A Comparative Study on Strategic Performance Management of Dutch Firms

Strategic performance management (SPM) has become an important vehicle for business management in today’s turbulent business environment. SPM has in recent years attracted much research interest from the side of both scientists and policy-makers. This interest is warranted because of the fundamental transformations (e.g. increased competition, changes in the regulatory environment, the impact of technology, growing globalization, shifts in customer behaviour and expectations) in industrial systems created a challenging business environment, which prompted firms to call for insight into their business activities and operational performance at all times. The growing importance of these changes has further intensified the need for alternative strategic control and performance measures to allow businesses to stay competitive and profitable. The performance measures should provide a complete picture of a firm’s progress towards the achievement of its mission and goals. The study addresses the need for an efficient SPM and operational Performance Measurement System (PMS) for assessing business performance to cope with continous changing business circumstances, to develop systematic strategic tools/approaches that shape and measure a firm’s capability for continuous competitiveness, to innovate and renew themselves business-oriented climate, which potentially determine the success of the firms. Both the popular and scientific literature indicate that there is evidence that SPM is now implemented (in use) in approximately 70% of medium-to-large firms in the US and Europe, as well as in many governmental departments. There is however, much unjustified belief in the assumed potential offered by the implementation of SPM in Dutch firms. Most studies are anecdotal, case studies, speculative and less based upon empirical facts or solid business management theory. Much work has been carried out on the design and deployment of SPM, but relatively little attention has been paid on the impact of SPM on firms’ results. The paper aims to investigate on an empirical basis whether SPM yield the benefits and/or disbenefits, as predicted by the literature, for Dutch firms. And to provide an insight into the reasons behind the implementation of SPM, as predicted by the literature, because each of the reasons for implementing SPM should yield particular benefits or disbenefits. The overarching analysis framework of this paper is based on SPM, because particular attention is paid to the lessons from the strategic performance management literature for measuring the successes (and failures) of Dutch firms. Much empirical studies provide mixed evidence on the strategic benefits from the implementation of SPM. Various literature sources, case studies and practical experience show that firms that have implemented SPM obtain better financial and non-financial results, and improve more their overall quality than competitors or comparable firms that are less SPM-driven over a longer period of time. But, other literature sources reported that SPM has failed through incorrect identification of non-financial indicators, poorly defines metrics to address the requirements of all the stakeholders, wrong and too little or much measurements, use the metrics ineffectively, no clear existence of the link between nonfinancial and the expected financial results and no clear interactions (correlation(s)) among the benefits, disbenefits and reasons behind the implementation of SPM. The research will deploy sophisticated statistical tools (exploratory factor analysis and multiple regression analysis) to assess systematically the business activities success and (and failures) after implementing SPM in practice.