the use of the balanced scorecard: linking different

UNIVERSITEIT GENT

FACULTEIT ECONOMIE EN BEDRIJFSKUNDE

ACADEMIEJAAR 2008 – 2009

The use of the Balanced Scorecard: linking different enabling theories

Masterproef voorgedragen tot het bekomen van de graad van

Master in de Toegepaste Economische Wetenschappen

Kevin De Ruyck

onder leiding van

Prof. Dr. W. Bruggeman

PERMISSION

Ondergetekende verklaart dat de inhoud van deze masterproef mag geraadpleegd en/of

gereproduceerd worden, mits bronvermelding

Kevin De Ruyck

I

Preface

Writing this master dissertation was probably the biggest task I’ve faced so far. It took a lot of

work and a healthy amount of creativity, but I think the result is worthy of the name master

dissertation. I am grateful to Professor Bruggeman for his help in my search for a suitable

subject matter and his guidance on the path to the problem’s solution. Professor Gerrit Van

Daele, Katrien Van Daele, Karen De Visch and David Van Laethem I would like to thank for

their revisions and corrections of my work. Finally I offer a word of sincere thanks to my

family for their support and patience.

Kevin De Ruyck

II

Index

1 INTRODUCTION ............................................................................................................ 1

2 LITERATURE REVIEW .................................................................................................. 3

2.1 Developmental approach to enabling formalization .................................................. 3

2.1.1 Enabling versus coercive formalization ................................................................ 3

2.1.1.1 Repair ............................................................................................................... 4

2.1.1.2 Internal transparency ....................................................................................... 5

2.1.1.3 Global Transparency ........................................................................................ 5

2.1.1.4 Flexibility ......................................................................................................... 6

2.1.2 Development of enabling formalization ................................................................ 6

2.1.2.1 Experience-based development ........................................................................ 7

2.1.2.2 Experimentation ............................................................................................... 8

2.1.2.3 Professionalism ................................................................................................ 8

2.1.3 Attitude towards performance measures............................................................... 9

2.2 Levers of control framework ................................................................................... 10

2.2.1 Levers of control items ........................................................................................ 10

2.2.2 Impacts of interactive and diagnostic use ........................................................... 11

2.3 Advantage of the Balanced Scorecard ..................................................................... 12

2.4 Hypothesis development .......................................................................................... 12

3 RESEARCH METHOD .................................................................................................. 15

3.1 Participants .............................................................................................................. 15

3.2 Construct development ............................................................................................ 16

4 RESULTS ...................................................................................................................... 19

4.1 Association degree of diagnostic and interactive use

with degree of enabling formalization ..................................................................... 19

4.2 Regression on attitude towards performance measures ........................................... 20

4.3 Regression on the degree of enabling formalization ............................................... 21

4.4 Econometric issues .................................................................................................. 22

4.4.1 Normality of residual terms ................................................................................ 22

4.4.2 Heteroscedasticity ............................................................................................... 22

4.4.3 Multicollinearity.................................................................................................. 22

4.4.4 Endogenity .......................................................................................................... 23

III

5 CONCLUSION .............................................................................................................. 24

List of appendices

Appendix A: Construct Items ................................................................................................ VIII

Appendix B: First Regression on attitude towards performance measures.............................. XI

Appendix C: Regression to test the impact of the degree of enabling formalization .............. XII

Appendix D: Heteroscedasticity tests ................................................................................... XIII

Appendix E: Multicollinearity .............................................................................................. XIV

Appendix F: Survey ................................................................................................................ XV

List of tables and figures

Fig. 1: Developmental model (Wouters & Wilderom, 2008) ................................................. 9

Fig. 2: Capability model (Henri, 2006) ................................................................................. 12

Table 1: Participants’ industries .............................................................................................. 15

Table 2: Participants’ functions ............................................................................................... 15

Table 3: Participants’ responsibility level ............................................................................... 15

Table 4: Construct analysis ..................................................................................................... 18

Table 5: Description data of degree of use and formalization for t test .................................. 19

Table 6: Independent-samples t test of degree of use and formalization ................................ 19

Table 7: Regression on attitude towards performance measures ............................................ 20

Table 8: Regression on degree of enabling formalization ........................................................ 21

IV

Used abbreviations

PMS: Performance Measurement System

BSC: Balanced Scorecard

OLS: Ordinary Least Squares

VIF: Variance Inflating Factor

1

1 INTRODUCTION

Performance Management Systems (PMS’s) have been around for a long time. The currently

applied models are widespread and diverse. However, the Balanced Scorecard (BSC) has

become an important player on the market of PMS’s (Kaplan & Norton, 1992). The BSC can

motivate breakthrough improvement on its four areas (Kaplan & Norton, 1993). In a BSC the

performance is measured using not only data from the past (Financial), but also data which

can measure future profits (Customer, Internal Business Processes, Learning and Growth)

(Kaplan & Norton, 1992). Studies showed that a company which uses the BSC outperforms a

company with a traditional PMS on financial measures (Davis & Albright, 2004). The BSC is

a measurement system which is weighed. The used indicators on a small operational basis

should be aligned with the overall strategy. The BSC translates the strategic objectives into a

coherent set of performance measures (Norton & Kaplan, 1993).

A study showed that a good way to motivate management is introducing strategic alignment.

The process of introducing strategic alignment, has a positive impact on the motivation of

management (Decoene & Bruggeman, 2006). This study revealed that the translation process

of the strategy towards the different levels in the organization is important to motivate

management. In addition, another study, performed by Hall, has proven that PMS’s have an

effect on management performance. He found that there is a positive, yet indirect impact.

PMS’s strengthen the role clarity, which is the job’s expectations, and the psychological

empowerment, which is the intrinsic task motivation. These concepts influence managerial

performance in a positive way (Hall, 2008).

The modern organization often needs to abandon the strong hierarchical structure and place

more power with the employees. Empowering leadership has an indirect positive effect on

performance, through the variables knowledge sharing and team efficacy (Srivastava, Bartol

& Locke, 2006).

The previous theories clarify motivation at the level of management. The motivation of the

entire workforce is explained by Nohri, Groysberg and Lee (2008). The motivation in their

model is explained by four drives. Firstly, there is the drive to acquire: this need can be met

by an objective reward system. The second drive is the drive to bond: a strong culture should

2

be in place to keep employees motivated. Next is the drive to comprehend, which can be

satisfied by designing jobs so they have meaning and are challenging. The final drive is the

drive to defend: people get to know and express ideas of the institution. This enhances

feelings of security and confidence. Performance management and resource-allocation

processes should be fair and transparent. Fulfilling these fundamental needs can boost

motivation. This study examines the defense drive suggested by Groysberg and Lee, namely

getting performance management supported by the employees. Adler and Borys (1996) found

that rules, procedures and instructions can be considered as a form of formalization. Coercive

formalization aims to force employee compliance, while enabling formalization makes

employees feel motivated and helped by the system. Lillis (2002) states that there are so many

dimensions a PMS should measure, that it is virtually impossible to include them all. Wouters

and Wilderom (2008) built their case on this inherent completeness of a PMS, stating that a

PMS should be seen as a form of formalization. They created a framework of development to

achieve enabling formalization in an organization.

