Toward performance measurement systems based on business models

Journal title MANAGEMENT CONTROL
Author/s Patrizia Di Tullio, Matteo La Torre, Diego Valentinetti, Michele A. Rea
Publishing Year 2021 Issue 2021/suppl. 1
Language English Pages 26 P. 97-122 File size 4467 KB
DOI 10.3280/MACO2021-001-S1006
DOI is like a bar code for intellectual property: to have more infomation click here

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

Emerging research in the field of Management Control calls for abandoning out-dated performance measurement systems (PMSs) to emphasize the value chain of companies’ value creation. Business model (BM) concepts can help to highlight this causal chain and convince companies to reframe their PMSs. However, little is known about how BM information is entered and used in companies’ accounting information systems (AISs). In this study, we investigate whether companies im-prove their AISs by institutionalizing BM information, and we look at ways in which they can combine this information into their PMSs. We statistically test the coercive, mimetic, and normative forces influencing the institutionalization of BM information and the changes in AISs using the content analysis of the corporate reports and websites of 86 listed firms. Our results show that firms adjusted their AISs to communicate BM information, resulting in AISs conducive to the re-placement of traditional PMSs with new BM-based frameworks. Despite this change, we offer some reflections on whether and how these changes may happen in practice, and on ways in which combining BM information can give rise to new cognitive and accounting frameworks to reshape PMSs. This study enriches the theoretical research on the determinants shaping the institutionalization of new corporate information. It highlights the cognitive effects resulting from designing PMSs by advocating the need to consider cognitive and psychological aspects when capturing and portraying value creation in synoptic tools.

Keywords: Business model, Institutional theory, Accounting information systems, Performance measurement systems

  1. Abernethy M.A., Bouwens J., van Lent L. (2010), Leadership and control system design, Management Accounting Research, 21(1), pp. 2-16.
  2. Ahmed K., Courtis J.K. (1999), Association between corporate characteristics and disclosure levels in annual reports: A meta-analysis, British Accounting Review, 31, pp. 35-61.
  3. Antoldi F., Capelletti E., Capelli C. (2016), Reconsidering the multi-sports club business model: designing effective new strategies in the face of environmental changes, Measuring Business Excellence, 20(4), pp. 10-27. DOI: 10.1108/MBE-08-2016-0040
  4. Atkinson A.A., Balakrishnan R., Booth P., Cote J.M., Groot T., Malmi T., et al. (1997), New directions in Management Accounting Research, Journal of Management Accounting Research, 9, pp. 79-108.
  5. Banker R.D., Chang H., Pizzini M. (2011), The judgmental effects of strategy maps in balanced scorecard performance evaluations, International Journal of Accounting Information Systems, 12, pp. 259-279.
  6. Beattie V., McInnes B., Fearnley S. (2004), A methodology for analysing and evaluating narratives in annual reports: A comprehensive descriptive profile and metrics for disclosure quality attributes, Accounting Forum, 28(3), pp. 205-236.
  7. Beattie V., Smith S.J. (2013), Value creation and business models: Refocusing the Intellectual Capital debate, British Accounting Review, 45(4), pp. 243-254.
  8. Bedford D.S., Malmi T. (2015), Configurations of control: An exploratory analysis, Management Accounting Research, 27, pp. 2-26.
  9. Berry A.J., Coad A.F., Harris E.P., Otley D.T., Stringer C. (2009), Emerging themes in management control: A review of recent literature, British Accounting Review, 41(1), pp. 2-20.
  10. Bini L., Dainelli F., Giunta F. (2016), Business model disclosure in the strategic report: Entangling intellectual capital in value creation process, Journal of Intellectual Capital, 17(1), pp. 83-102. DOI: 10.1108/JIC-09-2015-0076
