Management Accounting Section Midyear Meeting

Too Much of a Good Thing? Enabling Performance Measurement Systems and the Implications for Business Function Ambidexterity

• In Event: Performance Measures and Innovation

Abstract

This paper investigates the relationship between the decision-facilitating use of Performance Measurement Systems (PMSs) with enabling design features and a business function’s ambidextrous capability. It is not easy to achieve ambidexterity, and while the concept has spurred research in many different directions, the impact of organisational systems on ambidexterity is less understood, particularly at lower organisational levels. Using a cross-sectional survey of 143 function managers working in a variety of functions across high-tech industries in Ireland, the research examines the relationship between ambidextrous capability, conceptualised as the ability of functions to achieve high combined levels of exploitation and exploration, and PMSs possessing Adler & Borys’ four enabling design principles of repair, internal transparency, global transparency, and flexibility. The study’s findings give a more nuanced account of Adler & Bory’s claim that enabling systems can help organisations become ambidextrous. First, the study finds an inverted-U relationship between PMSs with enabling design features and ambidextrous capability; we interpret this relationship as a too-much-of-a-good-thing effect where high levels of an independent variable become detrimental to a dependent variable. Further analysis also reveals that as the enabling level of a PMS increases, functions become biased towards exploitation. Overall, the study contributes to the literature by theorising and demonstrating that control systems can be too highly enabling, thereby extending Adler & Borys’ framework beyond its dichotomy of enabling and coercive systems.

Authors

• Michael Farrell, University College Cork

• Breda Sweeney, National University of Ireland - Galway