The Effect of Comprehensive Performance Measurement Systems On Role Clarity Psychological Empowerment and Managerial Performance 2008 Accounting Organ

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Accounting, Organizations and Society 33 (2008) 141163

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The eect of comprehensive performance measurement

systems on role clarity, psychological empowerment
and managerial performance
Matthew Hall
Department of Accounting and Finance, London School of Economics and Political Science, Houghton Street,
London WC2A 2AE, United Kingdom
Abstract
This study examines how comprehensive performance measurement systems (PMS) aect managerial performance.
It is proposed that the eect of comprehensive PMS on managerial performance is indirect through the mediating variables of role clarity and psychological empowerment. Data collected from a survey of 83 strategic business unit managers are used to test the model. Results from a structural model tested using Partial Least Squares regression indicate
that comprehensive PMS is indirectly related to managerial performance through the intervening variables of role clarity and psychological empowerment. This result highlights the role of cognitive and motivational mechanisms in
explaining the eect of management accounting systems on managerial performance. In particular, the results indicate
that comprehensive PMS inuences managers cognition and motivation, which, in turn, inuence managerial
performance.
2007 Elsevier Ltd. All rights reserved.
Introduction
In recent years organizations have sought to
develop more comprehensive performance measurement systems (PMS) to provide managers
Tel.: +44 0 20 7955 7736; fax: +44 0 20 7955 7420.

E-mail address: M.R.Hall@lse.ac.uk
and employees with information to assist in managing their rms operations (Fullerton & McWatters, 2002; Ittner, Larcker, & Randall, 2003; Lillis,
2002; Malina & Selto, 2001; Ullrich & Tuttle,
2004). Prior research indicates that more comprehensive PMS include a more diverse set of performance measures, and performance measures that
are linked to the strategy of the rm and provide
information about parts of the value chain (Chenhall, 2005; Malina & Selto, 2001; Nanni, Dixon, &
0361-3682/$ - see front matter 2007 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2007.02.004
142
M. Hall / Accounting, Organizations and Society 33 (2008) 141163
Vollman, 1992; Neely, Gregory, & Platts, 1995).

Comprehensive PMS have been popularised in
techniques such as the balanced scorecard (Kaplan
& Norton, 1996), tableau de bord (Epstein &
Manzoni, 1998) and performance hierarchies
(Lynch & Cross, 1992).
In this paper I examine how comprehensive PMS
aect managerial performance. Prior research has
focused on the relation between comprehensive
PMS and organisational performance (perceived
or actual) (Chenhall, 2005; Davis & Albright,
2004; Hoque & James, 2000; Ittner, Larcker, &
Randall, 2003; Said, HassabElnaby, & Wier,
2003), and on the use of multiple performance measures in performance evaluation judgements
(Banker, Chang, & Pizzini, 2004; Lipe & Salterio,
2000; Schi & Homan, 1996). However, there is
limited empirical research that examines the behavioural consequences of comprehensive PMS (Ittner
& Larcker, 1998; Webb, 2004). Studies examining
links between management control systems and
organisational outcomes assume that such systems
aect the behaviour of individuals within the organization, which then facilitates the achievement of
organisational goals. However, as Chenhall (2003)
notes, this assumption involves broad leaps in logic
and there is no compelling evidence to suggest that
these links exist. Similarly, Covaleski, Evans, Luft,
and Shields (2003) argue that studies at the organisational level of analysis remain somewhat limited
because they are based upon assumptions about,
rather than a detailed investigation of, individual
behaviour.
Further, there is little empirical research that
examines whether control system components
have direct and/or indirect eects on work performance (Shields, Deng, & Kato, 2000). This is
important because there can be theoretical dierences between direct- and indirect-eects models
that can have practical implications (Shields
et al., 2000). Psychological theories indicate that
cognitive and motivational mechanisms are likely
to explain the relation between comprehensive
PMS and managerial performance (Collins, 1982;
Ilgen, Fisher, & Taylor, 1979; Luckett & Eggleton,
1991). As such, I examine how the relation
between comprehensive PMS and managerial
performance can be explained by the intervening
variables of role clarity and psychological

empowerment.
Recent research indicates that the information
dimensions of management accounting practices,
such as PMS, are not captured eectively by labels
such as the balanced scorecard (Chenhall, 2005;
Ittner, Larcker, & Randall, 2003). In particular,
Ittner, Larcker, and Randall (2003) argue that
researchers need to devise improved methods for
determining what rms mean by contemporary
PMS. As such, in this study, I draw on descriptions of PMS from the performance measurement
literature to develop a denition of a comprehensive PMS. Based on this denition, I develop an
instrument to measure empirically the comprehensive PMS construct.
Data collected from a survey of strategic business unit (SBU) managers are used to examine
how comprehensive PMS is related to managerial
performance. I focus on SBU managers as the
information provided by comprehensive PMS is
expected to be useful at this managerial level
because of SBU managers information requirements. The results show that comprehensive
PMS is indirectly related to managerial performance through the intervening variables of role
clarity and psychological empowerment. Consistent with theory, the results highlight the role of
cognitive and motivational mechanisms in
explaining the eect of management accounting
systems on managerial performance. In particular,
the results indicate that comprehensive PMS inuences managers cognition and motivation, which,
in turn, inuence managerial performance. This
contributes to prior research that has examined
the direct and indirect eects of management control systems on work performance (Shields et al.,
2000), and also extends the limited body of prior
research that has examined the eect of management control system attributes on psychological
empowerment (Smith & Langeld-Smith, 2003;
Spreitzer, 1995, 1996) and role clarity (Chenhall &
Brownell, 1988). Finally, the study responds to
calls to develop improved methods for examining the attributes of management accounting
practices by developing a reliable and valid instrument to measure the comprehensive PMS
construct.
The remainder of the paper contains four sections: the next section develops the theoretical
model, including presentation of the hypotheses.
The research method, including sample selection
and variable measurement, is then presented. This
is followed by presentation of the results. The nal
section discusses the results and concludes the
paper.
Comprehensive
PMS
H1
H3
H5
Role clarity
H2
Psychological
empowerment
H4
Theoretical development and hypotheses

formulation
A major premise behind the development of
more comprehensive PMS is that they can help
to improve managerial performance (Atkinson &
Epstein, 2000; Epstein & Manzoni, 1998; Kaplan &
Norton, 1996). Psychological theories indicate
that cognitive and motivational mechanisms are
likely to explain the relation between comprehensive PMS and managerial performance (Ilgen
et al., 1979). As such, comprehensive PMS is not
expected to have a direct eect on managerial performance. Rather, comprehensive PMS is expected
to have an indirect eect on managerial performance by: (1) clarifying managers role expectations, and (2) providing feedback to enhance
managers intrinsic task motivation (Collins,
1982; Luckett & Eggleton, 1991). Thus, theory
predicts that role clarity and psychological
empowerment are likely to mediate the relation
between comprehensive PMS and managerial performance. In particular, comprehensive PMS are
expected to have positive eects on SBU managers
behaviour. This is because the information provided by comprehensive PMS (information about
the important parts of the SBUs operations, and
integration of measures with strategy and across
the value chain) is expected to be useful for SBU
managers because their jobs require consideration
of multiple aspects of the SBUs operations and
consideration of strategic issues. Thus, comprehensive PMS is expected to provide important
information for SBU managers to enhance their
role clarity and psychological empowerment,
and, in turn, enhance managerial performance.
The theoretical model is shown in Fig. 1. For the
role clarity path, I argue that comprehensive PMS
143
Managerial
Performance
Fig. 1. Theoretical model: comprehensive PMS, role clarity,

psychological empowerment and managerial performance.
enhances role clarity (H1), and role clarity enhances

