Decentralization, Interdependence and Performance Measurement System Design: Sequences and Priorities

M. Abernethy, J.F.M.G. Bouwens, L.A.G.M. van Lent

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Abstract

We investigate the determinants of decentralization and performance measurement choices in multidivisional firms.We extend the research on the economics of organizational design choices by examining the impact of two important determinants of those choices, namely, subunit interdependencies and knowledge transfer costs.We test our predictions with a simultaneous equation model that captures the endogenous choices relating to the level of decentralization and the use of alternative subunit performance measures using data collected from 78 business units.Our findings are generally consistent with our predictions.
Original languageEnglish
Place of PublicationTilburg
PublisherAccounting
Number of pages39
Volume2001-28
Publication statusPublished - 2001

Publication series

NameCentER Discussion Paper
Volume2001-28

Keywords

  • performance measurement
  • interdependency
  • knowledge
  • decentralization
  • organizational structure

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