How does performance measurement impact performance?

What is it about?

This paper is about how performance measurement in organizations actually affects performance. To understand this, we focused on organizational routines as the basic processes that generate organizational performance. We found that performance measurement impacts performance in three different ways. These are a) the Trigger Effect, b) the Guidance Effect, and c) the Intensification Effect. The trigger effect relies on feedback; the guidance effect makes use of the feedforward function of measurement; and the intensification effect works through stimulating the cycle of reflection and action in organizations.

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Why is it important?

Unlike many of the previous studies that ask WHETHER performance measurement affects performance, this paper asks HOW this this effect happens. The value of this research is that it provides a look into the very mechanism that connects performance measurement interventions with their desired outcomes. As a result, it identifies multiple effects of performance measurement in organizations and helps explain the conflicting results produced by prior research.