managerial performance (H2). For the psychological empowerment path, I argue that comprehensive
PMS enhances psychological empowerment (H3),
and psychological empowerment enhances managerial performance (H4). I also propose a positive
association between role clarity and psychological
empowerment (H5).
Comprehensive performance measurement systems
Recent research has emphasised the importance
of examining the information dimensions of contemporary PMS (Chenhall, 2005; Ittner, Larcker, &
Randall, 2003; Luft & Shields, 2003). The performance measurement literature has identied
several important characteristics of more comprehensive PMS. Malina and Selto (2001) argue that
a comprehensive PMS consist of a parsimonious
set of critical performance measures. Results of
their study show that the balanced scorecard was
considered comprehensive when it provided an
overall measure of business performance. One
manager stated that the BSC is trying to give us
a broader business set of measures of success than
more traditional nancial or market share. It
wraps a set of things together that makes sense
for managing the business (Malina & Selto,
144
2001, p. 70). Ittner, Larcker, and Randall (2003)

argue that a broad set of measures, or measurement diversity, is an important feature of more
comprehensive PMS. Ittner, Larcker, and Randall
(2003, p. 717) consider measurement diversity as
supplementing traditional nancial measures
with a diverse mix of non-nancial measures that
are expected to capture key strategic performance
dimensions that are not accurately reected in
short-term accounting measures. Similarly, Ullrich and Tuttle (2004) and Henri (2006) argue that
comprehensive systems are designed to measure
performance in all the important areas of the rm.
These studies indicate that providing a broad set of
measures that cover dierent parts of the organizations operations is an important aspect of more
comprehensive PMS.
The integration of measures with strategy and
providing information about parts of the value
chain is also an important feature of more comprehensive PMS. Nanni et al. (1992) argue that PMS
that integrate actions across functional boundaries,
and focus on strategic results, are critical in supporting the new manufacturing and competitive
environments facing organizations. In addition,
the integration of measures with the strategy and
objectives of the organization provides performance information about progress on important
dimensions of performance (Kaplan & Norton,
1996; Malina & Selto, 2001; Malmi, 2001; Nanni
et al., 1992; Neely et al., 1995; Webb, 2004). More
comprehensive PMS provide an understanding of
the linkages between business operations and strategy (Chenhall, 2005).
Thus, the PMS literature indicates that there are
several important characteristics of comprehensive
PMS, including providing a broad set of measures
related to the important parts of the organisation,
the integration of measures with strategy and valued organisational outcomes, and the integration
of measures across functional boundaries and the
value chain (Chenhall, 2005; Henri, 2006; Ittner,
Larcker, & Randall, 2003; Malina & Selto, 2001;
Malmi, 2001; Neely et al., 1995). Therefore, it is
argued that a comprehensive PMS provides performance measures that describe the important
parts of the SBUs operations and integrates measures with strategy and across the value chain. As
such, a more comprehensive PMS is one that provides more comprehensive performance information to managers, i.e., measures that fully
describe the SBUs operations and link to strategy
and across the value chain. In contrast, a less comprehensive PMS is one that provides less comprehensive performance information to managers,
i.e., measures that only partially describe the
SBUs operations and contain few (if any) links
to strategy and across the value chain.
The way in which comprehensive PMS provide
enhanced performance information supplies the
basis for linking comprehensive PMS with SBU
managers role clarity and psychological empowerment. Individuals at higher levels in the organisation, such as SBU managers, obtain feedback
about the results of operations and work-related
performance from PMS (Collins, 1982; Luckett
& Eggleton, 1991). A more comprehensive PMS
provides richer and more complete feedback about
operations and results to SBU managers (Chenhall, 2005; Kaplan & Norton, 2001; Malina &
Selto, 2001), which is expected to have positive
eects on managers role clarity and psychological
empowerment.
Comprehensive PMS and role clarity
Role clarity refers to individuals beliefs about
the expectations and behaviours associated with
their work role (Kahn, Wolfe, Quinn, Snoek, &
Rosenthal, 1964).1 In this study I examine whether
comprehensive PMS is related to two aspects of
role clarity; goal clarity (the extent to which the
outcome goals and objectives of the job are clearly
stated and well dened) and process clarity (the
extent to which the individual is certain about
how to perform his or her job) (Sawyer, 1992). It
is expected that more comprehensive performance
information will help to clarify SBU managers
1
Kahn et al. (1964) use the term role ambiguity, which refers
to uncertainty regarding parts of an individuals role. In this
study the term role clarity is used. However, this is conceptually
no dierent from role ambiguity (Sawyer, 1992). Role clarity is
expressed as the extent of certainty, rather than ambiguity, of
role expectations.
role expectations and the appropriate behaviours

for fullling those role expectations.
Several researchers argue that more comprehensive performance information can help to improve
role clarity. Collins (1982) argues that management
accounting systems can be used to inform individuals about what is expected of them in their role.
Specically, comprehensive performance information can serve to clarify individuals roles in the
organisation by making specic the goals and
appropriate behaviours associated with a work role
(Ilgen et al., 1979).
Comprehensive PMS can increase SBU managers goal clarity by providing information about
the organizations strategies and operations, which
helps them to better understand their own role
within the organization. Access to comprehensive
performance information allows SBU managers
to see the big picture and develop a reference
point for understanding their roles within their
organization (Bowen & Lawler, 1992; Lawler,
1992). More comprehensive PMS can help to clarify and communicate strategic intent, and can capture dierent dimensions of performance, which is
important in describing the organizations operations (Kaplan & Norton, 1996; Lynch & Cross,
1992; Simons, 2000). Performance feedback about
business unit operations increases managers level
of certainty over the requirements of their work
role (Kahn et al., 1964; King & King, 1990). As
such, more comprehensive PMS should improve
SBU managers understanding of what comprises
their role and what is expected of them, and thus
increase goal clarity.
Comprehensive PMS can increase process clarity by providing performance information to
improve SBU managers understanding of the
drivers of performance, the eect of their actions
on parts of the value chain, and the links between
dierent parts of the organizations operations. In
particular, more comprehensive PMS can educate
SBU managers about the economics of the business and the drivers of costs, revenues and performance (Kaplan & Norton, 1996; Lynch & Cross,
1992; Simons, 2000). Banker et al. (2004) argue
that the integration of measures across the value
chain can help individuals to understand crossfunctional relationships. Similarly, Malina and
145
Selto (2001) found that the balanced scorecard

was important for managing the business when
performance information was comprehensive and
integrated. As such, more comprehensive
performance information is expected to improve
SBU managers understanding of their work
role and thus increase role clarity, which leads
to H1.
H1: There is a positive relation between comprehensive PMS and role clarity.
Role clarity and managerial performance

Individuals require sucient information to
perform tasks eectively. A lack of information
regarding the goals of the job and the most eective job behaviours can result in eort that is inefcient, misdirected or insucient for the task(s),
and thus reduce job performance (Jackson &
Schuler, 1985; Tubre & Collins, 2000). SBU managers are likely to be more eective when they
understand what needs to be done and how managerial functions are to be performed. Empirical
results indicate that role ambiguity decreases work
performance (Abramis, 1994; Jackson & Schuler,
1985; Tubre & Collins, 2000). These arguments
and evidence lead to H2:
H2: There is a positive relation between role
clarity and managerial performance.
Comprehensive PMS and psychological

empowerment
Psychological empowerment refers to increased
intrinsic task motivation manifested in a set of
four cognitions; meaning (the value placed on
work judged in relation to an individuals own ideals or standards), competence (an individuals
belief in his/her capacity to perform a job with
skill), self-determination (an individuals belief
concerning the degree of choice they have in initiating and performing work behaviours), and
impact (the extent to which an individual believes
they can inuence outcomes at work) (Spreitzer,
146
1995; Thomas & Velthouse, 1990).2 Higher levels

