Aligning Performance Metrics with Business Strategy

Authors

Ravi Kathuria, Chapman UniversityFollow
Lorenzo Lucianetti, University of Chieti

Document Type

Article

Publication Date

3-11-2024

Abstract

Purpose

This study examines whether different strategy archetypes deploy specific performance metrics to support their strategic goals and priorities. If so, does alignment of strategy and metrics positively impact organisational performance?

Design/methodology/approach

The conceptual framework and hypotheses are couched in Contingency Theory. The role of business strategy as a moderating variable is tested using MANOVA, followed by post hoc pairwise comparisons. The results are based on cross-sectional survey data from 372 manufacturing and service organisations in Italy.

Findings

The overall contingency effect of business strategy in selecting and deploying performance metrics and their effect on organisational performance is supported. However, the group-wise post hoc analyses show support only for Prospectors but not for Defenders and Analysers.

Research limitations/implications

This research lends further support in favour of the Contingency Theory from a new geographic context (Italy) that there are no universally best performance metrics that drive organisational performance. However, more research is needed to understand why the theory only holds for certain strategic archetypes and not across all archetypes.

Practical implications

Managers can direct resources and effort towards designing and deploying the “right” type of performance metrics suitable for their strategic orientation and thus optimise organisational performance.

Originality/value

This is a rare study that tests the moderating role of business strategy using all four strategic archetypes of the Miles and Snow typology. It deploys both financial and non-financial measures and uses a very large sample of both manufacturing and service organisations from a relatively unexplored region of the world. The study provides additional evidence in favour of the Contingency Theory whilst advocating for more research to refine our understanding of why the contingency perspective is not so important for firms that are not the first-in.

Comments

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Journal, volume, in year following peer review. This article may not exactly replicate the final published version. The definitive publisher-authenticated version is available online at https://doi.org/

Recommended Citation

Kathuria, R. and Lucianetti, L. (2024), "Aligning performance metrics with business strategy", Management Decision. https://doi.org/10.1108/MD-02-2023-0184

Peer Reviewed

1

Copyright

Emerald Publishing Limited

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License