  11. Bini L., Dainelli F., Giunta F., Simoni L. (2019), Are non-financial KPIs in annual reports really key?, ICAS.
  12. Busco C., Quattrone P. (2015), Exploring how the Balanced Scorecard engages and unfolds: Articulating the visual power of accounting inscriptions, Contemporary Accounting Research, 32(3), pp. 1236-1262. DOI: 10.1111/1911-3846.12105
  13. Capurro R., Fiorentino R., Garzella S., Morrone C. (2020), La creazione del valore: il necessario completamento del Sistema di controllo e di comunicazione aziendale, Management Control, 2, pp. 37-55. DOI: 10.3280/MACO2020-002003
  14. Carruthers B.G. (1995), Accounting, ambiguity, and the new institutionalism, Accounting, Organisations and Society, 20(4), pp. 313-328. DOI: 10.1016/0361-3682(95)96795-6
  15. Castellano N. (2011), Modelli e misure di performance aziendale: analisi della letteratura e spunti di ricerca, Management Control, 1, pp. 41-63. DOI: 10.3280/MACO2011-001003
  16. Castelo Branco M., Lima Rodrigue L. (2006), Communication of corporate social responsibility by Portuguese banks, Corporate Communications: An International Journal, 11(3), pp. 232-248. DOI: 10.1108/13563280610680821
  17. Chau V.S. (2008), The relationship of strategic performance management to team strategy, company performance and organisational effectiveness, Team Performance Management, 14(3/4), pp. 113-117. DOI: 10.1108/13527590810883398
  18. Cheng M.M., Humphreys K.A. (2012), The differential improvement effects of the strategy map and scorecard perspectives on managers’ strategic judgments, Accounting Review, 87(3), pp. 899-924.
  19. Cocca P., Alberti M. (2010), A framework to assess performance measurement in SMEs, International Journal of Productivity and Performance Management, 59(2), pp. 186-200. DOI: 10.1108/17410401011014258
  20. Cormier D., Magnan M., Van Velthoven B. (2005), Environmental disclosure quality in large German companies: Economic incentives, public pressures or institutional conditions?, European Accounting Review, 14(1), pp. 3-39. DOI: 10.1080/0963818042000339617
  21. Davila A., Foster G., Li M. (2009), Reasons for management control systems adoption: Insights from product development systems choice by early-stage entrepreneurial companies, Accounting, Organisations and Society, 34(3-4), pp. 322-347.
  22. De Geuser F., Mooraj S., Oyon D. (2009), Does the Balance Scorecard add value? Empirical evidence on its effect on performance, European Accounting Review, 18(1), pp. 93-122. DOI: 10.1080/09638180802481698
  23. de Villiers C., Alexander D. (2014), The institutionalisation of corporate social responsibility reporting, British Accounting Review, 46(2), pp. 198-212.
  24. de Villiers C., Low M., Samkin G. (2014), The institutionalisation of mining company sustainability disclosures, Journal of Cleaner Production, 84, pp. 51-58.
  25. de Villiers C., van Staden C.J. (2011), Where firms choose to disclose voluntary environmental information, Journal of Accounting and Public Policy, 30(6), pp. 504-525.
  26. de Waal A., Kourtit K. (2013), Performance measurement and management in practice: Advantages, disadvantages and reasons for use, International Journal of Productivity and Performance Management, 62(5), pp. 446-473. DOI: 10.1108/IJPPM-10-2012-0118
  27. DiMaggio P.J., Powell W.W. (1983), The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields, American Sociological Review, 48(2), pp. 147-160.
  28. Di Tullio P., Valentinetti D., Nielsen C., Rea M.A. (2019), In search of legitimacy: a semiotic analysis of business model disclosure practices, Meditari Accountancy Research, 28(5), pp. 863-887. DOI: 10.1108/MEDAR-02-2019-0449
  29. Dumay J., Cai L. (2014), A review and critique of content analysis as a methodology for inquiring into IC disclosure, Journal of Intellectual Capital, 15(2), pp. 264-290. DOI: 10.1108/JIC-01-2014-0010
  30. Dumay J., La Torre M., Farneti F. (2019), Developing trust through stewardship: Implications for intellectual capital, integrated reporting, and the EU Directive 2014/95/EU, Journal of Intellectual Capital, 20(1), pp. 11-39. DOI: 10.1108/JIC-06-2018-0097
  31. Dumitru M., Dyduch J., Guse R., Krasodomska J. (2017), Corporate Reporting Practices in Poland and Romania – An Ex-ante Study to the New Non-financial Reporting European Directive, Accounting in Europe, 14(3), pp. 279-304. DOI: 10.1108/JIC-06-2018-0097
  32. EFRAG, ANC, ASGC, OIC, FRC. (2013), Getting a better framework. The role of the Business Model in financial reporting, Bulletin.
