An Empirical Assessment of Interactive Use of Performance Measurement System, Organizational Learning and Firm Performance

Abstract

Similar to Bisbe & Otley’s (2004)
critique of Simon’s study regarding to the role of
innovation for the improvement of firm performance
using interactive use of performance measurement
system (PMS), we also found that Simons (1995) did
not clearly mention the role of organizational learning
in the relationship between interactive use of PMS and
firm performance. Thus, this study attempts to
investigate the extent to which interactive use of
performance measurement systems enables to enhance
firm performance through organizational learning.
This study was a self-administrated survey of 69
respondents from service organizations listed in the
Indonesian stock exchange. Analysing data using
SmartPLS, we found that interactive use of PMS has
no indirect effect on the enhancement of firm
performance through organizational leaning rather
than direct effect to firm performance. This study
provides at least two contributions. First, this study
clarifies Simon’s argument regarding to the role of
organizational learning as mediator effect of interactive
used of PMS and firm performance. Second, this study
adds to the literature in management accounting of
studies in the service organizations because numerous
authors state that there is a dearth of study in the
service sector.