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MAJ
32,2
Performance measurement
and management systems
Different usages in Brazilian
148 manufacturing companies
Flavio Hourneaux Jr and Julio Araujo Carneiro-da-Cunha
Department of Management, Nove de Julho University, São Paulo, Brazil, and
Hamilton Luiz Corrêa
Department of Management, University of São Paulo, São Paulo, Brazil

Abstract
Purpose – Managerial usage of performance measurement and management systems (PMMS) is commonly
far from what theory advocates as ideal. Based on this, the purpose of this paper is to identify the justifications
for using PMMS and how much each of them explains the actual use of these systems.
Design/methodology/approach – An empirical survey was conducted with 149 manufacturing
companies’ managers as respondents. Descriptive statistics analysis and factorial analysis were performed
with multivariate analysis to test proposed hypotheses.
Findings – The results for all the companies surveyed are similar for the four dimensions – monitoring,
focus, strategic decision-making and legitimization. Only monitoring dimension presents a difference between
larger and smaller companies. There is no difference in the other three dimensions. As for the source of capital,
there is no difference in any of the four dimensions. It evidences that companies do not seem to be mature
enough in the full usage of their PMMS.
Research limitations/implications – Data are related only to a sample of São Paulo manufacturing
companies and should not be fully considered in different contexts without the proper awareness of ambiance
differences.
Practical implications – There is still room for organizations to improve their performance measurement
systems as managers could learn how to better avail themselves of the information from the PMMS. Brazilian
policymakers could support this process through policies and programs that incentivize manager to gain education
in PMMS.
Social implications – Small and medium enterprises (SMEs) should be supported by policymakers
(through learning programs or internal monitoring incentives) to improve their measurement performance
systems usage capabilities.
Originality/value – Discussion was based on data from an emerging country where there are mostly
SMEs and companies have to deal with more contingencies and restrictions. Although the lack of resources
tends to diminish a more effective usage of these systems, PMMS are mostly directed to monitoring issues.
Keywords Manufacturing companies, Performance measurement, Performance management,
Indicators, Performance measurement and management systems
Paper type Research paper

1. Introduction
The field of performance evaluation is the targeted point in the study of a combination of
Managerial Auditing Journal indicators that are used to measure the efficiency of organizational activity. The process has
Vol. 32 No. 2, 2017
pp. 148-166 seen substantial development since 1990s (Taticchi et al., 2010), when most models were
© Emerald Publishing Limited
0268-6902
developed (Lima et al., 2013). This development took place mainly due to the fact that
DOI 10.1108/MAJ-11-2015-1277 performance measurement and management systems (PMMS) could operationalize
organizational performance with their set of indicators (Choi et al., 2013). This enabled Performance
strategy execution replacing the skepticism toward strategic planning in the 1990s measurement
(Mintzberg, 1994). PMMS contains spreadsheets, indicators and performance reports
(Chenhall et al., 2014) that support managers’ decision-making process based on information
and not only on their intuitive bets. As such systems support managers’ routine activities,
they also improve organizations’ capabilities and performance (Koufteros et al., 2014).
Despite their increasing importance, development in this area has not been sustained by
the practical usage of robust PMMS. It is commonly noticeable that key data for indicators 149
elaboration are missing in daily organizational activities (Carneiro-da-Cunha and Corrêa,
2013). Indicators selection might be supported by the discourse spread along organization
and its units rather than the actual usage potential for such indicators (Cooper and Ezzamel,
2013). It seems that organizations can gain more potential to better a performance process
through implementation and usage of PMMS.
Considering that a PMMS is able to positively influence organizational capabilities and
performance according to the way such system is used (Franco-Santos et al., 2012), how
organizations manage these systems should be deeply investigated. Studies are commonly
focused on the reasons why organizations adopt their PMMS (Bourne, 2005), whereas few
have analyzed the reasons for the use of such systems (Wiersma, 2009). Although some
meritorious initiatives have been undertaken trying to establish categories for such
reasoning (Simons, 2000; Marr, 2004; Wiersma, 2009), there is still insufficient background
and general theory acceptance to provide definitive conclusions within the field. Mainly
because greater empirical observations are still required to support additional usage of
PMMS.
This empirical study proposes additional usage of PMMS. Considering that PMMS in a
specific context might help create performance improvements (Franco-Santos et al., 2012),
this study focuses on a single sector to avoid sectorial variance. To do so, this study focuses
specifically on industrial companies in São Paulo State. It is the most developed state in
Brazil and is responsible for about one-third of Brazilian gross development product. An
empirical survey was conducted with 149 respondents, followed by descriptive statistics
analysis and multivariate analysis to test proposed hypotheses.
Although this study might aide in the understanding of sectorial specificities in the
development of PMMS, it mainly discusses the reasons for the usage of PMMS by these
companies. This current study aims to determine what are the reasons for using PMMS in
industrial sector companies located in the state of São Paulo; and in what extent are PMMS,
in their different dimensions, being used. Such statements lead us to our main purpose, that
is to identify within this context, the justifications for using PMMS and how each of these
justifications explain the use of indicators in the organization.