  33. Eppler M.J., Hoffmann F., Bresciani S. (2011), New business models through collaborative idea generation, International Journal of Innovation Management, 15(6), pp. 1323-1341. DOI: 10.1142/S1363919611003751
  34. Everaert P., Bouten L., Baele, A. (2019), CSR website disclosure: the influence of the upper echelons, Accounting, Auditing & Accountability Journal, 32(2), pp. 421-455. DOI: 10.1108/AAAJ-03-2017-2882
  35. Ferreira A., Otley D. (2009), The design and use of performance management systems: An extended framework for analysis, Management Accounting Research, 20(4), pp. 263-282.
  36. Frost G., Jones S., Loftus J., Van der Laan S. (2005), A survey of sustainability reporting practices of Australian reporting entities, Australian Accounting Review, 15(1), pp. 89-96.
  37. Giunta F., Bambagiotti-Alberti L., Verrucchi F. (2013), Business model disclosure: Evidence from annual reports of Italian listed companies, Oxford Journal: An International Journal of Business & Economics, 8(1), pp. 27-39.
  38. Granlund M. (2011), Extending AIS research to management accounting and control issues: A research note, International Journal of Accounting Information Systems, 12(1), pp. 3-19.
  39. Greco G., D’Onza G., Dal controllo alla creazione del valore (2020), Management Control, 2, pp. 5-9. DOI: 10.3280/MACO2020-002001
  40. GRI – Global Reporting Initiative (2013), G4 Sustainability Reporting Guidelines, -- available at https://www2.globalreporting.org/standards/g4/Pages/default.aspx.
  41. Hall M. (2011), Do comprehensive performance measurement systems help or hinder managers’ mental model development?, Management Accounting Research, 22(2), pp. 68-83.
  42. Holland J. (2004), Corporate intangibles, value relevance and disclosure content, Institute of Chartered Accountants of Scotland, (January 2004).
  43. Hoque Z. (2014), 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research, British Accounting Review, 46(1), pp. 33-59.
  44. Hosoda M. (2020), Integrated reporting and changes in management control systems in large Japanese companies, Corporate Governance. DOI: 10.1108/CG-06-2020-0238
  45. Hossain M., Tan L.M., Adams M. (1994), Voluntary disclosure in an emerging capital market: Some empirical evidence from companies listed on the Kuala Lumpur Stock Exchange, The International Journal of Accounting, 29, pp. 334-351.
  46. IIRC - International Integrated Reporting Council (2013), The International <IR> Framework, UK.
  47. Isenmann R., Bey C., Welter M. (2007), Online reporting for sustainability issues, Business Strategy and the Environment, 16(7), pp. 487-501.
  48. Ittner C.D., Larcker D.F., Meyer M.W. (2003), Subjectivity and the weighting of performance measures: Evidence from a balanced scorecard, Accounting Review, 78(3), pp. 725-758.
  49. Jazayeri M., Scapens R. (2008), The Business Values Scorecard within BAE Systems: the evolution of a performance measurement system, British Accounting Review, 40(1), pp. 48-70.
  50. Joyce A., Paquin R.L. (2016), The triple layered business model canvas: A tool to design more sustainable business models, Journal of Cleaner Production, 135, pp. 1474-1486.
  51. Judge W., Li, S., Pinsker, R. (2010), National Adoption of International Accounting Standards: An Institutional Perspective, Corporate Governance: An International Review, 18(3), pp. 161-174.
  52. Kaplan R., Norton, D. (1996), Using the Balanced Scorecard as a strategic management system, Harvard Business Review, January-February, pp. 75-85.
  53. Krippendorff K. (2013), Content Analysis. An Introduction to Its Methodology, Thousand Oaks California, Sage Publications.
  54. Lassini U., Lionzo A., Rossignoli F. (2016), Does business model affect accounting choices ? An empirical analysis of European listed companies, Journal of Management & Governance, 20(2), pp. 229-260.
