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Strategy communication and measurement systems

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  • Pascal Courty

Abstract

Organizations often face the challenge of communicating their strategies to local decision makers. The difficulty presents itself in finding a way to measure performance wich meaningfully conveys how to implement the organization's strategy at local levels. I show that organizations solve this communication problem by combining performance measures in such a way that performance gains come closest to mimicking value-added as defined by the organization's strategy. I further show how organizations rebalance performance measures in response to changes in their strategies. Applications to the design of performance metrics, gaming, and divisional performance evaluation are considered. The paper also suggests several empirical ways to evaluate the practical importance of the communication role of measurement systems.

Suggested Citation

  • Pascal Courty, 1997. "Strategy communication and measurement systems," Economics Working Papers 330, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:330
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    File URL: https://econ-papers.upf.edu/papers/330.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Measurement systems; firm objective; performance measurament; communication;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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