2. Literature review
2.1 Performance measurement and management systems
Mainly in the past two decades of development in the PMMS field, there have been an
increasing demand for more rigorous systems. The measurement process could eliminate
decision-making based only on the intuition of the manager (Ermolayev and Matzke, 2007) or
on unidimensional financial characteristics (Venkatraman and Ramanujam, 1986). Many
studies have been conducted using various methods aimed to operationalize performance
(Venkatraman and Ramanujam, 1986). Besides, those studies have been also conducted by
researchers from different background and knowledge, what consolidates performance
measurement as a multifaceted issue (Neely, 2007). The research has been more focused on
the formal aspects of performance measurement and management rather than deepening the
MAJ understanding of the measurement process: how data are obtained, analyzed, interpreted,
32,2 communicated and what impact does this process have on actual organizational
performance (Bourne et al., 2005). Thus, this activity requires new processes and structures
that support it in becoming a new philosophy within organizations (Eccles, 1991).
These management needs evolved in a way that it was sufficient not only to generate
metrics and to measure results but also to manage these results. Although models such as the
150 Balanced Scorecard were developed, mainly along the 1990 decade, they are not sufficient to
cover and adapt needs from all types of organizations (Johnsen, 2001). One of the directions
of this evolution was inevitably the development of systems and organizational models that
were not only focused on measuring performance but also in meeting management needs.
One of the challenges of this research thematic area is to provide systems focused rather on
performance management and not only on measurement (Neely, 2005).
It is not just the management issue that should be incorporated in such debate. This study
considers a broader concept of performance measurement system, as performance
measurement also leads to a performance appraisal. A PMSS should contain such demand
for performance measurement and managing in a manner that an organization’s strategy
could be implemented and monitored by establishing a relationship pattern between the
proposed objectives and the obtained results (Simons, 2000). According to Simons (2000), a
PMMS would be “an information system that administrators use to track the implementation
of a business strategy by comparing actual results with the objectives and strategic goals”
(Simons, 2000, p. 337). Neely et al. (1995, p. 81) emphasized that a PMMS “can be defined by
a set of metrics used to quantify the efficiency and efficacy of actions”. These authors
highlight that these metrics do not simply refer to a formula but to diverse elements that help
to constitute a complete measurement process.
Franco-Santos et al. (2004) consider that a PMMS consists of:
[…] a set of processes that an organization uses to manage the implementation of its strategy,
communicate its position and progress, and influence the behavior and actions of its employees. Such
model demands the identification of the strategic objectives, multidimensional performance measures,
targets, and the development of a support infrastructure (Franco-Santos et al., 2004, p. 401).
Atkinson et al. (1987, p. 26) define a PMMS as “a tool that a company uses to monitor its
contractual relationships”. From the authors’ viewpoint, this system should consider and support
senior management’s relationship with its stakeholders. Therefore, an organization’s PMMS
should establish an organizational analysis in a global manner as a whole to integrate all relevant
perspectives critical to the organization (Sinclair and Zairi, 2000).
Even under the assumption that there are different definitions about this topic,
Franco-Santos et al. (2007), who analyzed more than 200 publications dealing with the
concept of a performance and management system, tried to gather the extensive literature on
this subject. In their analysis, the authors concluded that there was no consensus about the
true meaning of the term. To resolve this question, they suggest that the researcher tried to
define better what is being studied in future researches. Therefore, based on the concepts
outlined in Table I, PMMS are defined in this study as a system of management indicators
that covers all relevant perspectives of the organization and monitors and drives the
organizational strategy to the operational level to communicate that strategy to the entire
organization and to its stakeholders.

