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Linking Environmental Uncertainty to Non-Financial Performance Measures and Performance: A Research Note

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Abstract

Several previous research studies have reported mixed results concerning the direct association between non-financial performance measures and performance. The presence of environmental uncertainty on this relationship has not been established. This paper makes a contribution to this area by proposing that it is in conditions of environmental uncertainty that non-financial measures are most useful in improving organisational performance. It analyses empirical data from a random sample of 52 New Zealand manufacturing firms to test the hypothesis that non-financial measures of performance would lead to improved organisational performance under conditions of increased environmental uncertainty. The findings suggest that performance should be a declining function of the size of the "mismatch" between an organisation's environment and use of the different combinations of non-financial performance measures. Further, it is suggested that prior mixed results may be attributed to the omission of environmental uncertainty.

Suggested Citation

  • Zahirul Hoque, 2005. "Linking Environmental Uncertainty to Non-Financial Performance Measures and Performance: A Research Note," Working Papers 2005_05, Deakin University, Department of Economics.
    • Handle: RePEc:dkn:acctwp:aef_2005_05
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    File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2005-05.pdf
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    Cited by:

    1. Hamzah Al-Mawali & Tri-Dung Lam, 2016. "Customer Accounting and Environmental Uncertainty: Sequential Explanatory Study," International Review of Management and Marketing, Econjournals, vol. 6(3), pages 532-543.
    2. Chih-An Lin & Homin Chen, 2018. "Deconstructing B2B, co-creation and service deployment in East Asia: evidence from Taiwan and PRC manufacturers," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(3), pages 351-370, May.
    3. Christophe Germain, 2007. "L'Architecture Des Systemes De Controle De Gestion : Une Analyse Du Rapport Entre Les Budgets Et Les Systemes De Mesure De La Performance," Post-Print halshs-00534760, HAL.
    4. Laura Broccardo & Simona Alfiero & Francesca Culasso, 2024. "Enhancing Performance Management Systems in a challenging environment," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2024(1), pages 5-14.
    5. Andrea Dello Sbarba & Riccardo Giannetti & Alessandro Marelli, 2015. "A field study of Value-Based Management sophistication: The role of shareholders," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2015(2), pages 65-100.
    6. Md. Mazharul Islam & Majed Alharthi, 2020. "Relationships among Ethical Commitment, Ethical Climate, Sustainable Procurement Practices, and SME Performance: An PLS-SEM Analysis," Sustainability, MDPI, vol. 12(23), pages 1-25, December.
    7. Rodrigues Quesado, Patrícia & Aibar Guzmán, Beatriz & Lima Rodrigues, Lúcia, 2014. "La influencia de factores relativos a la estrategia organizativa y al entorno en la adopción del Cuadro de Mando Integral en empresas portuguesas," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 17(2), pages 163-173.
    8. Eva Benková & Peter Gallo & Beáta Balogová & Jozef Nemec, 2020. "Factors Affecting the Use of Balanced Scorecard in Measuring Company Performance," Sustainability, MDPI, vol. 12(3), pages 1-18, February.
    9. Patrick Reinwald & Stephan Leitner & Friederike Wall, 2021. "Limited intelligence and performance-based compensation: An agent-based model of the hidden action problem," Papers 2107.03764, arXiv.org.
    10. Matolcsy, Zoltan & Wakefield, James, 2017. "Multinational headquarter control of wholly owned foreign subsidiaries," The British Accounting Review, Elsevier, vol. 49(3), pages 275-293.
    11. Goretzki, Lukas & Reuter, Marek & Sandberg, Joanna & Thulin, Gabriella, 2022. "Making sense of employee satisfaction measurement – A technological frames of reference perspective," The British Accounting Review, Elsevier, vol. 54(1).
    12. Kallunki, Juha-Pekka & Laitinen, Erkki K. & Silvola, Hanna, 2011. "Impact of enterprise resource planning systems on management control systems and firm performance," International Journal of Accounting Information Systems, Elsevier, vol. 12(1), pages 20-39.
    13. Hoque, Zahirul, 2014. "20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research," The British Accounting Review, Elsevier, vol. 46(1), pages 33-59.
    14. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    15. Avci, Umut & Madanoglu, Melih & Okumus, Fevzi, 2011. "Strategic orientation and performance of tourism firms: Evidence from a developing country," Tourism Management, Elsevier, vol. 32(1), pages 147-157.
    16. Iryna Alves & Sofia M. Lourenço, 2022. "The use of non-financial performance measures for managerial compensation: evidence from SMEs," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(2), pages 151-187, June.
    17. Laurent Mériade, 2019. "The hybridization of management instruments.The example of university performance management in France [L’hybridation des instruments de gestion. L’exemple du pilotage de la performance universitai," Post-Print hal-02163505, HAL.
    18. ECHO Orinya Christopher, 2023. "Influence of External Environmental Factors on the Performance of Access Bank PLC," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(4), pages 689-704, April.
    19. Erkki K. Laitinen & Aapo Länsiluoto & Soila Salonen, 2016. "Interactive budgeting, product innovation, and firm performance: empirical evidence from Finnish firms," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 27(4), pages 293-322, November.
    20. Filiz Karpuz & Erdal Güryay & Dervis Kirikkaleli, 2021. "Sustainable-Performance Instrument Development and Validation in the Northern Cyprus Banking Sector," Sustainability, MDPI, vol. 13(14), pages 1-14, July.

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