  55. Lau C.M., Martin-Sardesai A.V. (2012), The role of organisational concern for workplace fairness in the choice of a performance measurement system, British Accounting Review, 44(3), pp. 157-172.
  56. Lau C.M., Roopnarain K. (2014), The effects of non-financial and financial measures on employee motivation to participate in target setting, British Accounting Review, 46(3), pp. 228-247.
  57. Leotta A., Rizza C., Ruggeri D. (2020), Il ruolo del reporting per il controllo di gestione nelle piccole imprese, Management Control, 2, pp. 129-154. DOI: 10.3280/MACO2020-002007
  58. Lipe M.G., Salterio S.E. (2000), The balanced scorecard: Judgmental effects of common and unique performance measures, Accounting Review, 75(3), pp. 283-298.
  59. Lodhia S. (2018), Is the medium the message?: Advancing the research agenda on the role of communication media in sustainability reporting, Meditari Accountancy Research, 25(1), pp. 2-12. DOI: 10.1108/MEDAR-08-2017-0197
  60. Lucianetti L. (2011), L’adozione della Balanced Scorecard: I risultati di una ricerca empirica, Management Control, 3, pp. 39-66. DOI: 10.3280/MACO2011-003003
  61. Lund M., Nielsen C. (2014), The Evolution of Network-based Business Models Illustrated Through the Case Study of an Entrepreneurship Project, Journal of Business Models, 2(1), pp. 105-121.
  62. Malina A.M., Selto H.F. (2001), Communicating and Controlling Strategy: An empirical study of effectiveness of the Balanced Scorecard, Journal of Management Accounting Research, 13, pp. 47-90.
  63. Malmi T. (2001), Balanced scorecards in Finnish companies: A research note, Management Accounting Research, 12(2), pp. 207-220.
  64. Malmi T., Brown D.A. (2008), Management control systems as a package-Opportunities, challenges and research directions, Management Accounting Research, 19(4), pp. 287-300.
  65. Marchi L. (2011), L’evoluzione del controllo di gestione nella prospettiva informative e gestionale esterna, Management Control, 2, pp. 5-16. DOI: 10.3280/MACO2011-003001
  66. Marchi L. (2019), La creazione e la misurazione del valore: dalla prospettiva finanziaria alla prospettiva economico-sociale, Lectio Magistralis.
  67. Marchi L., Trucco S. (2017), La comunicazione delle performance economico-finanziarie: il ruolo del controllo di gestione, Management Control, 3, pp. 55-78. DOI: 10.3280/MACO2017-003005
  68. Mechelli A., Cimini R., Mazzocchetti F. (2017), The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study, Spanish Accounting Review, 20(1), pp. 1-12.
  69. Melloni G., Stacchezzini R., Lai A. (2016), The tone of business model disclosure: an impression management analysis of the integrated reports, Journal of Management & Governance, 20, pp. 295-320.
  70. Michalak J., Rimmel G., Beusch P., Jonäll K. (2017), Business Model Disclosures in Corporate Reports, Journal of Business Models, 5(1), pp. 51-73.
  71. Moulang C. (2015), Performance measurement system use in generating psychological empowerment and individual creativity, Accounting & Finance, 55(2), pp. 519-544.
  72. Muhammad K., Mastuki N., Darus F., Ghani E.K. (2019), Accounting information system change in an agriculture company: Examination using burns and scapens framework, Journal of International Studies, 12(1), pp. 105-118. DOI: 10.14254/2071-8330.2019/12-1/7
  73. Neely A., Adams C., Kennerley M. (2002), The Performance Prism: The Scorecard for Measuring and Managing Stakeholder Relationship, London, Prentice-Hall.
  74. Nielsen C. (2014), The investor perspective on business models. In The Basics of Business Models. Copenhagen, BookBoon.com/Ventus Publishing Aps.
  75. Nielsen C., Lund M., Montemari M., Paolone F., Massaro M., Dumay J. (2019), Business Models: A Research Overview, London and New York, Routledge.
  76. Nielsen C., Lund M., Thomsen P. (2017), Killing the balanced scorecard to improve internal disclosure, Journal of Intellectual Capital, 18(1), pp. 45-62. DOI: 10.1108/JIC-02-2016-0027
  77. Nielsen C., Roslender R. (2015), Enhancing financial reporting: The contribution of business models, British Accounting Review, 47(3), pp. 262-274.