2.2 Using performance measurement and management systems in organizations

Several studies indicated reasons that support the use of PMMS. Some pointed out
convincing arguments separately and others dedicated their efforts exclusively to explore
what these explanations meant and detect ways of categorizing them (Simons, 2000; Marr,
Reference PMMS concept
Performance
measurement
Simons (2000) Information system that managers use to track the
implementation of business strategy by comparing
actual results to objectives and strategic goals
Neely et al. (1995) A set of metrics used to quantify the efficiency and
efficacy of actions undertaken
Franco-Santos et al. (2004) Set of processes that an organization uses in order 151
to manage the implementation of its strategy,
communicate its position, and progress and
influence the behavior and actions of its
employees. This demands the identification of
strategic objectives, multidimensional
performance measures, targets, and the
development of a support infrastructure
Atkinson et al. (1987) Tool that a company uses to monitor its
contractual relationships with stakeholders
Sinclair and Zairi (2000) Analyze the organization as a whole to integrate Table I.
all the perspectives relevant to an organization Main PMMS concepts

2004; Franco-Santos et al., 2007; Wiersma, 2009). The present study is based on the typology
proposed by Henri (2009) to define the necessary categories for the segregation of different
justifications for using PMMS indicators. According to Henri (2009, p. 252), the use of PMMS
is defined as “the way in which the measures are used by managers”, and it refers to “the
nature and purpose” of the use of performance indicators by managers. The author also
states that the use of PMMS can be categorized into four different classifications, as per the
following subsections.
2.2.1 Monitoring. Monitoring is the formal feedback systems used to monitor and
coordinate the implementation of plans and reach organizational goals. PMMS play a key
role in obtaining feedback from operations performed (Otley, 1999); thus, making it possible
to compare results with the planned and projected goals and objectives. In fact, the idea that
the use of PMMS is justified to obtain more feedback and, as consequence, more control, is
advocated by several other authors (Simons, 2000; Marr, 2004). Most authors agree that
PMMS should play a role in monitoring progress and measure or assess performance, such
as Franco-Santos et al. (2007). This importance is noted not only among theorists but also in
organizational reality because the idea of using PMMS for controlling and monitoring individual
and group activity in the organization accounts for 30 per cent of the reasons why these systems
are used in organizations (Marr, 2004).
This monitoring function provided by PMMS can generate an environment geared
toward the sustainability of the system by stimulating a culture of the search for new
indicators and elements to be measured, which support the feedback and continuity of the
system itself (Chavan, 2009). In other words, an institutionalized environment is created if the
system is maintained in a manner to spread a mentality of control throughout the organization
and the indicators are constantly being revised to adapt to the new organizational realities.
The use and the review of PMMS provide improvements in organization personnel
behavior and support organizational capabilities development, what increase overall
corporate results (Gutierrez et al., 2015). PMMS might be key-factors to promote performance
improvements spending less resource than other alternatives, such as a change in the
organization structure for example (Garengo and Sharma, 2014).
2.2.2 Focus of attention. The focus of attention is the signaling systems used to focus the
organization’s attention and force communication throughout an organization. A
MAJ widespread notion among the theorists of the area is that PMMS are important for
32,2 organizational communication. It is worth highlighting that this communication refers to
internal and external communication (Franco-Santos et al., 2007). Internally, communication
between departments, units, processes, functions, hierarchical levels, etc. (Forza and
Salvador, 2000) makes it possible to communicate the strategic vision of the company as well
as the knowledge and alignment between all the different areas within the organization. This
152 multiplicity of communication is set out by Wiersma (2009) as a means to promote horizontal
integration (intra-group coordination and communication) and vertical integration (vertical
communication, control, monitoring and feedback of activities).
Its use is justified because the goals and objectives of the organization can be aligned in
accordance with its defined strategy (McAdam and Bailie, 2002), when accordingly
communicated throughout the organization (Melnyk et al., 2014). It is thus possible to align
the focus on common issues, especially regarding an organization’s operational priorities. In
summary, aligning and coordinating action plans between different areas is easier via clearer
communication. Greater integration between different areas supports the division of
responsibilities and roles within the organization’s activities, thus avoiding the duplication
of responsibilities or, even worse, its absence in certain activities (Pietro et al., 2006).
Externally, a stakeholder is dealt with at the point in time when he can obtain relevant
information via its PMMS (Hourneaux and Corrêa, 2012). PMMS can be used as a tool that
provides customer services, acting as support for customer interaction (Wiersma, 2009).
Conversely, a a company might conduct benchmark exercises against other organizations
(Neely, 1998) when indicators and measurement systems are similar and under equal
environmental pressures (Micheli and Mari, 2014). In happens to compare whether its
productivity levels are within industrial standards, indicating if there is opportunity for
improvement when there is a lag in comparison to competitors.
2.2.3 Strategic decision-making. There is a need for models to be able to serve as a basis
for decision-making in diverse organizations (Taticchi et al., 2010), especially to justify
rational decision-making by a manager (Wiersma, 2009). These decisions are taken aligned
with previous definitions of organizational strategy. This use of PMMS is related to the
planning and fulfilment of results of the objectives established by the organization (Bourne
et al., 2005). A study by Marr (2004) inclusively identified that 19 per cent of the companies
understand that the main reason for the use of PMMS in their routines is to allow strategic
planning. PMMS are usually tools needed where strategy operationalization takes place
(Choi et al., 2013).
PMMS can also be used as support of management information used in decision-making
based on solid data indicators and not only on a manager’s intuition and opinion (Ermolayev
and Matzke, 2007). Thus, a stock of experiences for managers on how to act when faced with
certain behaviors or indicator warning signs can be created. PMMS also offer a clearer
insight into possible solutions to the organization’s problems. They show possible ways to
solve problems, cause– effect relationships (Kaplan and Norton, 2004) and the consequent
learning based on this causation establishment by managers (Kasperskaya and Tayles,
2013). All this offers plausible arguments for strategic decision-making by the manager.
2.2.4 Legitimation. Legitimation is the justification and validation of past, present and
future actions and decisions according to values and organizational culture. Given that the
PMMS have the power to influence the behavior of individuals within an organization
(Franco-Santos et al., 2007), it is a justification for use relative to the organization’s legitimate
institutional environment. A mechanism is created for the social control of the organization
by managers (Paula and Silva, 2005) so that an instrument of implicit and explicit
characteristics is instituted to ensure social control over individuals on the basis of their
goals, results and efficiency. This institutional environment and organizational values are Performance
reinforced when it is understood that PMMS serve to teach employees (Simons, 2000) by measurement
emphasizing the fact that the system is used to transmit organizational values and
know-how.
The justification for the use of PMMS in this way is to ensure compliance with regulations
(Franco-Santos et al., 2007) from the moment when the indicators represent standards to be
adhered to in accordance with regulations and norms. This is especially true when these are
government regulations. An external user can ensure that the contractual relationships are 153
being respected. In summary, the elements that form a part of each of these four dimensions
are summarized in Table II. These statements form a part of the data collection tool used in
this study.
2.2.5 Study’s hypotheses. Our hypotheses are related to the justification and validation of
past, present and future actions and decisions regarding PMMS usage. H1 is related to the