of meaning, competence, self-determination and
impact reect higher intrinsic task motivation
(Thomas & Velthouse, 1990), and, therefore, are
expected to result in more focused attention on
tasks, greater eort (intensity) and persistence during tasks, and improved task strategies (Mitchell &
Daniels, 2003; Pinder, 1998).
Providing adequate performance information
enhances the development of psychological
empowerment. Feedback theories from psychology indicate that performance information can
improve psychological empowerment by providing
information about task behaviour and performance (Collins, 1982; Ilgen et al., 1979; Locke,
Shaw, Saari, & Latham, 1981; Luckett & Eggleton,
1991). In particular, intrinsic task motivation is
increased when managers are provided with feedback about the results of operations (Ilgen et al.,
1979). The greater the amount of information provided on a job, the greater will be the motivating
potential of the job (Ilgen et al., 1979). This is
because performing a task without knowledge of
results provides little feedback to managers, which
is likely to be frustrating and dissatisfying, thus
reducing intrinsic motivation (Luckett & Eggleton,
1991).
The empowerment literature also supports the
link between performance information and intrinsic motivation. Providing information about the
performance of the business is essential for the
development of empowerment (Bowen & Lawler,
1992; Spreitzer, 1995, 1996; Quinn & Spreitzer,
1997). In contrast, a lack of information about
performance has adverse aects on feelings of
empowerment (Chiles & Zorn, 1995). In support
of these arguments, Spreitzer (1995, 1996) found
that access to cost and quality performance information is positively associated with psychological
empowerment.
2
Psychological empowerment is a motivational construct and
is therefore distinguished from objective structural factors, such
as delegation of decision-making authority (Thomas & Velthouse, 1990). Delegation is likely to enhance psychological
empowerment; however, it is individuals cognitive interpretations of such structural factors that leads to stronger psychological empowerment, rather than some objective reality (Chiles
& Zorn, 1995; Spreitzer, 1996; Thomas & Velthouse, 1990).
As such, SBU managers require information

about the results of SBU operations to feel intrinsically motivated. The characteristics of comprehensive PMS (providing performance measures
that describe the important parts of the SBUs
operations and integrating measures with strategy
and across the value chain) provide a rich and relatively complete picture of the performance of the
business unit (Chenhall, 2005; Ittner, Larcker, &
Randall, 2003; Kaplan & Norton, 2001; Malina
& Selto, 2001). Such information is essential
for SBU managers because their jobs require
consideration of multiple aspects of the SBUs
operations and consideration of strategic issues.
As such, a more comprehensive PMS provides
the performance information necessary for SBU
managers to develop higher levels of psychological
empowerment. In contrast, a less comprehensive
PMS provides limited and inadequate performance information, and thus is likely to limit the
development of SBU managers psychological
empowerment.
Comprehensive PMS is expected to increase
SBU managers beliefs regarding each dimension
of psychological empowerment: meaning, competence, self-determination and impact. Conger
and Kanungo (1988) argue that performance
information is likely to strengthen individuals
beliefs of meaning and purpose, as managers
believe they are valued when they are provided
with the results of operations. Further, Spreitzer
(1995) argues that greater access to performance
information is essential in enabling managers to
believe that their work is valuable. A more comprehensive PMS provides a rich and relatively
complete picture of the performance of the business units operations, which increases SBU managers ability to judge the value of their work in
the context of the organizations strategies and
operations. As such, a more comprehensive PMS
can make SBU managers believe their jobs are
more meaningful by helping them to determine
how their work ts within the broader scope of
the organization. Without comprehensive information about performance, SBU managers are
likely to place little value on their work within
the organization, and thus experience lower levels
of meaning.
Gist and Mitchell (1992) argue that competence

beliefs are strengthened by providing performance
information to individuals in the organisation.
This is because performance information improves
individuals ability to make assessments of their
performance capabilities. By providing information about business unit operations, and links to
strategy and the value chain, a more comprehensive PMS provides improved knowledge of results,
which is fundamental for reinforcing a sense of
competence (Gist & Mitchell, 1992; Ilgen et al.,
1979; Lawler, 1992; Spreitzer, 1995). A less comprehensive PMS provides inadequate knowledge
of results, and therefore reduces SBU managers
belief in their ability to perform tasks competently
(Conger & Kanungo, 1988; Thomas & Velthouse,
1990).
Comprehensive PMS is expected to increase
self-determination. SBU managers require information about where their organization is headed
in order to believe they are capable of taking the
initiative (Kanter, 1989). Adequate knowledge of
results is essential for managers to be able to direct
and manage their own performance (Lawler,
1992). Managers need to understand how well
their business unit is performing to be condent
enough to make decisions on their own (Spreitzer,
1995). A more comprehensive PMS provides a rich
and relatively complete picture of the business
units performance, which increases SBU managers condence to initiate and complete tasks on
their own, thus increasing self-determination. A
less comprehensive PMS provides inadequate performance information, and thus reduces SBU
managers condence to initiate and regulate their
own actions.
Comprehensive PMS is also expected to
increase impact. To have an impact, managers
need to understand how their business unit is performing (Spreitzer, 1995). Further, managers
require adequate performance information in
order to believe they can make and inuence decisions that are consistent with the organizations
priorities (Lawler, 1992). A more comprehensive
PMS strengthens SBU managers knowledge of
operations and organisational priorities, and
therefore improves managers ability to inuence
and act in ways that are consistent with those pri-
147
orities, thus increasing impact. In contrast, a less

comprehensive PMS provides limited knowledge
of organisational priorities and strategies. Without
sucient knowledge of results, managers are unlikely to exert inuence in their work area (Kraimer,
Seibert, & Liden, 1999).
In summary, comprehensive PMS is expected to
be positively related to each dimension of psychological empowerment, which leads to H3:
H3: There is a positive relation between comprehensive PMS and the four dimensions of
psychological empowerment.
Psychological empowerment and managerial

performance
Empowered individuals should perform better
than those individuals who are less empowered
(Liden, Wayne, & Sparrowe, 2000). This is because
empowerment increases both initiation and persistence of managers task behaviour (Conger &
Kanungo, 1988; Thomas & Velthouse, 1990). In
particular, higher levels of psychological empowerment lead to greater eort and intensity of eort,
persistence, and exibility (Spreitzer, 1995; Thomas & Velthouse, 1990), all of which are behaviours that enhance performance (Mitchell &
Daniels, 2003; Pinder, 1998).
Each dimension of psychological empowerment
is related to behaviours that enhance managerial
performance. Individuals who place more meaning, or care more, about their work put forth more
eort and are more committed to their tasks, and
thus likely to persist in the face of obstacles or setbacks (Kanter, 1983; Liden et al., 2000; Thomas &
Velthouse, 1990). Individuals who believe they can
perform well on a task (i.e., feel competent) do better than those individuals who think they will fail
(Gist & Mitchell, 1992). Competence results in
more eort, persistence in the face of obstacles,
and more initiative (Bandura, 1977; Spreitzer,
Kizilos, & Nason, 1997; Thomas & Velthouse,
1990). Spreitzer et al. (1997) and Liden et al.
(2000) found that competence was positively associated with work performance. Self-determination
results in more eort and persistence, and greater
148
exibility to adapt to changing situations and create improved task strategies (Deci & Ryan, 1987;
Thomas & Velthouse, 1990). Work performance
is enhanced when managers believe they have
autonomy over how their work is to be accomplished (Miller & Monge, 1986). In relation to
impact, individuals who believe they can inuence
outcomes at work are more likely to actually have
an impact, and hence be more eective. Impact
results in more eort and greater persistence in
the face of obstacles (Abramson, Seligman, &
Teasdale, 1978; Ashforth, 1989; Spreitzer et al.,
1997; Thomas & Velthouse, 1990). Spreitzer
et al. (1997) and Liden et al. (2000) found that
impact was positively associated with work performance. These arguments and evidence lead to H4:
managers to determine and take actions to complete tasks, and thus should increase self-determination. A lack of role clarity is likely to make
individuals believe they are helpless and thus
reduce the impact they have in their work area
(Spreitzer et al., 1997). In contrast, individuals
who understand their work roles are more likely
to take actions and decisions that inuence results
in their work area (Sawyer, 1992). Prior research
shows that higher levels of role ambiguity are
related to lower levels of psychological empowerment (Smith & Langeld-Smith, 2003; Spreitzer,
1996). This analysis indicates that role clarity will
increase each dimension of psychological empowerment, which leads to H5:
H5: There is a positive relation between role
clarity and the four dimensions of psychological
empowerment.
H4: There is a positive relation between the four