Simons (1995) built a framework for control systems. Important forms of data usage of the

PMS are diagnostic and interactive use. While diagnostic use refers to top-down control,

interactive use refers to the discussion about the performance measures. Henri (2006) found

that interactive use has a positive impact on organizational capabilities, while diagnostic use

has a negative impact on organizational capabilities.

The next part of this paper will study the different trends in research on how organizations

should set up a system to create a workforce which is enabled. Members of an organization

are “enabled” when they experience the organization as an environment in which they are

motivated and stimulated to perform. These enabling theories are applied to the PMS. At the

end of the second part, these theories are compared and linked to form hypotheses. The third

part describes the adopted research design. The fourth part discusses the analytical results of

the research. The final part contains the concluding words of this paper.

3

2 LITERATURE REVIEW

2.1 Developmental approach to enabling formalization

2.1.1 Enabling versus coercive formalization

The core features of a bureaucratic form are the workflow formalization, the specialization

and the hierarchy. Formalization is the whole of written rules, procedures and instructions. A

bureaucracy is seen in a positive and a negative view. In the negative view, creativity, work

satisfaction and motivation decrease. The reason for this decrease is the abrogation of a great

part of the freedom. Workers in the bureaucracy are coerced into complying with the

overlying hierarchical level. Studies showed that formalization leads to work dissatisfaction,

absenteeism, physical and psychological stress, feelings of powerlessness, self-estrangement

and alienation (Rousseau, 1978) (Arches, 1991) (Bounjean & Grimes, 1970). The positive

view states that more guidance is given to the members of the organization. Responsibilities

are written down in clear and explicit words, hence there is lower role conflict and ambiguity,

resulting in a more positively perceived effectiveness (Adler & Borys, 1996). So there is a

positive and a negative opinion on formalization, but in the past no research has been done

about under which conditions these rules and procedures are accepted by the workforce and

under which there is an adverse feeling towards this. In organizational theories the types of

this formalization have often been neglected. People resent what they consider “bad” rules,

but “good” rules are often taken for granted (Perrow, 1984). In the past, little research has

been performed about when rules are considered “good” or “bad”. Adler and Borys have a

theory concerning these different types of formalization (1996). According to Adler and

Borys there are two main types of formalization: Coercive and enabling. The goal of coercive

formalization is forcing compliance. However, enabling formalization motivates and helps

employees to perform their tasks. These are the two contrasting types of formalization which

can be distinguished. Formalizations differ in three areas: the characteristics of the system, the

process of designing the system and the process of implementing the system. The

development process and these characteristics will lead to an enabling formalization. They

4

state that four generic features concerning formalization exist: repair, internal transparency,

global transparency and flexibility (Adler & Borys, 1996, p. 70).

2.1.1.1 Repair

Often in highly bureaucratic environments, managers separate the routine production tasks

from non-routine repair activities. They do so because they don’t value potential contributions

of workers. An example of this is the locking of a machine’s control panel, in order to prevent

workers from fiddling with the parts. They need to rely on a special workforce to fix the

problems. The workers will notice the management’s lack of trust: breakdowns will be

stimulated and possible suggestions for improvement won’t be given. Highly usable systems

are characterized by the fact that breakdowns in the system can be mended by the workers

themselves instead of them having to call a specialized workforce (Adler & Borys, 1996, p.

70). In this manner, repair processes are integrated in the routine operations. In the enabling

logic, operations are not fully programmable. Procedures are generated which facilitate

response to work problems. Accounting is a formal control system used to express operational

rules and standards. Most information like standard costs is only understandable for

accounting experts. If this information is broken down in parts relevant for employees, this

could be a great help to deal with operational problems. This information can also be of

service to repair and update the accounting structures (Ahrens & Chapman, 2004).

Breakdowns have a potential to signal work problems and become an opportunity for the

performance of the organization. This paper will define repair as follows: repair means that

users can mend and improve the work process themselves rather than allowing breakdowns

and other non-programmable events to force the work processes to a halt (Wouters &

Wilderom, 2008, p. 492).

5

2.1.1.2 Internal transparency

The internal transparency refers to the degree of intelligibility of the processes for the

organizational members. In this way it is related to repair (Adler & Borys, 1996, p. 72).

Internal transparency means that users have a good understanding of the logic of a system’s

internal functioning and they have information on its status (Wouters & Wilderom, 2008, p.

492). In coercive logic, reliance on users’ skills is low: there is no insight in internal

workings. Equipment status will often only be provided in case of breakdown. The language

will only be interpretable for the technical staff, not for the person who operates it. In the

enabling logic however, there is a sound grasp of the internal processes, by explaining key

components and providing understandable best-practices. The major key is layered

information: an information overload should be avoided (Ahrens & Chapman, 2004). So

internal transparency means that users have a good understanding of the logic of a system’s

internal functioning and they have information on its status. Enabling formalization provides

users with a clear understanding of the underlying rationale why certain control mechanisms

are in place. Such formalization also codifies best-practice experiences, and users are

provided with feedback on their performance (Wouters & Wilderom, 2008, p. 492).

2.1.1.3 Global Transparency

Global transparency checks whether employees know about the broader system in which they

are working (Adler & Borys, 1996, p. 72). In coercive formalizations, employees of different

task-forces are separated from each other and communication between them is minimized. If

employees go beyond their function, they’re told it’s not their job (Heckscher, 1994). In an

enabling approach, employees are given a wide range of contextual information and an

understanding is given how they fit in the whole. The insight in the budgets of the

departments is often only visible for the top management. Budgets for a department could

also be made available for other departmental managers. Lateral coordination can be achieved

because key targets of important departments can be communicated to make sure other units

prioritize their tasks accordingly (Ahrens & Chapman, 2004, p. 280). So global transparency

refers to the intelligibility for employees of the broader system and context in which they

operate. Controls are designed to afford employees an understanding of how their own tasks

6

fit into the whole. Information from outside one’s specific domain is available (Wouters &

Wilderom, 2008, p. 492).

2.1.1.4 Flexibility

Users must be able to make decisions with the information provided (Adler & Borys, 1996, p.

74). In coercive logic, machines take controlling decisions. Steps are to be explicitly followed

and exceptions must be authorized by the supervisor. In enabling logic, the machines give

suggestions and employees choose in the end. Deviations are not seen as risks but as learning

opportunities. A description made by Ahrens and Chapman refers to the organizational

members’ discretion over the use of the PMS. By technical development, personal computer

applications allow differentiated reports, composed of measures which are all stored in the

same database. In this way, different aggregations of performance information are created.

