Title

Motivational effects of linking incentives to different measures in strategic performance measurement systems : implications for proactive strategic behavior

Document Type

Book chapter

Source Publication

Advances in management accounting, volume 20

Publication Date

6-1-2012

First Page

209

Last Page

240

Abstract

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 & 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.

DOI

10.1108/s1474-7871(2012)0000020015

Publisher Statement

Copyright © Advances in Consumer Research, 2013

Access to external full text or publisher's version may require subscription.

Additional Information

ISBN of the source publication: 9781780527543

Full-text Version

Publisher’s Version

Recommended Citation

Guo, L., Bernard, W.-O.-W., & Lui, G. (2012). Motivational effects of linking incentives to different measures in strategic performance measurement systems: Implications for proactive strategic behavior. In J. Y. Lee & M. J. Epstein (Eds.), Advances in management accounting, volume 20 (pp. 209-240). Bingley: Emerald. doi: 10.1108/s1474-7871(2012)0000020015