Purpose of use Element analysis

Monitoring Progresses toward goals

Monitors results
Compares results with expectations
Reviews principal measures
Focus of attention Allows discussion in meetings with superiors, subordinates and
peers
Allows challenges and ongoing debates relative to what is implied in
data, assumptions and action plans
Provides the entire organization with a common vision
Strengthens ties within the organization
Allows the organization to focus on common issues
Allows the organization to focus on critical success factors
Strategic decision-making Strategic decisions are taken because the need for a decision is
identified and an immediate response is (or not) required
Decisions are taken even when it is difficult to differentiate between
possible solutions to a problem because each of them presents a
good argument in its favor
Decisions are taken when faced with an unstructured problem,
which has not been addressed before
Decisions are taken based on a recent similar decision
The future direction of the organization is anticipated, as opposed to
response to an identifiable problem
A final decision is taken on an important strategic issue
Strategic decisions are taken as the need for the decision is identified
and an immediate response is (or not) required
Legitimation Confirms your understanding of the business
Justifies your decisions
Checks your assumptions
Maintains your perspective
Supports your actions
Reinforces your beliefs
Maintains the business close to you
Increases your focus Table II.
Validates your viewpoint Dimensions and
elements for the use of
Source: Based on Henri (2009) PMMS
MAJ fact that larger companies should use PMMS more intensively, as they might have more
32,2 resources such as funds, investments and management time directed to such performance
control activities. As the implementation of PMMS can be more taxing at smaller companies
that have fewer resources (Hudson et al., 2001), we expect a greater use of such systems on
larger organizations.
H2 is related to the use of PMMS by companies with foreign share capital. It is expected
154 that such organization use PMMS more intensively due to their need for transparency and
information provident to a broader public. Such hypothesis is supported by the fact that
these systems are used more intensively by companies with foreign shareholders (Haldma
et al., 2007).
H1. Large companies use PMMS more intensely than smaller companies with regards to
the following:
H1a. Monitoring dimension;
H1b. Focus dimension;
H1b. Strategic decision-making dimension; and
H1d. Legitimation dimension.
and
H2. Companies with national shareholders use PMMS less intensely than those with
foreign share capital with regards to the following:
H2a. Monitoring dimension;
H2b. Focus dimension;
H2c. Strategic decision-making dimension; and
H2d. Legitimation dimension.