These represent differentiated but interrelated mental maps, which prepare the organization

for changing circumstances. (Ahrens & Chapman, 2004). ‘‘Flexible systems encourage users

to modify the interface and add functionality to suit their specific work demands’’ (Adler &

Borys, 1996, p. 74). So flexibility means that users can make controlling decisions after

enabling systems have provided information.

2.1.2 Development of enabling formalization

A main theory on how a PMS can get strong support by the workforce was published in 2008

by Wouters and Wilderom. This study relied on the Adler and Borys framework on sorts of

formalization. Enabling and coercive formalization were used specifically on a PMS. They

stated that the last two dimensions (process of designing and the process of implementing the

system) have great importance on the final outcome. However, design and implementation are

hard to distinguish (Adler & Borys, 1996). They decided to combine them under the name

7

“development process”. The way a the development process is implemented, will impact the

extent to which employees will perceive the PMS as enabling. According to Wouters and

Wilderom, this process should be characterized by being experience-based, supportive

towards experimentation and using the employees’ professionalism (Wouters & Wilderom,

2008, p. 492).

2.1.2.1 Experience-based development

Experience-based development of a PMS involves “the identification, appreciation,

documentation, evaluation and consolidation of existing local knowledge and experience with

respect to quantitatively capturing and reporting relevant aspects of performance” (Wouters &

Wilderom, 2008, p. 493). A PMS must pay attention to experience and user involvement.

Aside from the top-down goals, there must be attention to local knowledge. Often PMS’s only

have five characteristics (Wouters & Wilderom, 2008, p. 493–494). First, the firm’s

objectives were cascaded to lower levels. Secondly, underperforming parts of the company

are signaled. Thirdly, there is an ability to get more details when needed. Fourthly, there is

transparency and uniformity in the overall PMS. Finally, there is one information system for

the whole organization. Often external experts can be involved to implement a standardized

PMS. However, top-down PMS’s are less likely to succeed. A major conclusion by Wouters

and Wilderom, linked to a PMS that should be experience-based, is that local initiatives for a

PMS are often more successfully implemented (Wouters & Wilderom, 2008, p. 512). Often

informal measurement systems appear locally. So it is best to build on existing knowledge

and accumulated experience, as it will improve organizational learning (West & Iansiti, 2003)

and lead to organizational change and improvement (Zollo & Winter, 2003).

8

2.1.2.2 Experimentation

Experimentation involves “the first development of a performance measure and the

subsequent testing and refinement (in several rounds) of its conceptualization, definition,

required data, IT tools, and presentation, together with employees (whose performance is

going to be measured), to result in a measure that is a valid, reliable and understandable

indicator of performance in a specific local context” (Wouters & Wilderom, 2008, p. 493). A

performance measure will not be successful from the first time, but only after a few attempts.

Tinkering with the data should be possible. A study by Lowe and Jones (2004) showed that

the phase of making general goals into specific measureable goals is a process of trial-and-

error. This process needs input by the employees. West and Iansiti (2003) found evidence that

experience accumulation and experimentation are important drivers of performance.

2.1.2.3 Professionalism

Professionalism involves “an orientation by employees toward learning for the purpose of

improving work practices” (Wouters & Wilderom, 2008, p. 493). This orientation makes it

possible to rely on the experiences and experimentation by the workforce. Caldwell, Herold

and Fedor (2004) found that if employees are inclined to improve their work practice, they

will have a positive attitude towards performance measures. Professionalism in combination

with experience-based development and experimentation make a PMS more enabling. In

coercive formalizations, the procedures are designed by superiors, whose main goal is the

power to control the employees. Enabling formalizations’ procedures aren’t made top-down,

their goal is to improve the performance of the tasks of the employees. Adler and Borys

(1996) suggest that employees have a more positive attitude when they are enabled in their

tasks, but if they feel management tries to coerce their effort and make them comply, their

attitude will be more negative. Lillis (2002) stated that it is challenging to design the perfect

PMS, if not impossible. In that view, it’s important to foster the secure support from the

employees to improving performance. Important in a good BSC is that the measures should

9

be objective. Cheating should not be possible, if so the credibility of the BSC completely fails

(Malina & Selto, 2001).

Fig. 1 Developmental Model (Wouters & Wilderom, 2008)

2.1.3 Attitude towards performance measures

In the empirical part of the paper by Wouters and Wilderom (2008), these independent

variables were studied in a case study in the logistics department of a medium-sized beverage

company. Professionalism was measured by surveys in this department. Enabling

formalization was measured on the level of the individual as attitude towards performance

measures from the department. Attitude towards performance measures reflects the perceived

usefulness of the performance measures. In the framework of Adler and Borys enabling

formalization is characterized by a more positive attitude towards the PMS by the members of

the organization. He stated that in an environment with room for experimentation and

attention to experience of employees, professionalism will drive the perceived usefulness of

the performance measures. He found proof for this statement in an experimentation- and

experience-rich environment. However, he did control for a number of constructs: leadership

style (Bass & Avolio, 2000), team trust (Baer & Frese, 2003) and work pressure (Stanton et

al., 2001). Wouters also created job satisfaction as a percentage, directly asked to participants.

10

2.2 Levers of control framework

2.2.1 Levers of control items

In companies operating in a business-environment that requires flexibility, creativity and

innovation, control systems should consist of four parts to perform the best: a beliefs system,

a boundary system, diagnostic controls and interactive controls (Simons, 1995). According to

this study, it is important to have empowered employees, but there is a real need to control

them. Otherwise scandals can occur. A beliefs system is “the explicit set of organizational

definitions that senior managers communicate formally and reinforce systematically to

provide basic values, purpose, and direction for the organization” (Simons, 1995, p. 34). A

boundary system “delineates the acceptable domain of strategic activity for organizational

participants” (Simons, 1995, p. 39). A boundary system contains the actions which employees

should avoid. By only saying what employees shouldn’t do without telling them what they

should do, employees will be more creative and entrepreneurial, within limits. The boundary

system and the beliefs system are considered to create dynamic tension. The diagnostic

control system provides the common data, which is used to check whether the workforce

complies with the company goals. Interactive control systems focus on information based on

decisions made by subordinates, so there is contact between the different layers of

management. Interactive systems want to motivate workers by involving them in the process.

There are four characteristics of interactive control systems. First, they focus on constantly

changing, potentially strategic information. Secondly, information is significant enough to

pay attention to it on all the levels of the organization. Thirdly, this data should be discussed

face-to-face. Finally, it is a catalyst for continuous debate about relevant data. This framework

appears to be often used in PMS functioning (Abernethy & Brownell, 1999). Nevertheless,

the interactive and diagnostic systems are often the only ones that are used. The boundary

systems and the belief systems might be too generally formulated (Ahrens & Chapman,

2004).

11

2.2.2 Impacts of interactive and diagnostic use

A different study, done by Henri (2006), showed empirical evidence concerning the impact of

the use of the PMS on performance. However, he added a mediator: capabilities. The different

uses of a PMS refer to Simons (1995). Diagnostic use of performance measures is used

mainly to control the workforce, to track and review the employees in a mechanistic way.