dimensions of psychological empowerment and
managerial performance.
Research method
Role clarity and psychological empowerment
Sample selection and data collection
Finally, drawing on prior results, I hypothesize
a positive relation between role clarity and psychological empowerment. Unless SBU managers have
a clear sense of their responsibilities and how to
achieve them, it will be dicult for them to know
if they have the necessary skills and abilities to perform their tasks adequately (i.e., feel empowered).
As such, role clarity is expected to increase each
dimension of psychological empowerment; meaning, competence, self-determination and impact.
Spreitzer (1996) argues that it is only when individuals understand their roles that those roles can
take on personal meaning. Clear lines of responsibility and clear task requirements are related to
competence (Conger & Kanungo, 1988; Gist &
Mitchell, 1992; Kahn et al., 1964). SBU managers
with clear work goals, and an understanding of
how to achieve those goals, are likely to believe
they can perform their job with skill and thus feel
more competent. Managers who are uncertain of
their role expectations are likely to hesitate and
not take the initiative due to uncertainty, and thus
experience lower levels of self-determination (Spreitzer et al., 1997). High levels of role clarity enable
I collected data using a questionnaire administered to SBU managers within Australian manufacturing organizations. I obtained a list of 1000
SBU managers of Australian manufacturing rms
from a commercial mailing list provider. Due to
cost constraints, 400 managers were selected to
form the sampling frame for the study. I used a
four-step implementation strategy following the
recommendations of Dillman (2000); telephone
calls to check data accuracy3, a questionnaire
package with cover letter, questionnaire and
reply-paid envelope, a reminder postcard (sent
two weeks after questionnaire package), and a follow-up phone call (made two weeks after the
reminder postcard). To encourage completion of
the questionnaire, participants were promised a
summary of the results and informed that their
3
The contact details of 31 of the 400 SBU managers could

not be conrmed because they had ceased employment with the
contact organisation, the phone number was disconnected or
did not answer, or the organisation had ceased operations. As
such, the questionnaire was sent to 369 SBU managers.
149
responses were anonymous. Participants were also

provided with a practitioner article on PMS as a
token incentive (Davila, 2000; Dillman, 2000).
Of the 369 distributed questionnaires, 83 were
received, which provides a response rate of
22.5%.4 The response rate is similar to those
reported in recent accounting (Baines & Langeld-Smith, 2003; Moores & Yuen, 2001) and
non-accounting (Gordon & Sohal, 2001; Samson &
Terziovski, 1999; Terziovski & Sohal, 2000) surveys of SBU managers in Australian manufacturing organizations. Due to the relatively low
response rate, I investigate the possibility of nonresponse bias. First, I compared the SBU size
and industry representation of the 83 respondents
to the original list of 1000 SBUs. An independent
samples t-test shows that the mean sample SBU
size (X 336:13) is not signicantly dierent from
the mean original list SBU size (X 566:93)
(t = 1.400, p > 0.10). Furthermore, a v2-test shows
that the proportion of SBUs in each industry category is not signicantly dierent between the
sample SBUs and original list SBUs (v2 = 5.981,
degrees of freedom = 8, p > 0.10). Second, I compared early respondents (rst 20%) to late respondents (last 20%) for all constructs of interest
(demographic and model variables). Results (not
reported) show that there are no signicant dierences for any variables. In addition, during the follow-up phone calls I discussed with approximately
40 non-respondents their reason(s) for not completing the questionnaire. These reasons were time
pressures, receiving too many surveys, and com-
pany policy not to respond to voluntary surveys,

which are similar to the reasons for non-response
reported in other studies (for example, Baines &
Langeld-Smith, 2003; Chenhall, 2005; Subramaniam & Mia, 2003). These tests indicate that there is
no signicant non-response bias in the sample.
Demographic information was collected from
respondents regarding job tenure, company tenure, age, gender, SBU size (number of employees),
and main manufacturing industry. Table 1 reports
the descriptive statistics for the demographic variables. The average age of respondents was 46.84
years with an average job tenure of 5.14 years
and an average company tenure of 10.64 years.
Average SBU size was 336.13 employees. Eightytwo respondents were male and one was female.
Table 2 reports the manufacturing industry classication of respondents SBUs.
4
16 cases contained missing data: 14 cases with one item
missing, one case with two items missing, and one case with
four items missing. Littles MCAR test revealed that the
missing data were missing completely at random (MCAR)
(v2 = 4.424, degrees of freedom = 516, p > 0.10). As the missing
data is MCAR, any imputation method can be used (Hair,
Anderson, Tatham, & Black, 1998). As such, the data were
replaced using the expectationmaximisation (EM) method in
SPSS. The EM approach is an iterative two-stage process where
the E-stage makes the best estimates of the missing data and the
M-stage makes parameter estimates assuming the missing data
are replaced. This occurs in an iterative process until the
changes in the estimated parameters are negligible and the
missing values are replaced (Hair et al., 1998; Little & Rubin,
1987). This process resulted in a complete data set of 83
responses.
21 Food, beverage and tobacco

22 Textile, clothing, footwear and
leather
23 Wood and paper products
24 Printing, publishing and recorded
media
25 Petroleum, coal, chemical and
associated products
26 Non-metallic mineral products
27 Metal products
28 Machinery and equipment
29 Other
Total sample
83
Table 1
Descriptive statistics for demographic variables
Variable
Job tenure
(years)
Company tenure
(years)
Age (years)
SBU size (no.
of employees)
Minimum
Maximum
Mean
St Dev
25
5.14
5.95
37
10.64
8.37
26
10
64
4100
46.84
336.13
8.38
497.03
n = 83.
Table 2
Manufacturing industry classication
ANZSICa manufacturing industry
classication
Frequency
8
3
9.64
3.61
6
3
7.23
3.61
12
14.46
4
11
25
11
4.82
13.25
30.12
13.25
100
ANZSIC Australia and New Zealand Standard Industrial

Classication.
150
Variable measurement
The questionnaire obtained information on
comprehensive PMS, psychological empowerment,
role clarity and managerial performance. Established scales were used for each variable, except
comprehensive PMS. The development of the
questionnaire involved a review by three senior
management accounting academics with experience in survey design. I also pilot tested the questionnaire with four SBU managers (not part of
the sample), who completed the questionnaire
and participated in a brief interview. The review
process and the pilot test resulted in minor changes
to the wording of some items and to the layout of
the questionnaire.
Ittner, Larcker, and Randall (2003) argue that
improved methods are needed for determining
what rms mean by contemporary PMS, such as
the balanced scorecard. Prior research relating to
comprehensive PMS has used scales that examine
the extent to which a PMS contains a series of
specic performance measures (for example,
Hoque & James, 2000). A limitation of this type
of instrument is that it assumes that the performance measures contained in the instrument are
representative of the specic types of performance
measures used by the rms in the sample. Firms
may use similar nancial performance measures;
however, non-nancial and/or strategic measures
are likely to be unique to each rm (Lipe & Salterio, 2000). In addition, this type of scale may not
capture the strategic linkages of more comprehensive PMS (Hoque & James, 2000). As such, I
developed a new scale to capture the comprehensive PMS construct. The scale consists of nine
items. Five items relate to the extent to which the
PMS provides a variety of performance information about the important parts of the SBUs operations. The remaining four items were drawn from
Chenhall (2005), and relate to the extent of integration of measures with strategy and across the
value chain. The explanatory statement indicated
that we were interested in the extent to which the
PMS provides information about the operations
of the respondents business unit. This was done
to help ensure that when SBU managers were
responding to the statements, they were focused
on the role of their PMS in providing performance