  78. Nørreklit H. (2000), The balance on the balanced scorecard - A critical analysis of some of its assumptions, Management Accounting Research, 11(1), pp. 65-88.
  79. Nørreklit H. (2003), The Balanced Scorecard: What is the score? A rhetorical analysis of the Balanced Scorecard, Accounting, Organisations and Society, 28(6), pp. 591-619. DOI: 10.1016/S0361-3682(02)00097-1
  80. O’Donnell E., David J.S. (2000), How information systems influence user decisions: A research framework and literature review, International Journal of Accounting Information Systems, 1(3), pp. 178-203. DOI: 10.1016/S1467-0895(00)00009-9
  81. O’Dwyer B., Owen D., Unerman J. (2011), Seeking legitimacy for new assurance forms: The case of assurance on sustainability reporting, Accounting, Organisations and Society, 36(1), pp. 31-52.
  82. Osterwalder A., Pigneur Y. (2010), Business model generation: A Handbook for visionaries, game changers and challengers, Hoboken, New Jersey, John Wiley and Sons.
  83. Otley D. (1999), Performance management: A framework for management control systems research, Management Accounting Research, 10(4), pp. 363-382.
  84. Page M. (2014), Business models as a basis for regulation of financial reporting, Journal of Management and Governance, 18(3), pp. 683-695.
  85. Reichert B.E., Woods A. (2012), Does Motivational Orientation Impact the Effectiveness of Incentive Contracts, Journal of Management Accounting Research, 29(2), pp. 87-103.
  86. SASB (2017), SASB Conceptual Framework, available at https://www.sasb.org/standard-setting-process/conceptual-framework/
  87. Seddon P.B., Lewis G.P., Freeman P., Shanks G. (2004), The Case for Viewing Business Models as Abstractions of Strategy, Communications of the Association for Information Systems, 13, pp. 427-442.
  88. Singhvi S., Desai H.B. (1971), An Empirical Analysis of the Quality of Corporate Financial Disclosure, The Accounting Review, 46(1), pp. 129-138.
  89. Tayler W.B. (2010), The balanced scorecard as a strategy-evaluation tool: The effects of implementation involvement and a causal-chain focus, Accounting Review, 85(3), pp. 1095-1117.
  90. Tweedie D., Nielsen C., Martinov-Bennie N. (2018), The business model in integrated reporting: Evaluating concept and application, Australian Accounting Review, 28(3), pp. 405-420.
  91. Tuttle B., Dillard J. (2007), Beyond Competition: Institutional, Accounting Horizons, 21(4), pp. 387-409.
  92. Vedovato M., Bagnoli C. (2014), Le mappe strategiche per vincere le resistenze all’integrazione aziendale, Management Control, 3, pp. 11-36. DOI: 10.3280/MACO2014-003002
  93. Wallace R.S.O., Naser K. (1995), Firm-specific determinants of the comprehensiveness of mandatory disclosure in the corporate annual reports of firms listed on the stock exchange of Hong Kong, Journal of Accounting and Public Policy, 14(4), pp. 311-368. DOI: 10.1016/0278-4254(95)00042-9
  94. Wiersma E. (2009), For which purposes do managers use Balanced Scorecards? An empirical study, Management Accounting Research, 20(4), pp. 239-251.
  95. Wrigley C., Bucolo S., Straker K. (2016), Designing new business models: blue sky thinking and testing, Journal of Business Strategy, 37(5), pp. 22-31. DOI: 10.1108/JBS-04-2015-0041

  • Dynamics of Business Models in Industry-Wide Collaborative Networks for Circularity Aleš Krmela, Iveta Šimberová, Viktorija Babiča, in Journal of Open Innovation: Technology, Market, and Complexity 3/2022 pp.3
    DOI: 10.3390/joitmc8010003

Patrizia Di Tullio, Matteo La Torre, Diego Valentinetti, Michele A. Rea, Toward performance measurement systems based on business models in "MANAGEMENT CONTROL" suppl. 1/2021, pp 97-122, DOI: 10.3280/MACO2021-001-S1006