptive capacity and its impact on innovation performance," Omega, Elsevier, vol. 36(2), pages 173-187, April.
    8. Stephanie C Schleimer & Torben Pedersen, 2014. "The effects of MNC parent effort and social structure on subsidiary absorptive capacity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(3), pages 303-320, April.
    9. Saemundsson, Rognvaldur J. & Candi, Marina, 2017. "Absorptive capacity and the identification of opportunities in new technology-based firms," Technovation, Elsevier, vol. 64, pages 43-49.
    10. Ittner, Christopher D. & Larcker, David F. & Randall, Taylor, 2003. "Performance implications of strategic performance measurement in financial services firms," Accounting, Organizations and Society, Elsevier, vol. 28(7-8), pages 715-741.
    11. Pankaj C. Patel & Marko Kohtamäki & Vinit Parida & Joakim Wincent, 2015. "Entrepreneurial orientation-as-experimentation and firm performance: The enabling role of absorptive capacity," Strategic Management Journal, Wiley Blackwell, vol. 36(11), pages 1739-1749, November.
    12. Kostopoulos, Konstantinos & Papalexandris, Alexandros & Papachroni, Margarita & Ioannou, George, 2011. "Absorptive capacity, innovation, and financial performance," Journal of Business Research, Elsevier, vol. 64(12), pages 1335-1343.
    13. Grafton, Jennifer & Lillis, Anne M. & Widener, Sally K., 2010. "The role of performance measurement and evaluation in building organizational capabilities and performance," Accounting, Organizations and Society, Elsevier, vol. 35(7), pages 689-706, October.
    14. Emer Curtis & Breda Sweeney, 2017. "Managing different types of innovation: mutually reinforcing management control systems and the generation of dynamic tension," Accounting and Business Research, Taylor & Francis Journals, vol. 47(3), pages 313-343, April.
    15. Gordon, Lawrence A. & Narayanan, V. K., 1984. "Management accounting systems, perceived environmental uncertainty and organization structure: An empirical investigation," Accounting, Organizations and Society, Elsevier, vol. 9(1), pages 33-47, January.
    16. Dalla Via, Nicola & Perego, Paolo & van Rinsum, Marcel, 2019. "How accountability type influences information search processes and decision quality," Accounting, Organizations and Society, Elsevier, vol. 75(C), pages 79-91.
    17. Roberts, Nicholas, 2015. "Absorptive capacity, organizational antecedents, and environmental dynamism," Journal of Business Research, Elsevier, vol. 68(11), pages 2426-2433.
    18. Udo Zander & Bruce Kogut, 1995. "Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities: An Empirical Test," Organization Science, INFORMS, vol. 6(1), pages 76-92, February.
    19. Zahra, Shaker A. & Filatotchev, Igor & Wright, Mike, 2009. "How do threshold firms sustain corporate entrepreneurship? The role of boards and absorptive capacity," Journal of Business Venturing, Elsevier, vol. 24(3), pages 248-260, May.
    20. Audretsch, David B. & Lehmann, Erik E. & Menter, Matthias & Wirsching, Katharine, 2021. "Intrapreneurship and absorptive capacities: The dynamic effect of labor mobility," Technovation, Elsevier, vol. 99(C).
    21. Fayard, Dutch & Lee, Lorraine S. & Leitch, Robert A. & Kettinger, William J., 2012. "Effect of internal cost management, information systems integration, and absorptive capacity on inter-organizational cost management in supply chains," Accounting, Organizations and Society, Elsevier, vol. 37(3), pages 168-187.
    22. Bedford, David S. & Malmi, Teemu & Sandelin, Mikko, 2016. "Management control effectiveness and strategy: An empirical analysis of packages and systems," Accounting, Organizations and Society, Elsevier, vol. 51(C), pages 12-28.
    23. Grimpe, Christoph & Sofka, Wolfgang, 2016. "Complementarities in the search for innovation—Managing markets and relationships," Research Policy, Elsevier, vol. 45(10), pages 2036-2053.