information. For all nine items, respondents were
asked to indicate on a 7-point Likert scale
(1 = not at all to 7 = to a great extent) the extent
to which each characteristic was provided by their
business units PMS. The Appendix provides
details of the explanatory statement and lists the
items in the scale.
Because the scale has not been used in prior
research, I performed several tests to examine its
psychometric properties prior to including the
scale in the PLS measurement model. As reported
in Table 3, the results of an exploratory factor
analysis show that the nine-item scale is unidimensional, with each item loading on the single factor
above 0.70. The Cronbach alpha for the nine-item
scale is 0.95; well above acceptable limits (Nunally,
1978). I also examined the extent to which the scale
converged with an alternative measure of the comprehensive PMS construct. Respondents were provided with two descriptions of a PMS (reproduced
in the Appendix). The rst description related to a
comprehensive PMS (coded 1); the second
description related to a partial or less comprehensive PMS (coded 0). Respondents indicated
which of the two descriptions better represented
their PMS. The use of a forced-choice response
format is consistent with the principle of using
maximally-dissimilar forms of ratings when assessing convergent validity (Campbell & Fiske, 1959;
Murphy & Davidshofer, 1998). The point-biserial
Table 3
Factor loadings for nine-item comprehensive performance
measurement system (CPMS) scale from an exploratory factor
analysis
Item
CPMS1
CPMS2
CPMS3
CPMS4
CPMS5
CPMS6
CPMS7
CPMS8
CPMS9
Eigenvalue
% Variance explained
n = 83.
Factor loading
0.915
0.782
0.843
0.817
0.896
0.864
0.852
0.739
0.836
6.350
70.559%
correlation between the nine-item scale and the

forced-choice scale is 0.66 (p < 0.001), which provides strong support for the convergent validity
of the nine-item scale.5 In addition, an independent samples t-test shows that the mean score on
the nine-item scale is signicantly higher for those
respondents who indicated a comprehensive
PMS (X 5:507) compared to those respondents
who indicated a partial PMS (X 3:827)
(t = 7.867, p < 0.001). This supports the ability of
the nine-item scale to distinguish between more
and less comprehensive PMS. The reliability and
validity of the comprehensive PMS scale is
assessed further in the PLS measurement model.
Established scales are used to measure role clarity, psychological empowerment, and managerial
performance, with their psychometric properties
assessed in the PLS measurement model. Goal
clarity and process clarity are measured with two
ve-item scales drawn from Sawyer (1992).
Respondents were asked to indicate on a 7-point
Likert scale (1 = very uncertain to 7 = very certain) the extent to which they were certain or
uncertain about aspects of their job.
Psychological empowerment is measured with
Spreitzers (1995) 12-item scale, with three items
for each empowerment dimension: meaning, competence, self-determination and impact. Respondents were asked to indicate on a 7-point Likert
scale (1 = strongly disagree to 7 = strongly agree)
the extent to which they agreed or disagreed with
each item.
As respondents are anonymous, it is not possible
to obtain supervisor ratings of managers performance. As such, managerial performance is measured by a self-rated nine-item scale developed by
Mahoney, Jerdee, and Carroll (1965). The scale
assesses managerial performance along eight
dimensions related to planning, investigating, coordinating, evaluating, supervising, stang, negotiating and representing, and also includes an overall
assessment of performance. Respondents were
asked to indicate on a 7-point Likert scale (1 = well
below average to 7 = well above average) the
extent to which their performance was below aver5
I calculated the score for each respondent on the nine-item
scale as an average of the nine items.
151
age or above average on each item. The Mahoney

et al. (1965) scale is frequently used to measure
managerial performance in accounting studies
(Chalos & Poon, 2000; Chong & Chong, 2002;
Marginson & Ogden, 2005; Otley & Pollanen,
2000; Parker & Kyj, 2006; Wentzel, 2002). Several
researchers argue that self-report measures of performance are valid and tend to exhibit less bias
than supervisor ratings (Dunk, 1993; Marginson
& Ogden, 2005; Parker & Kyj, 2006). In addition,
prior research indicates that self-rated subjective
measures of subordinate performance are highly
correlated with superiors subjective ratings of subordinate performance and objective measures of
subordinate performance (Furnham & Stringeld,
1994; Heneman, 1974; Venkatraman & Ramanujam, 1987). The reliability and validity of the scales
is examined in the PLS measurement model.
Partial Least Squares regression
I use PLS regression analysis to test the hypotheses in this study. PLS is a latent variable modelling
technique that incorporates multiple dependent
constructs and explicitly recognises measurement
error (Fornell, 1982), and has been used in a number of accounting studies (Anderson, Hesford, &
Young, 2002; Chenhall, 2004, 2005; Ittner, Larcker, & Rajan, 1997; Vandenbosch, 1999). PLS is
particularly suited to this study because it makes
minimal data assumptions and requires relatively
small sample sizes (Wold, 1985).6
PLS comprises a measurement model and a
structural model. The measurement model species relations between observed items and latent
variables. The structural model species relations
between latent constructs. In PLS the measurement
and structural models are estimated simultaneously
6
Mardias (1970) test of multivariate kurtosis revealed that
the data are multivariate non-normal (t = 26.076, p < 0.001).
However, unlike structural equation modeling techniques such
as LISREL, PLS does not require normally distributed data.
Because PLS is a regression based technique, it requires ten
cases for the most complex regression (Chin, 1998; Vandenbosch, 1999). In this study, the most complex regression is
that with managerial performance as the dependent variable,
with eight independent variables, suggesting a minimum sample
size of 80 cases.
152
(Barclay, Thompson, & Higgins, 1995). However,

the PLS model is typically interpreted in two
stages. First, the reliability and validity of the measurement model is assessed. Second, the structural
model is assessed (Barclay et al., 1995). This
ensures that the constructs measures are reliable
and valid before assessing the nature of the relations between the constructs (Barclay et al., 1995;
Hair et al., 1998; Hulland, 1999). As such, the
results from the measurement model are presented
rst followed by an examination of the hypothesised relations between the constructs.7
Results
Measurement model
Statistics from the PLS measurement model are
used to examine the psychometric properties of the
variables. First I examine the factor loadings for
each variable. All items load on their respective
constructs; however, two items from the managerial performance scale have factor loadings below
0.5 (Hulland, 1999) (item MP7 = 0.461 and item
MP8 = 0.246). Low item loadings add very little
to the explanatory power of the model while
potentially biasing the estimates of the parameters
linking the constructs (Chin, 1998; Hulland, 1999).
Further tests show that the reason the two items
have low factor loadings is because they do not
form part of a unidimensional managerial performance scale.8 As such, items MP7 and MP8 are
removed from the scale and not used in further
analysis. The factor loadings from the nal PLS
measurement model are reported in Table 4.
I assess the reliability of each variable using Fornell and Larckers (1981) measure of composite
reliability and Cronbachs (1951) alpha. As shown
in Table 5, the composite reliability and alpha
7
I obtained the PLS results using PLS Graph Version 3.0.