3. Method
The empirical survey conducted consists of a “self-reporting” tool of factual data or opinions,
with the possibility of applying it to a homogeneous group that possesses at least one
common feature such as belonging for example to a specific industry (Flynn et al., 1990). The
research universe comprises industries that belong to the Industrial Centre of the State of São
Paulo (CIESP). All CIESP’s associated members were invited through a letter sent by CIESP
to participate in this data collection. The data gathering resulted in 149 valid responses. It
was an intentional data sample because data were collected on a voluntary basis, as
organizations could voluntarily express their desire to participate in the research (Saunders
et al., 2007).
The electronic data collection tool indexes issues related to the elements previously
mentioned in Table II, according to a study by Henri (2009). Points should be given to each
statement, according to an agreement– disagreement scale comprising seven points, with the
minimum range 1 corresponding to “not at all” and the maximum 7 points corresponding to
“to a large extent”.
Data analysis was performed in a uni- and multivariate fashion. For the univariate
analysis, the main characteristics of the responding companies were observed (Table IV)
along with the variables with respect to the objective of the study (mean and standard
deviation, represented in Table V). Factor analysis is shown in Table VI, and multivariate
analysis shown in Table VII were used to verify the correlations proposed by the study’s Performance
hypotheses. measurement
The constructs were constituted of different issues according to the dimensions shown in
the Table III. Cronbach’s alphas were calculated to verify the reliability of each of the
constructs. As levels of reliability were reached for values equal or above 0.7 for general
studies and 0.6 for exploratory studies (Hair et al., 1998), data collected presented an adequate
level of correlation among the constructs. Variables were not measuring the same thing
which made the answers valid for further results analysis. 155

4. Results
4.1 Characteristics of the sample
The state of São Paulo has the largest economic production of all the Brazilian states and is
responsible for more than 31 per cent of the country’s gross development product (São Paulo,
2010). Industry is the country’s largest employer with 2,575,782 people. It represents a total
remuneration of almost 61 billion Reais and more than 26 million BRL in terms of social and
labor charges, compensation and benefits along with industry’s net sales of nearly 593 billion
BRL (IBGE, 2007).
The main characteristics of the obtained sample are shown in Table IV.
According to the data, the sample constitutes primarily of organizations from the
processing sector, which mostly comprises in micro, small and medium-sized companies.
Such categorization follows BNDES (2010) division in which small and medium enterprises
(SMEs) are defined as organizations with annual revenues of less than 60 million BRL. The
majority of respondent companies is limited liability companies and funded by private
domestic capital.

4.2 Descriptive statistics

According to data, the indicators usage can be shown in a grading system. There are 27
indicators placed in a seven-point scale of disagreement–agreement (with a minimum of 1
equivalent to “not used at all” and the maximum of 7 corresponding to “used in a great
extent”). The results are presented in Table V.
Descriptive statistics also indicate that the main scores are prominently indicators of the
monitoring dimension (four of the top five). Indicators that are most used in studied
companies are the ones related to the controlling and monitoring activities. Other usage
possibilities are not seen as important as monitoring. We can observe that managers still
understand that performance indicators have a traditional and direct use in the daily routine
of monitoring others activities. As other dimensions seem to be considerably perceived as
less important than monitoring, PMMS may be falling short in support possibilities due to
managers understanding of balanced possibilities. As for other dimensions, there is a greater
variation in the results of the indicators average. So that it cannot be assumed that there is a
different usage pattern as in the monitoring dimension.

Construct Cronbach’s alpha Standardized Cronbach’s alpha No. of indicators

Monitoring 0.944 0.944 4

Focus of attention 0.951 0.951 7
Strategic decision-making 0.851 0.854 7 Table III.
Legitimation 0.950 0.951 9 Construct reliability
MAJ Variable Classification Frequency (%)
32,2
Industrial sector Agriculture. Livestock. Production 3 2.0
forestry. and Fisheries and
aquaculture
Extraction industries 1 0.7
156 Processing industries 130 87.2
Water. Sewage. and Waste 2 1.3
management and decontamination
Electricity and Gas 3 2.0
Construction 10 6.7
Origin of company’s capital investment National 119 79.9
Foreign 23 15.4
Mixed 7 4.7
Type of business Limited liability company 129 86.6
Corporation 17 11.4
Other 3 2.0
Billing/Annual Revenue (approximate) Less than R$60m 109 73.2
Between R$60m and R$300m 24 16.1
Between R$300m and R$600m 8 5.4
Between R$600m and R$1bn 3 2.0
Above R$1bn 5 3.4
No. of company employees Up to 99 employees 88 59.1
Between 100 and 500 employees 45 30.2
Between 500 and 1,000 employees 4 2.7
Between 1,000 and 5,000 9 6.0
employees
Table IV. Over 5,000 employees 3 2.0
Main research sample
characteristics a a
Note: Numbers in italic represent the highest frequency for each variable analyzed