    24. Josep Bisbe & Ricardo Malagueño, 2015. "How control systems influence product innovation processes: examining the role of entrepreneurial orientation," Accounting and Business Research, Taylor & Francis Journals, vol. 45(3), pages 356-386, April.
    25. Ferreras-Méndez, José Luis & Fernández-Mesa, Anabel & Alegre, Joaquín, 2016. "The relationship between knowledge search strategies and absorptive capacity: A deeper look," Technovation, Elsevier, vol. 54(C), pages 48-61.
    26. Rebecca Henderson & Iain Cockburn, 1994. "Measuring Competence? Exploring Firm Effects in Pharmaceutical Research," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 63-84, December.
    27. Santoro, Gabriele & Bresciani, Stefano & Papa, Armando, 2020. "Collaborative modes with Cultural and Creative Industries and innovation performance: The moderating role of heterogeneous sources of knowledge and absorptive capacity," Technovation, Elsevier, vol. 92.
    28. Cheng, Mandy M. & Humphreys, Kerry A. & Zhang, Yichelle Y., 2018. "The interplay between strategic risk profiles and presentation format on managers' strategic judgments using the balanced scorecard," Accounting, Organizations and Society, Elsevier, vol. 70(C), pages 92-105.
    29. Paul Geroski & Steve Machin & John Van Reenen, 1993. "The Profitability of Innovating Firms," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 198-211, Summer.
    30. Carmen Camelo-Ordaz & Joaquín García-Cruz & Elena Sousa-Ginel, 2015. "The Influence of Top Management Team Conflict on Firm Innovativeness," Group Decision and Negotiation, Springer, vol. 24(6), pages 957-980, November.
    31. Ali, Murad & Seny Kan, Konan Anderson & Sarstedt, Marko, 2016. "Direct and configurational paths of absorptive capacity and organizational innovation to successful organizational performance," Journal of Business Research, Elsevier, vol. 69(11), pages 5317-5323.
    32. Henk W. Volberda & Nicolai J. Foss & Marjorie A. Lyles, 2010. "PERSPECTIVE---Absorbing the Concept of Absorptive Capacity: How to Realize Its Potential in the Organization Field," Organization Science, INFORMS, vol. 21(4), pages 931-951, August.
    33. Stephanie A. Fernhaber & Pankaj C. Patel, 2012. "How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity," Strategic Management Journal, Wiley Blackwell, vol. 33(13), pages 1516-1539, December.
    34. Frans A. J. Van den Bosch & Henk W. Volberda & Michiel de Boer, 1999. "Coevolution of Firm Absorptive Capacity and Knowledge Environment: Organizational Forms and Combinative Capabilities," Organization Science, INFORMS, vol. 10(5), pages 551-568, October.
    35. Xiaohua Lin & Richard Germain, 2003. "Organizational structure, context, customer orientation, and performance: lessons from Chinese state‐owned enterprises," Strategic Management Journal, Wiley Blackwell, vol. 24(11), pages 1131-1151, November.
    36. Naranjo-Gil, David & Hartmann, Frank, 2007. "Management accounting systems, top management team heterogeneity and strategic change," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 735-756.
    37. Hall, Matthew, 2011. "Do comprehensive performance measurement systems help or hinder managers' mental model development?," LSE Research Online Documents on Economics 36703, London School of Economics and Political Science, LSE Library.
    38. Yan Zhang & Haiyang Li & Yu Li & Li‐An Zhou, 2010. "FDI spillovers in an emerging market: the role of foreign firms' country origin diversity and domestic firms' absorptive capacity," Strategic Management Journal, Wiley Blackwell, vol. 31(9), pages 969-989, September.
    39. Bedford, David S. & Bisbe, Josep & Sweeney, Breda, 2019. "Performance measurement systems as generators of cognitive conflict in ambidextrous firms," Accounting, Organizations and Society, Elsevier, vol. 72(C), pages 21-37.
    40. Czarnitzki, Dirk & Kraft, Kornelius, 2004. "An empirical test of the asymmetric models on innovative activity: who invests more into R&D, the incumbent or the challenger?," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 153-173, June.
