Metric intensity and innovation dependency

We examine how metric intensity—that is, the quantity, frequency, and extent to which performance metrics are tracked used—varies with a firm's dependency on innovation for business success. Although essential in an organization's management control system, little is known about use of differs organizations varying dependencies incremental radical innovation. Drawing data from sample small- medium-sized enterprises (SMEs), we hypothesize find that firms' (radical) positively (negatively) associated intensity. Furthermore, (1) positive relationship between intensity stronger when organizational culture focused more “control” (2) negative mitigated “flexibility.” Additional analysis shows (negative) can be by greater decision-facilitating purposes. Our findings suggest metrics-based formal controls designed match types pre-existing informal such as culture. This study highlights importance distinguishing different studying systems. L'intensité des mesures et la dépendance à l'innovation Les auteurs examinent comment l'intensité — c'est-à-dire quantité, fréquence l'étendue du suivi de l'utilisation varie en fonction d'une entreprise pour connaitre le succès commercial. Bien que les soient essentielles dans système contrôle gestion organisation, nous savons peu sur façon dont diffère organisations qui dépendent variable incrémentale radicale. À partir données provenant d'un échantillon petites moyennes entreprises (PME), formulent confirment l'hypothèse selon laquelle l'égard (radicale) est positivement (négativement) associée mesures. De plus, ils constatent relation entre plus forte lorsque organisationnelle davantage axée « » négative radicale atténuée flexibilité ». Une analyse supplémentaire montre (négative) peut être par une grande utilisation fins facilitation décision. résultats suggèrent contrôles formels basés sont conçus correspondre aux informels préexistants tels organisationnelle. Cette étude souligne l'importance distinguer différents l'étude systèmes gestion. The key element systems (Bloom & Van Reenen, 2007; Merchant der Stede, 2017). Indeed, research has shown often have effects firm growth other outcomes (Davila Foster, Sandino, 2007). Increasingly, technological advances enabled even deeper quantification work performance, allowing high-frequency, fine-grained, low-cost measurements. label tendency quantify manage operations “metric intensity.” In today's world, many companies also depend various forms survival success (Hasan Tucci, 2010). this “innovation dependency.” study, empirically investigate whether company's varies its dependency. controls—in form culture—strengthen or weaken focus studies accounting management, most those help hurt Some show used drive Ditillo, Greater facilitate providing feedback allows managers adjust courses action quickly increasing accountability motivation. On hand, discourage creativity Performance mechanisms, especially linked extrinsic incentives, decrease learning, reduce flexibility adaptation, hinder (Amabile, 1993, 1996). paper, our managers' choices situations intentionally based factors (Merchant There no single best design works universally across all organizations. Studies their number contextual variables, structure, size, environment, technology (Chenhall, 2003; Donaldson, 2001; Fisher, 1995; Langfield-Smith, 1997; Otley, 1980, 2016). Building upon body generally labeled contingency research, related determined dependency, firm-level reflects competitive environment important Following prior distinguish two main Innovation researchers traditionally theoretical typology makes distinction (Alexander Knippenberg, 2014; Dewar Dutton, 1986; Duchesneau al., 1979; Ettlie, 1983; Ettlie 1984; Hage, 1980; Nord Tucker, 1987). Radical involves long-term processes risky come unexpected challenges undetermined concepts but, if successful, will result products services distinctly new market. Incremental innovation, relies detailed technical market analyses predictable improvement processes. expect type depends on—that dependency—both constrains feasibility quantifying determines perceived benefits harms using quantified metrics, ultimately influencing For example, reflecting progress easier implement due relatively short cycles, better understood processes, information drivers Therefore, higher (lower) It note shared values effective than process difficult understand output cannot easily measured (Ouchi, 1979). Abernethy Brownell (1997) empirical evidence supports theory indicating personnel likely task uncertainty high. stream further explore influences Specifically, does emphasizing certain (e.g., flexibility) intensify mitigate intensity? To address questions, (SMEs) because, compared large firms, SMEs proportion relative (Sandino, sizes phases life cycle are, therefore, exhibit variance obtained one largest peer-mentoring top executives who administered survey management. Through survey, constructed measures intensity, measure separately, these innovations not mutually exclusive given organization. As expected, increases (decreases) Next, (organizational culture) affect (metric intensity). strengthened—that positive—when cultural emphasize “control,” accountability, precision, consistency. mitigated—that less negative—when “flexibility,” loose monitoring high error tolerance. finding suggests flexibility-focused cultures could enhance net benefit increase additional analysis, purpose becomes weaker statistically significant subsample firms purposes firms. mitigates aforementioned relationships mediation relates through much benefit—that minus harm—managers perceive metrics. helps explain why observe vary emphases contribute literature