Interactive use of performance measures encourages the dialogue between the different

hierarchical layers of the organization. Adjustments can also be made from bottom to top.

Henri (2006) identified an interaction-term between these two uses, which is the ‘dynamic

tension’. If an organization applies the interactive use, the diagnostic use is utilized to create

dynamic tension which has a positive effect on capabilities. However, he didn’t find strong

empirical results which supported the existence of this interaction term. The Resource-Based-

View (Barney, 1991) states that resources will lead to a sustainable competitive advantage if

they are valuable, rare, inimitable and non-substitutable. Capabilities are necessary to use

these resources in a coherent way (Day, 1994). The capabilities the study refers to are

innovation, organizational learning, market orientation and entrepreneurship. These are

primary capabilities needed to create competitive advantage, which is only possible if they are

all present (Bhuian, Menguc & Bell, 2005) (Hult & Ketchen, 2001) (Hurley & Hult, 1998).

This view is consistent with the capability-view in the strategy research trends (Lengnick-Hall

& Wolff, 1999). Results show that interactive use has a positive effect on capabilities, while

diagnostic use has a negative effect - as expected - and the dynamic tension isn’t that clear in

the data (Henri, 2006). This is an important contribution to the value of the types of use for

the organization.

The paper of Widener (2008) included the whole ‘levers of control’ framework of Simons:

beliefs system, boundary system, diagnostic controls and interactive control. She found

impact on performance through attention and learning.

12

Fig 2. Capability model (Henri, 2006)

2.3 Advantage of the Balanced Scorecard

The Balanced Scorecard doesn’t only have financial measures, but also indicators concerning

customers, internal processes and learning and growth (Kaplan & Norton, 1996). Malino and

Selto (2001) found indirect relationships between the BSC and organizational performance.

Davis and Albright (2004) researched the performance of BSC-driven financial companies

and non-BSC driven financial companies and found that the ones who did use BSC

outperformed the other group. Banker (2000) stressed the importance of the use of non-

financial measures. In a hotel environment he found a relationship between customer

satisfaction and future financial performance.

2.4 Hypothesis development

An interesting variable to see whether everybody is in favor of the PMS would be the attitude

towards the performance measures. A hesitant attitude towards the PMS should be avoided in

the organization. In this paper, attitude reflects the perceived usefulness of the performance

measures of their department. As a company, it's important to know how personnel are best

motivated to comply with the PMS. I will examine whether the variables that Wouters and

Wilderom propose in the development process have impact on the degree of enabling

13

formalization of the PMS. As Adler and Borys (1996) propose, enabling formalization leads

to a more positive attitude. So the characteristics will also impact the attitude of the

employees. This basic assumption will also be tested.

The theory of Adler and Borys uses the formalization of the organization, opposing to the

theory of Simons. The formalization movement in research is much wider and it can be

applied to the whole organization, but in this paper I focus specifically on the PMS. The

levers of control framework can only be applied to the control system. I will zoom in on the

interactive and the diagnostic use, which only provide the data usage of the performance

measures. The following propositions are in the alternative form, aligned with the

expectations (H1).

Propositions

A. The degree of interactive (diagnostic) use of the performance measures will be

positively (negatively) associated with the degree of enabling formalization

Comparing Wouters and Wilderom with Adler and Borys, there are some similarities

in these two trends of research. An enabling formalization focuses on making

procedures simpler for employees, which is similar to the interactive use that promotes

a dialogue between the top-level management and the other employees. In a coercive

formalization, data is used to make the employees comply with the rules while

diagnostic use consists of tracking the effectiveness and efficiency (Simons, 1995). So

there are obvious similarities in these concepts. However, in the characteristics of

formalization there is no mentioning of the data usage. Hence this could be an

interesting addition to the formalization theory.

B. The degree of professionalism has a positive impact on the degree of enabling

formalization

This is one of the three developmental variables of the PMS suggested by Wouters and

Wilderom (2008) which drives enabling formalization. In an environment which

encouraged experiences and experimentation by the workforce, this variable had a

positive impact on attitude towards the performance measures of the department.

14

C. The degree of experience-based development has a positive impact on the degree of

enabling formalization


Wilderom (2008) which drives enabling formalization. It is stated that local

knowledge is very important to create enabling formalization.

D. The degree of experimentation has a positive impact on the degree of enabling

formalization


Wilderom (2008) which drives enabling formalization. According to Wouters and

Wilderom, the possibility to tinker with the performance data is important to create

enabling formalization.

E. The degree of enabling formalization has a positive impact on the attitude towards

performance measures

When employees feel the PMS helps them to perform better, their attitude towards it

will be positive. In contrast, if the PMS is only in use to coerce the employees, their

attitudes won’t be positive. (Adler & Borys, 1996, p. 66).

F. The degree of interactive (diagnostic) use has a positive (negative) impact on attitude

towards performance measures

Interactive and diagnostic use show similarities with enabling and coercive

formalization. Interactive use has a positive relationship with capabilities while

diagnostic use has a negative relationship with capabilities (Henri, 2006). This leads to

the expectation that interactive use will be perceived as more useful, while diagnostic

use will be perceived as less useful. There is no association between these variables,

but a causal relationship. This stems from the fact that the attitude towards

performance measures of the organizational members is the result of the degree of use

of these measures and the degree of enabling formalization.

15

3 RESEARCH METHOD

These hypotheses were researched by means of a questionnaire, which was distributed online

to random people in various organizations. For the body of research material to be both

extensive and representative, not only companies which use the BSC were contacted, but all

types of PMS’s were allowed. 1440 companies from Flanders and Brussels were contacted

through email to participate in this online survey (see appendix F). A reminder was sent after

2 weeks. Afterwards, an additional 1460 companies were contacted and a reminder was sent.

In total there were 87 participants. Their email addresses were selected on Belfirst 2008, made

possible by Bureau Van Dijck. With this data, I have tested the hypotheses.

3.1 Participants

Participants should give a fair representation of the corporate life, which means people of all

levels and sectors should be included.

Industry Frequency Function Frequency

Processing industry (textile, food, drinks) 11 Direction 28

Construction industry 8 Sales and marketing 7

Metal industry 12 Human Resources 33

Wholesale and retail 6 Accounting and finance 2

Catering industry 3 Operations 12

Chemical industry 5 ICT 5

Energy and water 4 Total 87

Agriculture and forestry 0 Table 2:

Transport and communication 6 Participants’ functions

Services 32

Financial sector 0

Total 87

Table 1: Participant’s industries

Responsibility Frequency

Top Management 36

Middle Management 33

Lower Management 9

Non Management 9

Total 87

Table 3: Participants’ responsibility level

16

A few remarks are in order. Not a single participant from the financial sector seemed to

submit the survey. This is a possible consequence of the financial crisis of 2008. There is also

a large part of HR-people who completed the survey. This is no problem in such. However,

36 top managers entered in this survey. This could be a problem, in particular in combination

with diagnostic and interactive use. The survey defines these uses as the way top management

uses performance measures. However, if the participant is part of the top management, that

could cause distortion when explaining for the attitude. Instead of filtering out these

observations, a dummy variable will be used to indicate the top managers.