    41. Henri, Jean-François & Wouters, Marc, 2020. "Interdependence of management control practices for product innovation: The influence of environmental unpredictability," Accounting, Organizations and Society, Elsevier, vol. 86(C).
    42. Papazoglou, Michalis E. & Spanos, Yiannis E., 2021. "“Influential knowledge and financial performance: The role of time and rivals’ absorptive capacity”," Technovation, Elsevier, vol. 102(C).
    43. Bouwens, Jan & Abernethy, Margaret A., 2000. "The consequences of customization on management accounting system design," Accounting, Organizations and Society, Elsevier, vol. 25(3), pages 221-241, April.
    44. Chenhall, Robert H., 2003. "Management control systems design within its organizational context: findings from contingency-based research and directions for the future," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 127-168.
    45. Müller-Stewens, Benedikt & Widener, Sally K. & Möller, Klaus & Steinmann, Jan-Christoph, 2020. "The role of diagnostic and interactive control uses in innovation," Accounting, Organizations and Society, Elsevier, vol. 80(C).
    46. Jansen, J.J.P. & van den Bosch, F.A.J. & Volberda, H.W., 2005. "Managing Potential and Realized Absorptive Capacity: How do Organizational Antecedents matter?," ERIM Report Series Research in Management ERS-2005-025-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    47. Chenhall, Robert H., 2005. "Integrative strategic performance measurement systems, strategic alignment of manufacturing, learning and strategic outcomes: an exploratory study," Accounting, Organizations and Society, Elsevier, vol. 30(5), pages 395-422, July.
    48. Jianwen Liao & Harold Welsch & Michael Stoica, 2003. "Organizational Absorptive Capacity and Responsiveness: An Empirical Investigation of Growth–Oriented SMEs," Entrepreneurship Theory and Practice, , vol. 28(1), pages 63-86, January.
    49. Hall, Matthew, 2008. "The effect of comprehensive performance measurement systems on role clarity, psychological empowerment and managerial performance," Accounting, Organizations and Society, Elsevier, vol. 33(2-3), pages 141-163.
    50. Peter J. Lane & Jane E. Salk & Marjorie A. Lyles, 2001. "Absorptive capacity, learning, and performance in international joint ventures," Strategic Management Journal, Wiley Blackwell, vol. 22(12), pages 1139-1161, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hong-Jing Jia & Zi-Yin Zhuang & Yan-Xiang Xie & Yi-Xi Wang & Shi-Ying Wu, 2023. "Research on Dynamic Capability and Enterprise Open Innovation," Sustainability, MDPI, vol. 15(2), pages 1-23, January.
    2. Hui Gao & Suming Wu, 2023. "The Influence of Ambidextrous Knowledge Search on Technological Innovation: The Mediating Role of Knowledge Base," SAGE Open, , vol. 13(4), pages 21582440231, December.
    3. Williams, Christopher & van Triest, Sander, 2023. "Understanding performance in professional services for innovation intermediation: Technology consultants vs. management consultants," Technovation, Elsevier, vol. 126(C).
    4. Battistella, Cinzia & Ferraro, Giovanna & Pessot, Elena, 2023. "Technology transfer services impacts on open innovation capabilities of SMEs," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    5. Zhu, Peiyu & Miao, Xiaoming & Jin, Shumo & Moehler, Robert, 2023. "Transactive memory system, boundary-spanning search and business model innovation: the moderating role of environmental dynamism," Technovation, Elsevier, vol. 128(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khan, Zaheer & Lew, Yong Kyu & Marinova, Svetla, 2019. "Exploitative and exploratory innovations in emerging economies: The role of realized absorptive capacity and learning intent," International Business Review, Elsevier, vol. 28(3), pages 499-512.
    2. Bedford, David S. & Bisbe, Josep & Sweeney, Breda, 2019. "Performance measurement systems as generators of cognitive conflict in ambidextrous firms," Accounting, Organizations and Society, Elsevier, vol. 72(C), pages 21-37.
    3. Ritter-Hayashi, Daniela & Knoben, Joris & Vermeulen, Patrick A.M., 2021. "Temporary employment: Curse or blessing for a firm's absorptive capacity?," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    4. Martinkenaite, Ieva & Breunig, Karl Joachim, 2016. "The emergence of absorptive capacity through micro–macro level interactions," Journal of Business Research, Elsevier, vol. 69(2), pages 700-708.