4.3 Factorial analysis for the use of performance measurement and management systems
From the analysis of data on indicators usage degree in PMMS, an exploratory factor
analysis was performed by including 27 representative variables according to the study
conducted by Henri (2009). The results offered an explanation of 73.10 per cent of the
total variance with elements being grouped in four factors, as shown in Table VI.
Overall, the generated factors or dimensions confirm the theoretical model used. Only
three items (highlighted in bold in the last column of Table VI) did not fully confirm Henri’s
(2009) results. The first was to make a final decision on a strategic issue of great importance,
originally belonging to the dimension “decision making” and classified in the dimension
“legitimation”. As it had the lowest loading factor (0.4901), it could have be excluded from
this dimension. The second was to allow challenges and ongoing debate about what is
implied in data, assumptions and plans of action. The third was to allow open discussions in
meetings with superiors, subordinates and peers, originally belonging to the “focus”
dimension and classified in the “monitoring” dimension. They had the lowest factor loadings
(0.5870 and 0.5828). These items occupy the last positions in their initial-proposed factors.
Given the magnitude of their factorial loadings being very similar to the largest factorial
loadings obtained for these items, these items could be classified as per the original study,
hence showing evidence of similarity with the original study.
Dimension Indicators Average SD Order a

Monitoring USO_A1 Monitoring goals 5.9530 1.1528 4

USO_A2 Monitoring results 6.1208 1.1205 1
USO_A3 Comparing with targets 6.0805 1.2221 2
USO_A4 Review of measures 5.8725 1.2318 5
Focus of attention USO_B1 Discussion meetings 6.0000 1.2412 3
USO_B2 Challenge and ongoing debate 5.7383 1.3223 7
USO_B3 Shared organizational vision 5.5839 1.3106 12
USO_B4 Strengthening organizational ties 5.5168 1.3587 19
USO_B5 Focus on common issues 5.5705 1.2748 15
USO_B6 Focus on critical success factors 5.5705 1.2801 16
USO_B7 Common vocabulary 5.3356 1.4455 22
Strategic decision-making USO_C1 Immediate response 5.6040 1.1320 11
USO_C2 Non-immediate response 4.9060 1.4766 26
USO_C3 Difficulty differentiating between problems 4.9597 1.4790 25
USO_C4 New problems and unstructured problems 5.0201 1.4541 24
USO_C5 Similar previous decisions 5.4094 1.2303 21
USO_C6 Change of direction 4.8121 1.5482 27
USO_C7 Major issue 5.6107 1.3290 10
Legitimation USO_D1 Confirmation of business understanding 5.5839 1.2030 13
USO_D2 Justification of decisions 5.5772 1.2312 14
USO_D3 Verification of assumptions 5.4228 1.2312 20
USO_D4 Maintaining perspective 5.5302 1.1715 18
USO_D5 Support for actions 5.6577 1.1785 9
USO_D6 Reinforcement of beliefs 5.3020 1.3442 23
USO_D7 Maintenance of business proximity 5.7584 1.1189 6
USO_D8 Improvement of focus 5.7114 1.1046 8
USO_D9 Validation of points of view 5.5503 1.1592 17

Note: a Classified in descending order of mean

statistics
PMMS– descriptive
Use of
Table V.
157
measurement
Performance
 32,2

158
MAJ

Table VI.