3.2 Construct development

I measured the items of the constructs on a 7-point Likert scale. All items are reformulated

into statements which the test persons should agree or disagree with. Then they were graded

on a scale from 1 to 7.

The degree of interactive and diagnostic use, the way top management uses these performance

measures, was constructed by Henri (p. 551).

The degree of professionalism (p. 514) and attitude towards performance measures (p. 513 –

514) has been tested by Wouters. The constructs ‘team trust’, ‘work pressure’ and ‘leadership

style’ (p. 501) were defined by Wouters.

The other variables were constructed for the use of this paper, in accordance with the

definitions given in the literature study (see appendix A). Constructs are calculated by taking

the average of these items. Thus, for all of these constructs values range from 1 to 7. 1 stands

for a very low level of this construct and 7 for a very high level of this construct.

One item of repair was removed, and repair was constructed together with internal

transparency, since there are strong similarities in these concepts (see appendix A).

Afterwards also the degree of enabling formalization was constructed, which is comprised of

repair, internal transparency, global transparency and flexibility. They are all coded in such a

way that a high degree of enabling formalization is a high number. All construct reliabilities

can be evaluated as acceptable to very good, the common cut-off level of 0,70 is maintained

with all constructs.

Correlation analysis gives a number of significant relationships, but no problems should be

expected. For example, repair and internal transparency, global transparency and flexibility

17

are all strongly positively correlated with each other and with the overall degree of enabling

formalization, but this is trivial. There also appears to be a positive association between the

degree of interactive and diagnostic use, which is possible, but can give an unexpected result.

Other significant correlations are much lower, but these correlations are mainly a problem due

to sample size. This does not influence parameter estimation in the regression models.

18

Construct

Diagnostic

use

Interactive

use Professionalism Attitude

Team

trust

Work

pressure

Leadership

style

Repair & internal

transparency

Global

transparency Flexibility Formalization Experimentation

Experience-

based dev.

Cronbach Alpha 0,892 0,897 0,886 0,959 0,721 0,801 0,949 0,729 0,823 0,81 0,889 0,895 0,826

Items 4 7 25 10 7 14 10 10 5 5 20 7 6

Mean 5,7356 4,9343 5,7255 5,6391 5,2841 3,7939 5,1885 4,6828 5,0759 5,1356 4,8943 4,5107 4,8544

Std. Deviation 1,03735 1,06522 0,52849 0,97484 0,81061 0,70731 1,07643 0,71743 0,90129 0,95015 0,72443 1,25765 1,1116

Minimum 1,5 1 4 1 3 2,21 2 2,4 2 1 2,2 1 1,5

Maximum 7 7 6,64 7 6,71 5,36 7 6,6 7 6,6 6,2 6,71 7

N 87 87 87 87 87 87 87 87 87 87 87 87 87

Pearson Correlations

Diagnostic use 1

Interactive use ,739** 1

Professionalism ,385** ,385** 1

Attitude ,706** ,532** ,495** 1

Team trust ,288** 0,205 ,442** ,435** 1

Work pressure -0,105 -0,107 -0,125 -0,175 -0,199 1

Leadership style ,376** ,344** ,435** ,543** ,294** -0,102 1

Repair & internal

transparency ,472** ,458** ,412** ,521** ,340** -0,117 ,215* 1

Global transparency ,698** ,631** ,328** ,670** ,342** -0,077 ,417** ,691** 1

Flexibility ,644** ,608** ,404** ,705** 0,187 -0,118 ,406** ,605** ,692** 1

Formalization ,662** ,623** ,439** ,698** ,336** -0,12 ,369** ,909** ,880** ,843** 1

Experimentation ,450** ,351** ,334** ,598** 0,2 -0,118 ,472** ,344** ,467** ,548** ,496** 1

Experience-based

development ,514** ,335** ,347** ,618** ,278** -0,141 ,318** ,441** ,552** ,505** ,556** ,770** 1

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Table 4: Construct analysis

19

4 RESULTS

4.1 Association degree of diagnostic and interactive use with degree of enabling

formalization

Using the correlation matrix proposition A can already be commented. There appears to be a

positive association between the degree of enabling formalization and the degree of

interactive use, as predicted, but also between the degree of enabling formalization and the

degree of diagnostic use. The Pearson correlation between the degree of diagnostic use and

the degree of enabling formalization is 0,662, which is significant at the 2-tailed 0,01 level.

This correlation for the degree of interactive use and the degree of enabling formalization is

0,622, which is also significant at this level.

If this use is tested in 2 groups, one with a high level of enabling formalization (> 5) and one

with a low level of enabling formalization (<= 5), this can be confirmed.

Formalization N Mean Std. Deviation

Diagnostic use Lower than 5 46 5,3152 1,17548

Higher than 5 41 6,2073 0,57256

Interactive use Lower than 5 46 4,4783 1,08304

Higher than 5 41 5,446 0,78259

Table 5: Description data of degree of use and formalization for t test

t Sig. (2-tailed)

Diagnostic use 4,574 0,000 (Equal variances not assumed)

Interactive use 4,725 0,000 (Equal variances assumed)

Table 6: Independent-samples t test of degree of use and formalization

The independent-samples t test confirms that both types of uses are positively correlated with

the degree of enabling formalization. This nuances proposition A: not only the degree of

interactive use, but also the degree of diagnostic use, is positively associated with the degree

of enabling formalization.

20

4.2 Regression on attitude towards performance measures

A regression equation that explains attitude towards performance measures is estimated. First

the control variables Wouters and Wilderom suggested were included but afterwards they

were omitted (see appendix B).

Coefficients Test

Dependent variable: attitude B

Std.

Error t Sig. (2-sided)

(Constant) 0,818 0,476 1,718 0,090*

Diagnostic use 0,405 0,108 3,743 0,000*

Interactive use -0,131 0,097 -1,359 0,178

Repair & internal transparency 0,059 0,133 0,444 0,659

Global transparency 0,199 0,131 1,521 0,132**

Flexibility 0,353 0,111 3,198 0,002*

Top management member ( 0 = No, 1 = Yes) 0,114 0,142 0,808 0,421

* Significant at 2-sided 1% level R² = 0,631

** Significant at 2-sided 13,2% level

Table 7: Regression on attitude towards performance measures

A total R² of 63.1% is achieved, which indicates a model which explains a lot of the total

variation. There is an F value of 22,766. So the null hypothesis that all the coefficients are not

significantly different from 0 can be rejected with a p-value of 0,000. A dummy variable top

management member is included, which captures the effect of the people which indicated

they are top manager. However, a positive impact from the degree of diagnostic use is found,

against expectations. If the degree of diagnostic use goes up by one point on the 7-point scale,

the attitude towards performance measures goes up by 0,405 points on the 7-point scale. The

degree of interactive use does not appear to be significant. Flexibility is significant at the 2-

sided 1% level, global transparency is significant at the 2-sided 13,2% level. If global

transparency goes up by 1 point, attitude towards performance measures goes up by 0,199

points. If flexibility goes up by 1 point, the attitude towards performance measures goes up by

0,353 points. The variable repair and internal transparency is not significant. However, there

is a large positive correlation between these 4 characteristics of enabling formalization. The

null hypothesis that the residuals are normally distributed, can not be rejected, according to

the Kolmogorov-Smirnov test for normality. The p-value here is 0,20. The dummy variable

which was added is not significant.