following ways. First, growing context managing (Byron Khazanchi, 2012; Davila 2017; Grabner, Grabner Speckbacher, 2016; Kachelmeier 2008; Lakiza Deschamps, 2018; Marginson, 2002). commonly made disciplines, very few burgeoning investigated role played type. A notable example here Chen al. (2015), finds rewarding (punishing failure) (incremental innovation). (2009) Speckbacher (2017) point need future consider variations because require respond call provide industries versus opposite directions, highlighting Among Bedford (2015) association self-assessed modes (i.e., strategic priorities). take approach focusing determinants, rather consequences, (here, define variable. doing so, contingency-based Guenther Heinicke, 2019; Ittner 2007) documenting factor choice: Second, intensity) (Bedford, 2020; Chenhall Moers, 2015; 2009; 2013). argued desirable outcomes, including interact system complementary practices, it been unclear negatively interaction controls. knowledge, offer first degree at enhanced emphasizes “flexibility” Finally, sociology (Mazmanian Beckman, Ranganathan Benson, 2020). powerful similar stages tendencies businesses. Rather investigating specific aspects systems, foundation systems—the organization, intensity—and emphases. Many inherent tension (Kachelmeier Williamson, 1 both might leading indicators notoriously measure, creates output-based innovation-related patents granted) far perfect commercial cause less-than-desirable behaviors. specify actions lead desired commercially successful innovations, behavior-based some innovators primarily driven intrinsic motivation rely team collaboration. Metrics-based incentives crowd out motivation, explorative collaboration, and/or distract employees creative tasks 1983, 1996; Shalley 2000). particular, Amabile (1993) make feel constrained controlled external forces detrimental effects. beneficial motivating performance. Most effect performance-based incentive schemes settings highly dependent lab experiments linking well-designed improve (Chen 2008, assessing economic environment. archival convincingly establish causal outcomes. (2014) takes focuses dependency—the employee creativity, necessity. She creativity-dependent pay balance incorporating subjective evaluations. Her like ours, follows long tradition showing function technology, size (see Chenhall, 2016 reviews). basic idea choice circumstances. appropriate considerably among Sandino (2007) early-stage choose initial suited strategy structure. line variable—the success, dependency”—and quantitative business. (the metrics) existing culture). Prior examined scholars diagnostic interactive style Cools 2017), 2004), diverse (Henri, 2006), uses evaluations (Grabner, 2014). fundamental aspect systems: business, Recent higher-frequency, lower-cost, fine-grained measurements outputs. motivates “quantification,” “production communication numbers,” demonstrates wield great influence within fields (Espeland Stevens, Kiviat, 2019a, 2019b; Lupton, connection standardized actions. updated frequently) leads productivity contexts simple but reduced complex (Ranganathan addition, ritual fosters collective underlying belief objective authority numbers 2018). Still, understanding Why do levels argue “manage numbers” previously identified Consistent literature, “improvements products/services” “novel products/services, major breakthroughs” Benner Tushman, 2003, p. 243; Danneels, 2002; By “dependency innovation,” mean model. necessarily reflect any actual innovative behaviors subsequent discussed above, expected matched appropriate, internally consistent arrangement—an level case (Cooper, 2011). Because improved products, services, developed ones, already possess knowledge markets internal sources. implies availability informative realistic benchmarks. usually quick improvements, may face demand rapid learning These tend pose clearly defined questions targeted problem-solving. what Unsworth (2001) defines “responsive creativity,” solving externally closed problem. strong induced direct solve problems achieve objectives. high-quality good cognitive mode (strong focus) problem (prespecified objectives) integrate accompanies typically quantification, budgeting. extended periods time uncertain (Danneels Kleinschmidt, Garcia Calantone, Sorescu Spanjol, 2008). result, fewer available activities, exist term, achievement program milestones, reliable indications eventual requires open thinking discovery generate novel ideas solutions longer-term breakthroughs (Roussel 1991). Due magnitude departure technologies, projects already-defined well-specified broad scanning identification definition then “out box” narrow set prespecified harm, help, imposed perception being evaluated crucial hypothesis: Hypothesis.Metric exclusive. neither other. hypothesis predicts conceptually directions. overall subject accounting, control, economics controls, notably Culture beliefs, values, norms widely organization (Akroyd Kober, Merchant, 1985; Schein, 1990). Cultural stated ideals while day-to-day practices beliefs held members Corporate ethical choices, risk-taking, value creation (Graham 2022). Both smaller struggle development maintenance well-developed measurement (Abernethy Brownell, Ouchi, Culture, behavioral norms, change. Early-stage heavily before they adopt viewed variable, starting practice manipulated (Ferreira Flamholtz, subtle, frame (Malmi Brown, Scholars examining together Chua, Malmi “managing culture” relate numbers?” seems plays where 1979), resulting associated. since support reinforce 2009), reasonable least efficiency-focused efficiency-driven general prediction culture, broadly defined, However, worth pointing multifaceted significantly Specific associa