PMMS usage
Factora analysis for
Components Classification in
Factors Indicators 1 2 3 4 original studyb

1 Legitimation (24.80% of total Support for actions 0.7921 0.1928 0.2724 0.2311 Legitimation
variance) Justification of decisions 0.7885 0.2428 0.1381 0.1701 Legitimation
Verification of assumptions 0.7861 0.3006 0.1917 0.1166 Legitimation
Maintenance of expectations 0.7837 0.1726 0.2862 0.2083 Legitimation
Maintenance of business proximity 0.7622 0.2578 0.2121 0.1723 Legitimation
Reinforcement of beliefs 0.7570 0.1179 0.1749 0.1863 Legitimation
Focus Improvement 0.7562 0.3142 0.2574 0.1499 Legitimation
Validation of points of views 0.7281 0.2016 0.3741 0.1557 Legitimation
Business understanding Confirmation 0.6083 0.1877 0.3961 0.3425 Legitimation
Major issue 0.4901 0.2291 0.0444 0.4110 Decision-making
2 Monitoring (17.57% of total Monitoring Results 0.2771 0.8663 0.2087 0.1128 Monitoring
variance) Compared with expectations 0.3168 0.8329 0.2519 0.1170 Monitoring
Monitoring goals 0.2491 0.8077 0.2565 0.1734 Monitoring
Review of measures 0.2967 0.7642 0.3308 0.1192 Monitoring
Challenge and ongoing debate 0.1986 0.5870 0.5795 0.2542 Focus of attention
Discussion meetings 0.2577 0.5828 0.5096 0.2961 Focus of attention
3 Focus of attention (17.07% of total Strengthening of organizational links 0.3297 0.3454 0.7732 0.1450 Focus of attention
variance) Focus on common issues 0.2912 0.3895 0.7256 0.1607 Focus of attention
Common vocabulary 0.3291 0.1911 0.7191 0.2883 Focus of attention
Organization’s common vision 0.3183 0.4620 0.6973 0.1723 Focus of attention
Focus on critical success factors 0.3559 0.4629 0.6606 0.1640 Focus of attention
Immediate response 0.4452 0.1092 0.5272 0.3840 Focus of attention
4 Strategic decision-making (13.66% New problems and unstructured problems 0.2237 0.0500 0.2453 0.7740 Decision-making
of total variance) Difficult to differentiate between problems 0.1978 0.0399 0.1671 0.7419 Decision-making
Change of direction 0.1408 0.2051 ⫺0.0791 0.7157 Decision-making
Non-immediate response 0.1092 0.0814 0.2310 0.7029 Decision-making
Previous similar decisions 0.2577 0.2341 0.3003 0.6623 Decision-making

Notes: a Extraction method: Main component analysis; Rotation method: varimax with Kaiser normalization with conversion in seven iterations; KMO ⫽ 0.9393; b Items highlighted in
italic differ from the results of the original study (Henri, 2009). We have kept all the indicators – even the ones with lower loading factors–to make the comparison between the two studies
possible
4.4 Analysis of differences between groups: size and origin of capital Performance
A variance analysis (or the ANOVA technique) is generally used to determine whether the measurement
samples of two or more groups have the samples statistically the same means (Hair et al.,
1998). Likewise, in the ANOVA test, if there is contrast between the means and the null
hypothesis, the means are the same; hence, H0: ␮ 1 ⫽ ␮ 2 ⫽ … ⫽ ␮ k (Hair et al., 1998). As
it is not possible to use ANOVA, which is recommended for parametric tests, the choice was
to use the equivalent technique indicated for nonparametric tests, the Kruskal–Wallis test. It
is recommended for ordinal scales (Favero et al., 2009), and the rejection of the null 159
hypothesis would lead to the identification of differences among the groups.
Two variables were used in the test:
(1) company size, divided into two categories: (G1) which involves micro, small and
medium companies with annual billing below 60 million BRL[1] and (G2) large
companies with billing equal to or greater than 60 million BRL. The choice was due
to testing whether the volume of potentially available resources would influence the
different conditions under which the companies operate.
(2) origin of the capital, which is divided into two categories: (G1) national companies
and (G2) foreign-funded companies and/or mixed. The choice arose as a result of
testing whether international companies’ policies and practices could represent
differences in performance measurement when compared with national companies.

Table VII represents a summary of the results of the tests that were conducted. There is a
difference between the groups in H1a. Only the monitoring dimension presents a difference
between the larger (use to a greater extent) and smaller (use a lesser extent) companies. With
respect to size, there is no difference in other dimensions. With respect to the source of capital,
there is no difference in any of the four dimensions.