21

To check whether it is right to add the degree of interactive use, the degree of diagnostic use

and the dummy variable top management member in this regression model, another regression

equation explaining attitude was created, this time using only the characteristics of enabling

formalization suggested by Adler and Borys (see Appendix C). The same variables (global

transparency and flexibility) were significant, but only an adjusted R² of 0,545 was achieved.

In the regression that includes diagnostic use, interactive use, and the dummy top

management member, the adjusted R² is 0,603. So by adding these variables, the regression

stays efficient, so it’s a good addition to this model.

These findings partly explain proposition E: only the characteristics global transparency and

flexibility of the degree of enabling formalization have a significant positive influence on the

attitude towards performance measures. Proposition F has to be nuanced: only diagnostic use

has an impact on the attitude towards performance measures, however a positive impact.

4.3 Regression on the degree of enabling formalization

Then a regression is made to explain the degree of enabling formalization.

Coefficients Test

Dependent variable: formalization B

Std.

Error t Sig.

(Constant) 1,292 0,682 1,894 0,062

Experimentation 0,07 0,078 0,895 0,373

Experience-based development 0,24 0,089 2,69 0,009*

Professionalism 0,371 0,127 2,924 0,004*


Table 8: Regression on degree of enabling formalization

The F-value of the equation is 17,203. So the null hypothesis that all the coefficients are not

significantly different from 0 can be rejected with a p-value of 0,000. The degree of

experimentation is not significant. However, the degree of experience-based development and

the degree of professionalism both have a positive sign and are significant at a 1% level. If the

degree of experience-based development goes up by 1 point on the 7-point scale, the degree

of enabling formalization goes up with 0,24 points on the 7-point scale. If the degree of

professionalism goes up by 1 point, the degree of enabling formalization goes up by 0,371

22

points. The null hypothesis that the residuals are normally distributed, can not be rejected with

a p-value of 0,195, according to the Kolmogorov-Smirnov test for normality. Again, this is

good news for this model. This model supports proposition B and C, but no evidence is found

that supports proposition D.

4.4 Econometric issues

4.4.1 Normality of residual terms

The null hypothesis that the residual terms are normally distributed, can not be rejected in

both equations, which means the constructed model still holds.

4.4.2 Heteroscedasticity

In both equations, there seems to be no constant variation in the residual term (see appendix

D). Especially the second equation tests positive on a White-test on heteroscedasticity.

However, problems aren’t severe. The exact residual term sorted for an independent value is

unknown. A White-correction can make the estimations of the standard error consistent,

which only applies in case of many observations. Since there only is a limited amount of

observations, there is no indication this correction would make standard errors of the

parameters more accurate. For that reason I chose not to make these corrections.

4.4.3 Multicollinearity

As stated before, there is a certain degree of multicollinearity in these equations, due to

correlations of independent variables. The VIF’s are calculated in Appendix E, but they

appear to be sufficiently low, so multicollinearity in the equations is rather low. The only

right measure against this would be adding more observations, but since the multicollinearity

problem isn’t severe, this isn’t necessary.

23

4.4.4 Endogenity

Since I am dealing with 2 different equations, questions rise about endogenity and whether

there is a need to use other estimation models like Lisrel. Here however there is no need to

use structural equations modeling, since there only are two simple equations and no reciprocal

relationships in the formed theory. In the regression on attitude towards performance

measures, the variation of the characteristics of enabling formalization are not only explained

by the developmental variables, but also by externalities. So I conclude by stating that two

OLS regressions are in order here.

24

5 CONCLUSION

Although there are similarities between interactive use and the way the rules are organized in

an enabling formalization and contrasting features between diagnostic use and enabling

formalization, there appears to be a positive association between the degrees of enabling

formalization, interactive and diagnostic use. The more the users of a PMS find it enabling,

the more data is used, whether it is in an interactive way or a diagnostic way. The attitude

towards these measures will be more positive if the data is used in a diagnostic way. A

possible explanation for this is that data must be used to follow up goals. Otherwise the

system will not be taken seriously. There is no support in the data that interactive use can

boost the attitude of the employees.

The data supports the developmental approach of Wouters and Wilderom (2008) towards

creating an enabling formalization. In regression analysis the degree of professionalism and

the degree of experience-based development have a significant positive impact on the degree

of enabling formalization, which proves this theory. For the degree of experimentation, no

evidence is found. I can conclude that, in the development process, experience-based

development and professionalism are the most important elements to create enabling

formalization.

An important basis for the enabling formalization theory is that employees will have a more

positive view towards this enabling formalization or “good rules”, and a more negative view

towards coercive formalization or “bad rules”. These characteristics of formalization were

split out and checked to see if they have an impact on the attitude towards the performance

measures. Although only a significant relationship was found with global transparency and

flexibility, there is a large correlation between these four concepts. These four concepts are

important to create a high degree of enabling formalization. However, according to this data, I

can state global transparency and flexibility are the most important drivers of the attitude

towards performance measures.

An important result of this paper is that in a firm which organizes itself in such a way that

there is a high degree of enabling formalization and combines this with a diagnostic way to

measure results, the attitude towards these performance measures will be most positive. I.e. it

will be valued more. Therefore, the system will be supported by the organizational members.

V

References

Abernathy, M. A., & Brownell, P. (1999), The role of budgets in organizations facing

strategic change: an exploratory study, Accounting, Organizations and Society, 24(3), 189–

204.

Adler, P.S., Borys, B. (1996), Two types of bureaucracies: enabling and coercive,

Administrative Science Quarterly, 41, 61-89.

Ahrens, T. A., & Chapman, C. S. (2004), Accounting for flexibility and efficiency: A field

study of management control systems in a restaurant chain, Contemporary Accounting

Research, 21(2), 271–301.

Arches, J. (1991), Social structure, burnout and job satisfaction, Social Work, 36(3), 202-206.

Baer, M., & Frese, M. (2003), Innovation is not enough: Climates for initiative and

psychological safety, process innovations, and firm performance, Journal of Organizational

Behavior, 24, 45–68.

Banker, R.D., Potter, G., Srinivasan, D.(2000), An empirical investigation of an incentive

plan that includes nonfinancial performance measures, Accounting Review, 75(1), 65–92.

