Download DEVELOPMENT OF PERFORMANCE MEASUREMENT SYSTEM

DEVELOPMENT OF PERFORMANCE MEASUREMENT SYSTEM ACCORDING TO
BUSINESS ENVIRONMENT : AN SME PERSPECTIVE
Lina Kloviene, Kaunas University of Technology, 2013
Introduction to the problem (1)
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Context of business environment;
Fast decision making process;
Growing importance of performance
measurement system;
Development of performance measurement
system in SMEs according to business
environment.
Introduction to the problem (2)
• Importance of SME’s for a economic growth;
BUT
• Challenge to sustain performance for a long term;
WHY?
• Scared resources for a new PMS methods;
• Need for new possibilities.
Introduction to the problem (3)
What is performance measurement?
The main feature of performance measurement is:
• ability to apply theoretical descriptive method
into practices,
• ability to incorporate information to decision
making process,
• ability to improve and change the systems
according to changing external conditions and
internal potential of organization.
The research problem
What is a broader and more
comprehensive view of all the
performance measurement practice
in SMEs?
The aim of an article
is to investigate an internal recourses
based development of performance
measurement system according to
business environment
Theoretical background(1-2)
Environmental level
Economic factors
Economic
constraints
Competition
Technological
advancement
Coercive factors
Accounting standards and
financial legislation
Socioeconomic -political
institutions’ pressures
Performance
measurement
system
Mimetic factors
Copying best
practices from others
Organizational level
Normative factors
Professionals/competence
Organizational strategic
orientation
Corporate culture
Organizational
characteristics
Theoretical background(2-2)
Internal environment - reaction
Absorption dimension
Static dimension
Performance
measurement
system
Simplicity dimension
Dynamic dimension
External environment
Theoretical assumptions
Internal environment - reaction H1
Absorption
H3
• increasing
level of
strategy
complication
Static
H2 • increasing number of used measures
• variability of
underlying
goalsin an
• increasing level
of flexibility
internal processes
• wide range of
decision making
Simplicity
Dynamic
External environment
Research method
• External environment of organization was
analyzed according to the frequency of
changes in factors of external environment.
• Internal environment was analyzed
according to complexity of internal factors –
as organization reaction to absorb or
simplify external environment.
• Performance measurement system was
analyzed as having five variables –
measures, strategy, goals, processes and
decision making level.
Research results (1-2)
Research results (2-2)
The empirical data confirmed that internal
operational focus and lack of external
orientation still affects many SMEs and as
result affecting performance measurement
process;
 Continual analyzes of changes in external
environment should be ensured.

Conclusions
Dynamic external environment raises demand for
variety of an information influencing importance of
different measures (financial, market, customer,
internal process, employees, innovation and growth).
According to research results, financial and market
measures should mostly be taken into account
operating in a static external environment.
External orientation should be implemented through
effective internal/external communication.
Thank you for attention
Your questions