    5. Rafael Sancho-Zamora & Isidro Peña-García & Santiago Gutiérrez-Broncano & Felipe Hernández-Perlines, 2021. "Moderating Effect of Proactivity on Firm Absorptive Capacity and Performance: Empirical Evidence from Spanish Firms," Mathematics, MDPI, vol. 9(17), pages 1-15, August.
    6. Hammady Ahmed DINE RABEH, 2013. "Firm Resources’ Entanglement Determines ITS Absorptive Capacity: A Review Towards A New Reconceptualization," Working Papers 270, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.
    7. Mariano, Stefania & Al-Arrayed, Suad, 2018. "Combinations of absorptive capacity metaroutines: The role of organizational disruptions and time constraints," European Management Journal, Elsevier, vol. 36(2), pages 171-182.
    8. Nitzl, Christian, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 19-35.
    9. Michele N. Medina & Indu Ramachandran & Joshua J. Daspit, 2019. "Collaboration Or Clash? Mapping The Effects Of Top Management Team Conflict On Firm Absorptive Capacity," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(03), pages 1-29, April.
    10. Lhuillery, Stéphane & Tellechea, Marion & Thiéry, Stéphanie, 2023. "Innovation in lieu of compliance: Internal audit departments’ standardized and non-standardized knowledge sources," Technovation, Elsevier, vol. 123(C).
    11. Peeters, T.J.G., 2013. "External knowledge search and use in new product development," Other publications TiSEM 300ebb34-b090-4210-b95e-f, Tilburg University, School of Economics and Management.
    12. Emre Yildiz, H. & Murtic, Adis & Klofsten, Magnus & Zander, Udo & Richtnér, Anders, 2021. "Individual and contextual determinants of innovation performance: A micro-foundations perspective," Technovation, Elsevier, vol. 99(C).
    13. Chen, Clara Xiaoling & Lill, Jeremy B. & Lucianetti, Lorenzo, 2023. "Performance measurement system diversity and product innovation: Evidence from longitudinal survey data," Accounting, Organizations and Society, Elsevier, vol. 111(C).
    14. Cäker, Mikael & Siverbo, Sven, 2018. "Effects of performance measurement system inconsistency on managers’ role clarity and well-being," Scandinavian Journal of Management, Elsevier, vol. 34(3), pages 256-266.
    15. Burcharth, Ana Luiza Lara de Araújo & Lettl, Christopher & Ulhøi, John Parm, 2015. "Extending organizational antecedents of absorptive capacity: Organizational characteristics that encourage experimentation," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 269-284.
    16. Camisón, César & Forés, Beatriz, 2011. "Knowledge creation and absorptive capacity: The effect of intra-district shared competences," Scandinavian Journal of Management, Elsevier, vol. 27(1), pages 66-86, March.
    17. H. Emre Yildiz & Adis Murtic & Udo Zander & Anders Richtnér, 2019. "What Fosters Individual-Level Absorptive Capacity in MNCs? An Extended Motivation–Ability–Opportunity Framework," Management International Review, Springer, vol. 59(1), pages 93-129, February.
    18. Huang, Kuo-Feng & Lin, Ku-Ho & Wu, Lei-Yu & Yu, Pang-Hsiang, 2015. "Absorptive capacity and autonomous R&D climate roles in firm innovation," Journal of Business Research, Elsevier, vol. 68(1), pages 87-94.
    19. D׳Souza, Derrick E. & Kulkarni, Shailesh S., 2015. "A framework and model for absorptive capacity in a dynamic multi-firm environment," International Journal of Production Economics, Elsevier, vol. 167(C), pages 50-62.
    20. Flatten, Tessa & Adams, Daniel & Brettel, Malte, 2015. "Fostering absorptive capacity through leadership: A cross-cultural analysis," Journal of World Business, Elsevier, vol. 50(3), pages 519-534.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:techno:v:118:y:2022:i:c:s016649722200133x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/01664972 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.