Barney, J. , Wright, M., Ketchen, D.J., The resource-based view of the firm: 10 years after

1991, Journal Of Management, 27(6), 625-641.

Barney, J. B. (1991), Firms resources and sustained competitive advantage, Journal of

Management, 17, 99–120.

Bass, B. M., & Avolio, B. J. (2000), MLQ multifactor leadership questionnaire (2nd ed.),

Redwood City: Mind Garden (Technical Report).

Bhuian, S. N., Menguc, B., & Bell, S. J. (2005). Just entrepreneurial enough: the moderating

effect of entrepreneurship on the relationship between market orientation and performance,

Journal of Business Research, 58(1), 9–17.

Bonjean, Charles M,, and Michael D. Grimes (1970), Bureaucracy and alienation: A

dimensional approach, Social Forces, 48, 365-373.

Caldwell, S. D., Herold, D. M., & Fedor, D. B. (2004). Toward and understanding of the

relationship among organizational change, individual differences, and changes in personal

environment fit: A cross-level study, Journal of Applied Psychology, 89(5), 868–882.

Davis, S., Albright, T. (2004) , An investigation of the Balanced Scorecard implementation on

financial performance, Management Accounting Research, 15, 135-153.

Day, G. S. (1994), The capabilities of market-driven organizations, Journal of Marketing, 58,

37–52.

VI

Decoene, V, Bruggeman, W, (2006), Strategic alignment and middle-level managers’

motivation in a balanced scorecard setting, International Journal of Operations & Production

Management, 26, 429-448.

Hall, M. (2008), The effect of comprehensive performance management systems on role

clarity, psychological empowerment and managerial performance, Accounting, Organizations

and Society, 33, 141-163.

Heckscher, Charles (1994), Defining the postbureaucratic type, In C. Heckscher and A.

Donnellon (eds.), The Post-bureaucratic Organization: New Perspectives on Organizational

Change, 14-62, Thousand Oaks. CA: Sage.

Henri, J-F. (2006) , Management control systems and strategy: a resource-based perspective,

Accounting, Organizations and Society, 31, 529-558.

Hult, G. T. M., & Ketchen, D. J. (2001). Does market orientation matter?: a test of the

relationship between positional advantages and performance, Strategic Management Journal,

22 , 899–906.

Hurley, R. F., & Hult, G. T. M. (1998), Innovation, market orientation, and organizational

learning: an integration and empirical examination, Journal of Marketing, 62, 42–54.

Kaplan, R. , Norton, D. (1992), The Balanced Scorecard: Measures That Drive Performance,

Harvard Business Review, 70, 71-79.

Kaplan, R., Norton, D. (1993), Putting the Balanced Scorecard to Work, Harvard Business

Review, 71 (5), 134 – 142.

Lengnick-Hall, C. A., & Wolff, J. A. (1999), Similarities and contradictions in the core logic

of three strategy research streams, Strategic Management Journal, 20, 1109–1132.

Lillis, A. M. (2002), Managing multiple dimensions of manufacturing performance—An

exploratory study, Accounting, Organizations and Society, 27, 497–529.

Lowe, A., & Jones, A. (2004), Emergent strategy and the measurement of performance: The

formulation of performance indicators at the microlevel, Organization Studies, 25(8), 1313–

1337.

Malina, M. , Selto, F. (2001), Communicating and controlling strategy: an empirical study on

the effectiveness of the Balanced Scorecard, Journal of management accounting research, 48-

90.

Nohria, N., Groysberg, B., Lee, L-E. (2008), Employee Motivation: A Powerful new model,

Harvard Business Review, 78-84.

VII

Perrow, Charles (1983), The organizational context of human factors engineering,

Administrative Science Quarterly, 28, 521-541.

Rousseau, Denise M. (1978), Characteristics of departments, positions and individuals:

Contexts for attitudes and behavior, Administrative Science Quarterly, 23: 521-540.

Simons, R.(1995) , Control in an Age of Empowerment, Harvard Business Review, 80-88.

Srivastava, A. , Bartol, K.M., Locke, E.A. (2006), Empowering leadership in management

teams: effects on knowledge sharing, efficacy and performance, Academy of Management

Journal, 49(6), 1239-1251.

Stanton, J. M., Balzer, W. K., Smith, P. C., Parra, L. F., & Ironson, G. (2001), A general

measure of work stress: The stress in general scale, Educational and Psychological

Measurement, 61(5), 866–888.

West, J., & Iansiti, M. (2003), Experience, experimentation, and the accumulation of

knowledge: The evolution of R&D in the semiconductor industry, Research Policy, 32(5),

809–825.

Widener, S. K.(2008), An empirical analysis on the levers of control framework, Accounting,

Organizations & Society, 32, 757-788.

Wouters, M. , Wilderom, C. (2008) , Developing performance-measurement systems as

enabling formalization: A longitudinal field study of a logistics departement, Accounting,

Organizations and Society, 33, 488-516.

Zollo, M., & Winter, S. G. (2002), Deliberate learning and the evolution of dynamic

capabilities, Organization Science, 13(3), 339–351.

VIII

Appendix A

Construct items

Formalization:

Repair

Employees can mend work processes themselves.

There is no need to contact superiors when dealing with problems with performance

measures and performance data.

I can mend control processes myself if necessary.

Problems in the control system are quickly mended by employees.

If there is a problem with performance measures, only top management can change

them (omitted).

Internal Transparency

There is a good understanding about the key performance indicators in your domain.

The reasoning behind the performance management system in your domain is

understandable.

It is understandable why certain control measures are taken in your domain.

There is information about the current status of the key performance indicators in your

domain.

Best-practices experiences about the control system are made available.

Feedback is given on my performance.

Global Transparency

There is a good understanding about the key performance indicators in the whole

organization.

The reasoning behind the performance measures of the whole organization is

understandable.

It is understandable why certain control measures are taken in the whole organization.

There is information about the current status of the key performance indicators of the

whole organization.

The link between your own tasks and the broad organization is clear.

IX

Flexibility

You can make controlling decisions personally after information is given by the

performance measurement system.

You can take initiatives to improve the key performance indicators of the performance

measurement system.

Your own decisions are very important when trying to improve key performance

indicators.

The interface of the performance measurement system can be altered.

Functionalities can be added to suit specific work demands.

Experimentation

Management and employees worked together to develop the used measures.

Performance measures were altered several times during development.

Employees had the possibility to experiment with different measures during development.

I was able to experiment with different measures in general during development.

I was able to alter tables and graphs during development.

I had impact on the procedures for data gathering during development.

I was able to alter qualitative descriptions during development.

Experience-based development

I was asked to give my opinion towards the performance measures during development.

I was able to share experiences that could be relevant during development.

My input was used in the development process of the performance measures.

BSC was developed exclusively by the top management.

Opinions about performance measures given by employees were appreciated during

development.

Local knowledge was documented during development.