An exploratory factor analysis (oblique rotation) of the
managerial performance scale shows two factors with eigenvalues greater than one, with items MP1MP6 and MP9
loading on the rst factor, and items MP7 and MP8 loading on
a second factor. Thus, the low factor loadings for MP7 and
MP8 arise because they do not form part of a unidimensional
managerial performance scale (Barclay et al., 1995).
8
scores for each variable are above 0.80, which demonstrates acceptable reliability (Nunally, 1978).
Convergent validity of the variables is assessed
by examining the average variance extracted
(AVE) statistics. Table 5 shows that the AVE for
each variable is 0.50 and above, which demonstrates adequate convergent validity (Chin, 1998;
Hair et al., 1998).
The AVE statistic is also used to assess discriminant validity by comparing the square root of the
AVE statistics to the correlations among the latent
variables (Chin, 1998). This tests whether a construct shares more variance with its measures than
it shares with other constructs (Fornell & Larcker,
1981). Table 5 shows that the square roots of the
AVEs (diagonal) are all greater than the respective
correlations between constructs. In addition, Table
4 shows that each item loads higher on the construct it intends to measure than on any other construct (Barclay et al., 1995; Chin, 1998). The results
of these two tests demonstrate adequate discriminant validity. Overall, the results from the PLS
measurement model indicate that each construct
exhibits satisfactory reliability and validity.
Tests of hypotheses
I estimate a structural model in PLS to test the
hypotheses. In addition to the hypothesized paths,
I also include job tenure in the structural model to
control for the endogeneity concern that more tenured employees have access to more information
and also feel more psychologically empowered
(Chenhall & Moers, in press). The objective of
PLS is to maximise variance explained rather than
t, therefore prediction-orientated measures, such
as R2, are used to evaluate PLS models (Chin,
1998). The R2 for each endogenous variable is
shown in Table 6. PLS produces standardised bs
for each path coecient, which are interpreted in
the same way as in OLS regression. As PLS makes
no distributional assumptions, bootstrapping (500
samples with replacement) is used to evaluate the
statistical signicance of each path coecient
(Chin, 1998).9
9
Statistical signicance is determined using the reported
original PLS estimates and bootstrapped standard errors.
153
Table 4
Factor loadings from nal PLS measurement model
Item
CPMS
GC
PC
MEAN
COMP
IMP
SD
MP
CPMS1
PMS2
CPMS3
CPMS4
CPMS5
CPMS6
CPMS7
CPMS8
CPMS9
0.920
0.786
0.837
0.810
0.896
0.860
0.859
0.733
0.841
0.431
0.316
0.280
0.362
0.365
0.396
0.380
0.381
0.361
0.196
0.188
0.135
0.098
0.190
0.174
0.134
0.096
0.142
0.497
0.368
0.404
0.360
0.352
0.430
0.435
0.340
0.398
0.407
0.318
0.300
0.158
0.308
0.261
0.315
0.159
0.365
0.475
0.419
0.308
0.382
0.426
0.379
0.491
0.307
0.457
0.269
0.226
0.159
0.201
0.249
0.281
0.268
0.175
0.268
0.319
0.236
0.305
0.201
0.238
0.316
0.251
0.251
0.254
GC1
GC2
GC3
GC4
GC5
0.349
0.363
0.265
0.364
0.399
0.787
0.795
0.786
0.801
0.875
0.532
0.615
0.530
0.507
0.566
0.450
0.454
0.426
0.535
0.535
0.431
0.498
0.335
0.457
0.488
0.564
0.538
0.378
0.517
0.483
0.478
0.473
0.357
0.244
0.326
0.481
0.559
0.430
0.580
0.524
PC1
PC2
PC3
PC4
PC5
0.203
0.122
0.115
0.100
0.185
0.586
0.535
0.590
0.453
0.596
0.795
0.813
0.847
0.811
0.817
0.295
0.247
0.363
0.268
0.450
0.446
0.488
0.426
0.357
0.533
0.464
0.408
0.394
0.339
0.467
0.448
0.501
0.427
0.455
0.481
0.448
0.336
0.414
0.364
0.462
MEAN1
MEAN2
MEAN3
0.457
0.486
0.405
0.559
0.590
0.534
0.366
0.401
0.375
0.949
0.961
0.918
0.593
0.632
0.625
0.556
0.648
0.525
0.361
0.407
0.305
0.583
0.597
0.554
COMP1
COMP2
COMP3
0.288
0.233
0.370
0.428
0.440
0.548
0.432
0.483
0.525
0.514
0.522
0.642
0.868
0.777
0.932
0.453
0.566
0.560
0.336
0.403
0.473
0.471
0.330
0.559
IMP1
IMP2
IMP3
0.502
0.346
0.413
0.538
0.545
0.535
0.353
0.540
0.461
0.619
0.490
0.481
0.618
0.480
0.478
0.850
0.881
0.886
0.495
0.644
0.683
0.519
0.332
0.366
SD1
SD2
SD3
0.264
0.319
0.183
0.400
0.424
0.430
0.455
0.489
0.572
0.334
0.395
0.302
0.318
0.474
0.461
0.634
0.657
0.580
0.891
0.938
0.871
0.248
0.382
0.418
MP1
MP2
MP3
MP4
MP5
MP6
MP9
0.262
0.220
0.244
0.187
0.223
0.265
0.170
0.412
0.370
0.385
0.402
0.509
0.532
0.511
0.302
0.308
0.342
0.213
0.394
0.413
0.449
0.529
0.312
0.258
0.333
0.540
0.456
0.500
0.431
0.294
0.246
0.280
0.411
0.460
0.450
0.337
0.276
0.237
0.289
0.357
0.372
0.415
0.228
0.236
0.291
0.138
0.350
0.298
0.372
0.664
0.568
0.701
0.689
0.768
0.743
0.788
CPMS, comprehensive performance measurement system; GC, goal clarity; PC, process clarity; MEAN, meaning; COMP, competence; IMP, impact; SD, self-determination; MP, managerial performance.
n = 83.
Although there is a positive correlation between

comprehensive PMS and managerial performance
(see Table 5), Table 6 shows that comprehensive
PMS is not associated with managerial performance (b 0:030; t 0:298; p > 0:10. As
expected, this indicates that comprehensive PMS

does not have a direct eect on managerial performance, but, instead, its eect on managerial performance is fully mediated by the intervening
variables. The results from the structural model,
CPMS, comprehensive performance measurement system; GC, goal clarity; PC, process clarity; MEAN, meaning; COMP, competence; IMP, impact; SD, selfdetermination; MP, managerial performance.
Diagonal elements are the square roots of the AVE statistics. O-diagonal elements are the correlations between the latent variables calculated in PLS. All correlations
above 0.20 are statistically signicant (p < 0.01, two-tailed).
n = 83.
0.902
0.397
0.872
0.691
0.472
0.861
0.608
0.472
0.536
0.943
0.654
0.613
0.381
0.613
0.817
0.404
0.557
0.513
0.567
0.500
0.809
0.681
0.595
0.552
0.619
0.466
0.641
0.840
0.434
0.182
0.478
0.351
0.487
0.281
0.315
0.705
0.655
0.667
0.889
0.742
0.761
0.811
0.500
0.946
0.868
0.875
0.935
0.804
0.842
0.880
0.824
4.657
5.963
5.191
5.916
5.891
6.121
5.971
5.405
CPMS
GC
PC
MEAN
COMP
IMP
SD
MP
1.289
0.829
0.871
1.019
0.729
0.778
0.938
0.610
0.955
0.905
0.909
0.960
0.895
0.905
0.929
0.874
SD
IMP
COMP
MEAN
PC
GC
CPMS
Correlations
AVE
Composite reliability
Cronbach alpha
Standard deviation
Mean
Variable
Table 5
Descriptive statistics, reliability and average variance extracted (AVE) statistics, and correlations from PLS model
0.707
MP
154
reported in Table 6, indicate how role clarity and

