The performance consequence of multiple performance measures usage: Evidence from the Malaysian manufacturers

The purpose of this paper is to contribute to the body of knowledge in the area of performance measurement systems, particularly the BSC framework, by investigating empirically the extent of multiple performance measures usage and their effects on the performance of Malaysian manufacturers.

The paper used a mail‐survey of companies listed in the Directory of the Federation of Malaysian Manufacturers (FMM), year 2003. The FMM Directory provides a database of over 2,000 manufacturing firms of various sizes producing a broad range of products. The FMM Directory was utilized because it specifically covers manufacturers and manufacturing‐related services. A simple random sample of 975 companies located in West Malaysia was drawn. Companies with at least 25 employees and annual sales turnover of at least RM10 million were selected. A total of 120 usable responses were gathered and used in the data analysis.

The findings suggest that the use of non‐financial measures, particularly, internal business process and innovation and learning measures, appears to be important as it enhances firm performance. More interesting, the findings reveal that the use of multiple performance measures via overall BSC measures contributes to a more positive outcome.

The paper shows that the FMM Directory is not an exhaustive list, and may not represent the whole population of Malaysian manufacturers. The sample size is not overwhelming and confined to the manufacturing sector only. Furthermore, the use of cross‐sectional data could not find consistent association between non‐financial measures and future performance.

The paper shows that one important practical implication is for the designers of control and performance measurement systems to emphasize the use of multiple performance measures that are fundamental to the success of organizations.