Performance on the Right Hand Side: Organizational Performance as an Independent Variable

Organizational performance in most survey-based management control research appears on the “left hand side of the equation” as a dependent variable. The objective typically being to identify, predict or model the effects of management control variables presumed to be causally antecedent. However, the effects of organizational performance acting as an independent variable has received surprisingly little attention in management control research. We argue that without taking into consideration the recursive effects of organizational performance, such models are likely to be incomplete and provide a distorted picture of the true causal structure of performance. Based on a questionnaire survey, and follow-up interviews with CEOs and senior executives in Australian Not-for-profit (NFP) organizations, our quantitative results do not support this contention. Our qualitative results however, reveal broader considerations that may explain this finding. We discuss the theoretical implications of these findings, and propose directions for further research in this area.