psychological empowerment act as intervening
variables in the relation between comprehensive
PMS and managerial performance.
For the role clarity path, there is a positive association between comprehensive PMS and goal
clarity (b = 0.440, t = 4.668, p < 0.01), and a weak
positive association between comprehensive PMS
and process clarity (b = 0.184, t = 1.497, p <
0.10) (H1). For the relation between role clarity
and managerial performance (H2), there is a positive association between goal clarity and managerial performance (b = 0.380, t = 2.328, p < 0.01),
but no association for process clarity (b = 0.047,
t = 0.311, p > 0.10).
For the psychological empowerment path, there
are positive associations between comprehensive
PMS and meaning (b = 0.256, t = 2.845, p <
0.01) and impact (b = 0.292, t = 2.717, p < 0.01),
and weak positive associations between comprehensive PMS and self-determination (b = 0.147,
t = 1.305, p < 0.10) and competence (b = 0.167,
t = 1.474, p < 0.10) (H3). For the relation between
psychological empowerment and managerial performance (H4), only the meaning dimension of
psychological empowerment is positively associated with managerial performance (b = 0.351,
t = 2.350, p < 0.01).
Results also show that the proposed association
between role clarity and psychological empowerment (H5) is partially supported, with goal clarity
positively associated with meaning (b = 0.448,
t = 3.153, p < 0.01), impact (b = 0.334, t = 2.607,
p < 0.01) and competence (b = 0.224, t = 1.594,
p < 0.10), and process clarity positively associated
with competence (b = 0.374, t = 3.369, p < 0.01),
impact (b = 0.233, t = 2.328, p < 0.01) and selfdetermination (b = 0.495, t = 4.171, p < 0.01).10
10
In addition to the model reported in Table 6, I also

estimated the PLS structural model using only the 67 respondents with complete data (i.e., no missing items). Results for the
hypothesized relations are the same as those reported in Table
6, except that the weak positive association between comprehensive PMS and self-determination is no longer signicant
(b = 0.102, t = 0.717, p > 0.10), and the weak positive association between comprehensive PMS and process clarity is no
longer signicant (b = 0.166, t = 1.152, p > 0.10).
0.513
0.480
0.375
0.027 (0.379)
0.129
(0.591)
n = 83. Each cell reports the path coecient (t-value). Blank cells indicate that the path was not hypothesized within the model.
*
p < 0.10 (one-tailed).
**
p < 0.05.
0.113
(0.826)
0.351
(2.350)***
Managerial performance
Impact
Self-determination
Discussion
0.107
(0.833)
0.063 (0.835)
0.143 (1.647)
0.417
Competence
Meaning
Process clarity
155
Fig. 2 shows how the intervening variables

mediate the relation between comprehensive
PMS and managerial performance (Baron &
Kenny, 1986; James & Brett, 1984). The results
indicate that role clarity and psychological
empowerment fully mediate the relation between comprehensive PMS and managerial performance. Specically, the results show that
comprehensive PMS is related to managerial performance indirectly through: (1) the meaning
dimension of psychological empowerment and
(2) goal clarity.
**
0.151 (1.857)**
0.442
0.143 (2.100)
0.052
(0.445)
0.374
(3.369)***
0.495
(4.171)***
0.233
(2.328)***
0.047
(0.311)
0.448
(3.153)***
0.224
(1.594)*
0.064
(0.492)
0.334
(2.607)***
0.380
(2.328)***
0.034
**
0.020 (0.237)
0.016
0.200
0.121 (1.365)
0.050 (0.600)
0.440
(4.668)***
0.184
(1.497)*
0.256
(2.845)***
0.167
(1.474)*
0.147
1.305)*
0.292
(2.717)***
0.030
(0.298)
Comprehensive PMS
Goal clarity
Goal clarity
Comprehensive PMS
Independent variables
Dependent variables
Table 6
PLS structural model: path coecients, t-statistics and R2
Process clarity
Meaning
Competence
Self-determination
Job tenure
Impact
R2
In this study I examined how comprehensive

PMS is related to managerial performance. As
such, the study is among the rst to provide empirical evidence regarding the behavioural consequences of comprehensive PMS (Webb, 2004). A
structural model was tested using PLS to examine
whether the relation between comprehensive PMS
and managerial performance is direct, or indirect
through the intervening variables of psychological
empowerment and role clarity. Results indicate
that comprehensive PMS is not directly associated
with managerial performance; rather, comprehensive PMS is indirectly associated with managerial
performance through dimensions of role clarity
and psychological empowerment. These results
are consistent with arguments that cognitive and
motivational mechanisms help to explain the
eects of management control systems on work
performance (Collins, 1982; Ilgen et al., 1979;
Luckett & Eggleton, 1991). In particular, the
results indicate that comprehensive PMS inuences managers cognition and motivation, which,
in turn, inuence managerial performance. As
such, the study contributes to prior research that
examines the direct and indirect-eects of management control system components on work performance (Shields et al., 2000). From a theoretical
perspective, the study indicates that the development of theoretical models that include relevant
cognitive and motivational variables can help to
improve our understanding of how management
control systems aect managerial work behaviour.
156
Comprehensive
PMS
0.147*
Selfdetermination
0.184*
0.495***
0.167*
Process
Clarity
0.374***
Competence
0.440***
0.233***
0.292***
0.224*
Goal
Clarity
0.334***
Impact
0.448***
0.256***
0.380***
Meaning
0.351***
Managerial
Performance
Fig. 2. PLS structural model with signicant path coecients. *** p < 0.01, ** p < 0.05, * p < 0.10 (one-tailed). n = 83 (signicant paths
for job tenure not shown).
In addition, the study also illustrates how PLS can

be used to examine the nature of the relation
between management control system components
and work performance.
Researchers have called for improved methods
for determining what rms mean by contemporary PMS (Ittner, Larcker, & Randall, 2003). This
is because labels, such as the balanced scorecard,
are unlikely to capture eectively the information
dimensions of management accounting practices
(Chenhall, 2005; Ittner, Larcker, & Randall,
2003). In this study, I used descriptions from the
performance measurement literature to develop
an instrument to measure the important attributes

of comprehensive PMS. These attributes include
providing performance measures that describe
the important parts of the SBUs operations
and integrating measures with strategy and
across the value chain. (Chenhall, 2005; Ittner,
Larcker, & Randall, 2003; Malina & Selto,
2001; Malmi, 2001; Neely et al., 1995). Empirical
results indicate that the instrument is a reliable
and valid measure of the comprehensive PMS
construct.
The ndings need to be interpreted in light of
the limitations of the study. As noted above, a
new instrument was developed to measure the