X

Construct development of repair and internal transparency

Cronbach Alpha Items

Repair before omission 0,195 5

Repair after omission 0,227 4

Internal transparency 0,881 6

Repair after omission & internal transparency 0,729 10

Repair appeared to be a difficult item to describe. I opted to delete one item of repair, to get a

higher Cronbach Alpha. Repair and internal transparency were conflated, since these two

characteristics of enabling formalization are closest to each other. In doing so, a Cronbach

Alpha of 0,729 is achieved.

XI

Appendix B

First regression on attitude towards performance measures

First a regression on attitude included the control variables Wouters suggested:

Model Coefficients Test


Std.

Error t Sig.

(Constant) -0,172 0,677 -0,253 0,801

Diagnostic use 0,355 0,099 3,607 0,001*

Interactive use -0,128 0,088 -1,459 0,149

Repair & internal transparency 0,043 0,125 0,348 0,729

Global transparency 0,09 0,121 0,741 0,461

Flexibility 0,343 0,103 3,345 0,001*

Top management member ( 0 = No, 1 = Yes) 0,084 0,129 0,656 0,514

Team trust 0,221 0,084 2,63 0,01*

Work pressure -0,051 0,087 -0,583 0,561

Leadership style 0,187 0,065 2,872 0,005*


The F-value of the equation is 20,939. So the null hypothesis that all the coefficients are not

significantly different from 0 can be rejected with a p-value of 0,000.

However, the residuals appear not to be normally distributed: the Kolmogorov-Smirnov test

for normality has a p-value of 0,001. So the null hypothesis that the residuals are normally

distributed is rejected.

It is chosen to delete these three control variables for a couple of reasons

• There is no research interest in these variables.

• No clear rationale was given why these variables influence the attitude towards

performance measures.

• Opposing to Wouters and Wilderom (2008), other broader variables are used to

explain attitude towards performance measures. There is no indication there is still

need for these variables.

• It is possible that the Kolmogorov-Smirnov test can not reject that residual terms are

normally distributed, after omission.

One objection could be that when there are fewer variables included, it is possible that

variables will be less significant. However, I opted to omit these variables from the

regression.

XII

Appendix C

Regression to test the impact of the degree of enabling formalization

A regression on attitude towards performance measures was made, but only including the

characteristics of the enabling formalization.

Coefficients Test


Std.

Error t Sig.

(Constant) 1,282 0,489 2,623 0,01*

Repair & internal transparency -0,003 0,141 -0,021 0,983

Global transparency 0,38 0,124 3,073 0,003*

Flexibility 0,476 0,106 4,466 0,000*

* Significant at the two-sided significance level of 1%

R² = 0,561

We see that the same variables (global transparency and flexibility) are significant here. An

adjusted R² of 0,545 is achieved.

According to a Kolmogorov-Smirnov test, the null hypothesis that residuals are normally

distributed can not be rejected, with a p-value of 0,20.

XIII

Appendix D

Heteroscedasticity tests

Coefficients Test

B

Std.

Error t Sig.

(Constant) 1,761 0,455 3,866 0

Diagnostic use -0,1 0,103 -0,967 0,336

Interactive use 0,032 0,092 0,342 0,733

Repair & internal transparency -0,091 0,127 -0,712 0,479

Global transparency -0,001 0,125 -0,009 0,993

Flexibility -0,104 0,106 -0,981 0,33

Top management member ( 0 = No, 1 =

Yes) -0,084 0,135 -0,618 0,538

a. Dependent Variable: Residues on attitude squared R² = 0,13

n* R² = 87 * 0,13 = 11,31

Chi² (6 degrees of freedom, 5% significance) = 12,5916 ( for n -> ∞)

The critical value is not surpassed.

According to the test, this equation is significant. So there is no heteroscedasticity (if,

however, a few variables are dropped, the degrees of freedom will make this model

significant).

Coefficients Test

B

Std.

Error t Sig.

(Constant) 1,039 0,621 1,672 0,098

Experimentation 0,004 0,071 0,049 0,961

Experience-based development -0,185 0,081 -2,279 0,025

Professionalism 0,028 0,115 0,247 0,806

a. Dependent Variable: Residues on formalization squared

R² = 0,127

n*R² = 87 * 0,127 = 11,049

Chi² (3 degrees of freedom, 5% significance) = 7,81473 ( for n -> ∞)

The critical value is crossed.

According to the test, this equation is significant. So there is heteroscedasticity to a certain

degree.

XIV

Appendix E

Multicollinearity

To test the multicollinearity, the variance of the parameters is split out in a VIF and the basic

variance, to see to what degree collinearity inflates the variance of the parameters.

VIF Basic variance Total variance

Dependent variable: attitude

Diagnostic use 2,867 0,004 0,012

Interactive use 2,417 0,004 0,009

Repair & internal transparency 2,076 0,009 0,018

Global transparency 3,162 0,005 0,017

Flexibility 2,514 0,005 0,012

Top management member ( 0 = No, 1 = Yes) 1,122 0,018 0,020

Dependent variable: formalization

Experimentation 2,492 0,002 0,006

Experience-based development 2,517 0,003 0,008

Professionalism 1,151 0,014 0,016

Although there are some significant correlations, the VIF’s don’t give any indication of a

large multicollinearity problem. A rule of thumb is that there is a problem when the VIF is

larger then 5, there is no multicollinearity problem. This indicates there are no

multicollinearity problems. But also when looking at the VIF in combination with the basic

variance, we can state that the basic variance is sufficiently small. So when it is multiplied

with a larger VIF, the total variance will be still small enough. Here I can state

multicollinearity issues are not severe.

XV

Appendix F

Survey

Participating request

Mail

Onderwerp: Onderzoek metingen performantie Universiteit Gent

Beste,

Ik ben een Masterstudent Toegepaste Economische Wetenschappen aan de Universiteit te Gent. Als

Masterproef doe ik een academisch onderzoek, met als onderwerp het ontwerp en gebruik van

prestatiemeetsystemen.

D.m.v. de vragenlijst , waarvan de link onderaan vermeld staat, verzamel ik gegevens over de wijze

waarop prestatiemeetsystemen tot stand komen en gebruikt worden.

Ik zou u zeer erkentelijk zijn, mocht u deze enquête willen invullen of deze mail willen doorsturen

naar een geschikt persoon (een managementfunctie) binnen uw onderneming? De enquête neemt

slechts 10 minuten in beslag.

Alle gegevens zullen anoniem verwerkt worden. Als u wil, kan u ook de resultaten van mijn

onderzoek vernemen. Hiervoor contacteert u me best op mijn emailadres.

Om de enquête in te vullen, gelieve door te klikken naar de volgende link:

Indien de link niet werkt, gelieve deze dan te kopiëren naar de navigatiewerkbalk van uw

webbrowser.

Alvast bedankt,

Met vriendelijke groeten,

Kevin De Ruyck

XVI

Survey

XXVIII

XXXII

.

XXXIII

the use of the balanced scorecard: linking different

Documents