SUBJECTIVE PERFORMANCE MEASUREMENT: MULTI-CASE STUDY BASED ON CHINESE CORPORATIONS Gao Chen and Tang Guliang Business School, Beijing Technology and Business University, China and Business School, University of International Business and Economics, China Abstract Subjective performance measurement is a new hotspot in recent year western management accounting and motivation theory study. However, until now, there has been little research regarding the application of this theory in China. In order to bridge this research gap, this paper provides five propositions and four in-depth case studies in Chinese corporations. By the comparison of the application of subjective performance measures in China Minsheng Banking Corporation(CMBC), China Minmetals Corporation(Minmetals), China North Industries Group Corporation(CNGC) and UFIDA Software Corporation(UFIDA),this study suggests that the use of subjective performance measures differs as the corporation’s strategy, the corporation’s developing phase, organizational culture and institutional background. This study also suggests that the evaluation bias is the factor affecting the effects of application of subjective performance measures. The organizational culture is identified as the key factor that contributes to this bias. Keywords: performance measurement, incentive contract design, Chinese corporations, multi-case study
Performance measurement and incentive contract design have already been one of the frontier issues of western corporate management control theory and motivation theory study. Studies of the issue widely involve and influence corporate governance, strategy implement, compensation system and corporate culture, concerned extensively by academic and business circles (Merchant, 2004). The core of performance measurement system design lies in the choice of performance measurement. In recent years, choice of performance measurement appears comprehensive, with the differences of financial measure and non-financial, Objective Performance Measures (OPM) and Subjective Performance Measures (SPM) (Van de Stede et al., 2006). In recent years, subjective measures and discretionary bonus have received more and more attention of the researchers. Through theory deductive analysis, empirical research and experiment study, the in-depth research has gained plentiful academic results and valuable study conclusions. Comparatively, research documents in China focused on financial measure and some study on innovative measures, methods (as EVA, The Balanced Score Card) and introduction to their applications（Duh, Xiao and Chow, 2007) or on the application and results of nonfinancial measure based on the classification of financial and non-financial measure (Pan Fei, 2006). However, the researchers don’t pay great attention to problems in non-financial 1
measure such as the difference of objectivity and subjectivity, determinants and effects of subjective measures, and there is no academic dissertation on subjective performance measures. This study is originated from confusion regarding the following questions: to what degree are subjective performance measures actually used in China? What are the major factors influencing the application of subjective measures? What about the effects? Are there any successful experiences or problems? What are the special influence of Chinese corporate systems and culture difference to the application and effects, etc? These questions are also the problems which management needs to resolve in performance management practice. The paper’s framework and contents are as follows: Part two is literature review and research propositions including the theory background and syllogism of the proposition; Part three is research design and description of the case including the process of choosing the target corporations and data collection and also the company’s application of subjective performance measures; Part four is the comparative...
Please join StudyMode to read the full document