comprehensive PMS construct. Although the
instrument exhibited satisfactory psychometric
properties, future research could rene and further
validate the instrument. The study presents statistical associations that are consistent with the
theory developed in the study; however, the
cross-sectional research design precludes any
claims regarding causality of relations among the
variables in the model. A further limitation is the
use of self-assessed performance ratings. Although
managers are considered the best judges of their
own performance (Brownell, 1995), future
research would benet from conrmation of managers ratings using supervisor ratings, if possible
within the research design. I included job tenure
in the analysis to address endogeniety concerns;
however, it is possible that there are other
correlated variables that were omitted from the
model tested in the study. The study focused
on SBU managers, thus further research is
required to assess whether comprehensive PMS is
useful at other managerial levels. Although tests
indicate an absence of non-response bias, the
relatively low response rate is a limitation of the
study.
The study points to several avenues for future
research. Prior research indicates that the relation
between attributes of performance information
and managerial performance is inuenced by contextual factors, such as the level of task uncertainty (Chong, 1996; Mia & Chenhall, 1994).
Future research could investigate whether contextual factors inuence the relations reported in this
study. In particular, comprehensive PMS may be
more important in uncertain environments as a
mechanism to reduce uncertainty surrounding
decision tasks (Chapman, 1997; Galbraith,
1973). A further avenue for future research is to
examine the specic attributes of the performance
measures that comprise a comprehensive PMS;
for example, the number of measures and/or the
mix of nancial and non-nancial performance
measures. Recent research indicates that simply
adding more performance measures does not necessarily improve the comprehensiveness of a PMS
(Cheng & Luckett, 2004). Finally, the results of
157
this study show that comprehensive PMS positively aect managerial work performance by
enhancing role clarity and psychological empowerment. In contrast, prior research indicates that
the use of comprehensive PMS for performance
evaluation and compensation purposes can be
problematic (Ittner, Larcker, & Meyer, 2003; Lipe
& Salterio, 2000). As such, an important avenue
for future research is to investigate the simultaneous use of comprehensive PMS for providing
feedback and evaluating/compensating managers
(Sprinkle, 2000, 2003).
Acknowledgements
This paper is based on my PhD thesis completed at Monash University. I am grateful
for the support and advice of my PhD supervisor
Professor Robert Chenhall. Thanks to the two
anonymous reviewers, David Smith, Steve
Salterio, Margaret Abernethy, Sally Widener,
Shannon Anderson, Teemu Malmi, Peter Luckett,
Graeme Harrison, Laurence van Lent, workshop
participants at the University of Melbourne,
University of New South Wales, Macquarie University, University of Technology Sydney, University of Tilburg, and participants at the Global
Management Accounting Research Symposium
2004, Accounting and Finance Association of
Australia and New Zealand Annual Conference
2004 and New Directions in Management
Accounting: Innovations in Practice and Research
Conference 2004 for helpful comments.
Appendix. Survey items

Explanatory statement: We are interested in
the extent to which your performance measurement system provides information about the operations of your business unit. Please indicate the
extent to which the following characteristics are
provided by your business units performance
measurement system.
158
Comprehensive PMS multi-item instrument (1 = not at all, 7 = to a great extent)

Item
Label
The performance measurement system provides a broad range of performance

information about dierent areas of the business unit
The performance measurement system is produced in a fully documented form,
which provides a record for evaluating performance
It provides a diverse set of measures related to the key performance areas of the
business unit
It provides consistent and mutually reinforcing links between the current
operating performance of your business unit and the long term strategies
of the organization
The performance measurement system provides information on dierent
dimensions of the business units performance
It links together the activities of your business unit to the achievement of
the goals and objectives of the organization
It provides a variety of information about important aspects of the business
units operations
It shows how the activities of your business unit aect the activities of other
units within the organization
The performance measurement system provides a range of measures that cover
the critical areas of the business units operations
CPMS1
CPMS2
CPMS3
CPMS4
CPMS5
CPMS6
CPMS7
CPMS8
CPMS9
CPMS2, CPMS4, CPMS6 and CPMS8 were taken from Chenhall (2005). The other items were developed for this study.
Comprehensive PMS forced-choice instrument

Type of PMS
Description
Comprehensive The performance measurement system consists of a diverse set of measures which
capture the key performance areas of the business unit. It presents information
about dierent aspects of the business units operations, which provides a
comprehensive and complete view of the business units performance
Partial
The performance measurement system provides measures which cover some,

but not all, of the key performance areas of the business unit. It presents information
that focuses on a few aspects of the business units operations, which provides a partial
view of the business units performance
Psychological empowerment (1 = strongly disagree, 7 = strongly agree)

Item
Label
Meaning
The work I do is very important to me
My job activities are personally meaningful to me
The work I do is meaningful to me
MEAN1
MEAN2
MEAN3
159
Appendix (continued)
Item
Label
Competence
I am condent about my ability to do my job
I am self-assured about my capabilities to perform my work activities
I have mastered the skills necessary for my job
COMP1
COMP2
COMP3
Self-determination
I have signicant autonomy in determining how I do my job
I can decide on my own how to go about doing my work
I have considerable opportunity for independence and freedom in how I do my job
SD1
SD2
SD3
Impact
My impact on what happens in my work area is large
I have a great deal of control over what happens in my work area
I have signicant inuence over what happens in my work area
IMP1
IMP2
IMP3
Role clarity (1 = very uncertain, 7 = very certain)

Item
Label
Goal clarity
My duties and responsibilities
The goals and objectives for my job
How my work relates to the overall objectives of my work unit
The expected results of my work
What aspects of my work will lead to positive evaluations
GC1
GC2
GC3
GC4
GC5
Process clarity
How to divide my time among the tasks required of my job
How to schedule my work day
How to determine the appropriate procedures for each work task
The procedures I use to do my job are correct and proper
Considering all your work tasks, how certain are you that you
know the best way to do these tasks?
PC1
PC2
PC3
PC4
PC5
Managerial performance (1 = well below average, 7 = well above average)

Item
Label
Planning: determining goals, policies, and courses of action

such as work scheduling, budgeting, and programming
Investigating: collecting and preparing of information usually
in the form of records, reports, and accounts (measuring output,
record keeping, and job analysis)
Coordinating: exchanging information with people in the organisation
other than my subordinates in order to relate and adjust procedures,
policies and programs
MP1
MP2
MP3
(continued on next page)
160
Appendix (continued)
Item
Label
Evaluating: assessment and appraisal of proposals or of reported/

observed performance (e.g., employee appraisals, judging nancial
performance and product inspection)
Supervising: directing, leading, and developing your subordinates
Stang: maintaining the work force of your responsibility area
(e.g., selecting and promoting your subordinates)
Negotiating: purchasing, selling, or contracting for products or
services (e.g., contracting suppliers, collective bargaining)
Representing: advancing the general interests of my organisation
through speeches, consultations, or contacts with individuals or
groups outside the company
Overall, how do you rate your performance?
MP4
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Accounting, Organizations and Society 33 (2008) 141163

The eect of comprehensive performance measurement

Tel.: +44 0 20 7955 7736; fax: +44 0 20 7955 7420.

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

Vollman, 1992; Neely, Gregory, & Platts, 1995).

variables of role clarity and psychological

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

Theoretical development and hypotheses

Fig. 1. Theoretical model: comprehensive PMS, role clarity,

enhances role clarity (H1), and role clarity enhances

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

2001, p. 70). Ittner, Larcker, and Randall (2003)

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

role expectations and the appropriate behaviours

Selto (2001) found that the balanced scorecard

Role clarity and managerial performance

Comprehensive PMS and psychological

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

1995; Thomas & Velthouse, 1990).2 Higher levels

As such, SBU managers require information

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

Gist and Mitchell (1992) argue that competence

orities, thus increasing impact. In contrast, a less

Psychological empowerment and managerial

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

H4: There is a positive relation between the four

The contact details of 31 of the 400 SBU managers could

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

responses were anonymous. Participants were also

pany policy not to respond to voluntary surveys,

21 Food, beverage and tobacco

ANZSIC Australia and New Zealand Standard Industrial

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

on the role of their PMS in providing performance

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

correlation between the nine-item scale and the

age or above average on each item. The Mahoney

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

(Barclay, Thompson, & Higgins, 1995). However,

I obtained the PLS results using PLS Graph Version 3.0.

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

Although there is a positive correlation between

expected, this indicates that comprehensive PMS

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

reported in Table 6, indicate how role clarity and

In addition to the model reported in Table 6, I also

Fig. 2 shows how the intervening variables

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

In this study I examined how comprehensive

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

In addition, the study also illustrates how PLS can

an instrument to measure the important attributes

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

new instrument was developed to measure the

Appendix. Survey items

M. Hall / Accounting, Organizations and Society 33 (2008) 141163

Comprehensive PMS multi-item instrument (1 = not at all, 7 = to a great extent)

The performance measurement system provides a broad range of performance

Comprehensive PMS forced-choice instrument

The performance measurement system provides measures which cover some,

Psychological empowerment (1 = strongly disagree, 7 = strongly agree)

M. Hall / Accounting, Organizations and Society 33 (2008) 141163