5. Conclusions and final discussions

5.1 Academic implications
The results of the study suggest that PMMS can be used for different purposes as a
monitoring tool, where the results were evidenced by the survey replies. The effective use of
PMMS can be an important support for corporate performance management. Results
demonstrate that monitoring process is the only variable that can be seen as different
between larger and smaller companies. This confirms proposed H1a. Larger companies
present more monitoring issues due to their size and it explains their need for higher level of
controls. It could justify their deeper concerns on PMMS usage. Considering that monitoring
indicators are seen as the most used ones, it can be assumed that most managers still
prioritize having a PMMS to control and monitor organizational activities for broader and
more complex organization.
Mainly in larger companies, the results might point out a limitation caused by a
traditionalist management style when using PMMS. This fact can limit the use of PMMS by
managers, making them fall short of their real potential. It may prevent these systems from
providing all the possible support and management technology they were designed to
implement. Without such possibilities in place, PMMS may be underused and therefore less
effective for organizational strategic management. To aide in a more comprehensive use of
PMMS techniques, managers could be trained to better understand PMMS usage
possibilities. This could enhance their managerial efforts toward strategic decision-making,
focusing decisions and important issues legitimization. It would certainly improve PMMS
utility to managers and would provide more informational support to managerial
decision-making resulting in more productivity and profits to the organization.
 32,2

160
MAJ

Table VII.

capital of the
Analysis of the
differences of the

the size and source of

variables according to

respondent companies
Sizea Source of capitalb
Variable G1 G2 Significance level Hypothesis G1 G2 Significance level Hypothesis

Dimension monitoring 69.85 89.59 0.0112 H1a 72.37 85.45 0.1318 H2a
Dimension focus 71.61 84.25 0.1162 H1b 75.04 74.85 0.9823 H2b
Dimension strategic decision-making 73.17 79.98 0.3951 H1c 75.90 71.42 0.6074 H2c
Dimension legitimation 74.60 76.10 0.8561 H1d 76.33 69.73 0.4672 H2d

Notes: Observation: Using the Kruskal–Wallis test; Using the Monte Carlo method, 95% significance level; a N ⫽ 149; G1 Micro, Small and Medium ⫽ 109;
G2-Large ⫽ 40; b N ⫽ 149; National G1 ⫽ 119; Foreign G2/Mixed ⫽ 30
Currently, the strategic nature of PMMS, which supports the ability of these tools to sustain Performance
long-term planning, decision-making, internal development and people training amongst measurement
other characteristics may be limited. The PMMS may end up playing a secondary role in
regard to organizational strategy. There may be an illusion that the organization does have
a sustainable organizational strategy support tool when it actually cannot even align and
define a managerially sustainable organizational strategy in the eyes of the senior
management by the underestimated PMMS usage. Only tracking target results and
indicators does not guarantee the successful implementation of an organizational strategy. 161
Management may be ignoring and neglecting fundamental elements for driving the proper
implementation of organizational strategy.
It is important to note that no differences were observed for the other dimensions for
either size or source of capital. Additionally, the typology put forward by Henri (2009) seems
appropriate because it was confirmed almost entirely through the factorial analysis made.

5.2 Practical implications

The data sample obtained in this research can be deemed to represent the São Paulo State and
Brazilian manufacturing industry. It included the sector representation in this state with the
predominance of smaller companies, national private capital and not traded on the stock
exchange, which are typical of the national economy. It is therefore reasonable to assume that
the same conditions and difficulties faced by these companies would also be repeated for
other companies in the Brazilian scenario. The survey results show that there is still great
room for improvement for the use of PMMS in organizations. There is room for enhancing
performance management practices. The use of PMMS seems to be in an embryotic stage,
despite the size or capital origin of companies. Results indicate that SMEs should be
supported by policymakers through learning programs or internal monitoring incentives to
improve their measurement performance usage capabilities. They could improve their
monitoring capacity with apparently not too many efforts, avoiding mismanagement and
uncontrolled actions in the decision-making process.

5.3 Suggestions for future researches

As suggestions for future studies, it is recommended to expand this study to other sectors,
other Brazilian states and other countries to allow that specificities and differences between
phenomena sustain new contributions. After understanding the reasons for usage of
indicators in organizations, additional descriptive studies could identify possible sector
causes for specific indicators usage and why other indicators are not used. Future studies
could guide the understanding that different indicators dashboard usages might cause
different performance levels. It is important to comprehend which measurements and
appraisal systems positively affect an organization’s results. Although there are studies that
mentions how appraisal performance systems may affect performance (Koufteros et al., 2014;
Melnyk et al., 2014), how and why appraisal systems are used to successfully aide
management need to be better understood to help other organizations. Other studies are
working in this direction (Speklé and Verbeeten, 2014). Researches should go in the direction
to more deeply understand such relationships (appraisal systems with performance) through
the systems usage approach. The goal is to find ways for management to be more successful
in operating their organizations.

Note
1. At the time of this research data collection, US$1.00 was equal to around 2,50 BRL.
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Corresponding author
Flavio Hourneaux Jr can be contacted at: flaviohjr@usp.br

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