TY - JOUR
T1 - Performance measurement system diversity and product innovation
T2 - Evidence from longitudinal survey data
AU - Chen, Clara Xiaoling
AU - Lill, Jeremy B.
AU - Lucianetti, Lorenzo
N1 - We thank Ranjani Krishnan (editor) and two anonymous reviewers. We also thank Mark Anderson, Anwer Ahmed, David Bedford, Josep Bisbe, Jan Bouwens, Brent Garza, Ryan Hudgins, Michal Matejka, Korok Ray, workshop participants at Jinan University, Singapore Management University, Texas A&M University, Zhongnan University of Law and Economics, and participants at the 2016 Management Accounting Section Midyear Meeting and 2016 American Accounting Association Annual Meeting for their very helpful comments on the earlier versions of the paper. We also thank the managers of the sample firms who agreed to participate in our phone interviews. Clara Xiaoling Chen is grateful for generous financial support from the Lillian and Morrie Moss Endowed Professorship. Jeremy Lill is grateful for generous financial support from the Howard Mid-career Professorship.
PY - 2023/11
Y1 - 2023/11
N2 - We examine (1) the association between performance measurement system (PMS) diversity and product innovation; and (2) the interdependence between PMS diversity and PMS use (diagnostic or interactive) for product innovation. We expect the association between PMS diversity and product innovation to depend on the trade-off between PMS diversity's potential benefits of meeting enhanced information needs and potential costs of information overload. Further, we apply knowledge recombination theory of innovation, which suggests that innovation requires access to diverse information and integration efficiency. Thus, we expect PMS diversity and PMS use to be complementary in supporting product innovation. We test our predictions using survey data collected over two waves. We find a positive association between PMS diversity and product innovation. We test for bidirectional effects, and find that the direction of the association is from PMS diversity to innovation. Furthermore, we find strong support for the complementarity between PMS diversity and PMS use (diagnostic or interactive) in supporting product innovation. Lastly, we document that environmental uncertainty moderates these effects.
AB - We examine (1) the association between performance measurement system (PMS) diversity and product innovation; and (2) the interdependence between PMS diversity and PMS use (diagnostic or interactive) for product innovation. We expect the association between PMS diversity and product innovation to depend on the trade-off between PMS diversity's potential benefits of meeting enhanced information needs and potential costs of information overload. Further, we apply knowledge recombination theory of innovation, which suggests that innovation requires access to diverse information and integration efficiency. Thus, we expect PMS diversity and PMS use to be complementary in supporting product innovation. We test our predictions using survey data collected over two waves. We find a positive association between PMS diversity and product innovation. We test for bidirectional effects, and find that the direction of the association is from PMS diversity to innovation. Furthermore, we find strong support for the complementarity between PMS diversity and PMS use (diagnostic or interactive) in supporting product innovation. Lastly, we document that environmental uncertainty moderates these effects.
KW - Complementarity
KW - Diagnostic controls
KW - Interactive controls
KW - Interdependence
KW - Performance measurement diversity
KW - Performance measurement system
KW - Product innovation
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U2 - 10.1016/j.aos.2023.101480
DO - 10.1016/j.aos.2023.101480
M3 - Article
AN - SCOPUS:85167396721
SN - 0361-3682
VL - 111
JO - Accounting, Organizations and Society
JF - Accounting, Organizations and Society
M1 - 101480
ER -