Academic journal article E - Journal of Social & Behavioural Research in Business

The Association between Sustainability Performance Management Goals and Organisational Performance1

Academic journal article E - Journal of Social & Behavioural Research in Business

The Association between Sustainability Performance Management Goals and Organisational Performance1

Article excerpt

Abstract

Purpose: This paper identifies the sustainability performance management goals that Australian Companies use and their association with organisational performance.

Design/methodology/approach: This study involved a questionnaire survey administered to Senior Level Managers of medium to large Australian companies. To identify their main sustainability performance management goals, a principal component factor analysis was conducted to reduce a total of 35 items related to sustainability performance management goals to 7 key sustainability performance management goal factors - environmental, new product innovation, customer acquisition and retention, information systems capability, employee welfare and community engagement, operational profitability, and organisational profitability. To determine which of these sustainability performance management goal factors were significantly associated with organisational performance, each of these factors was regressed against five single-item dependent variables of Customer Satisfaction Performance, Employee Satisfaction Performance, Sales from New Products Performance, Profit from Operations Performance and Environmental Budget Allocation Performance.

Findings/Results: Results reveal that environmental, new product innovation, customer acquisition and retention, and information systems capability goals were positively associated with new product sales. Environmental, information systems capability, and employee welfare and community engagement goals were found to be positively associated with environmental budget allocations. Also, customer acquisition and retention, employee welfare and community engagement, and organisational profitability goals were found to positively influence customer satisfaction. Finally, information systems capability and employee welfare and community engagement goals were found to be positively associated with employee satisfaction.

Keywords: Multidimensional Performance Management Systems, Organisational Goals, Organisational Performance.

JEL Classification: M40; M41

PsycINFO Classification: 3900

Introduction

Considerable research has been devoted to multidimensional performance management systems (MPMS) [such as the balanced scorecard], which suggests that organisational performance parameters should include a balance of financial and non-financial performance indicators (Kaplan and Norton 1993; 1996, 2006; Forker and Vickery, 1996; Rangone, 1996). This means that financial outcomes and input/output ratios should be balanced against measures of business growth, and innovation and growth (Ford and Schellenberg, 1982; Kaplan and Norton, 1992; Mapes and New, 1997; Gopalakrishnan, 2000). Moreover, contemporary research in management accounting suggests that organisational sustainability is a critical success factor and accordingly it is in an organisation's best economic interest to have a strong relationship with its stakeholders. This suggestion is based on the premise that stakeholders are individuals (or groups), who can affect or be affected by successful attainment of an organisation's objectives (Freeman, 1984). Atkinson, Banker, Kaplan, and Young (1997, p. 503) conceptualised an organisation as "a nexus of interrelated contracts among its five stakeholder groups"; comprising "shareholders, customers, the community (society), employees and suppliers (including creditors)". For example, shareholders and suppliers will benefit from sound economic health achieved through performance outcomes such as from profitable operations and sales of new products; which will also provide customer satisfaction through their continued access to products and services and employee satisfaction arising from better job security. The community as a stakeholder group will benefit from triple bottom line initiatives such as budget allocations for environmental matters, social goals and sound financial planning resulting in the creation of employment, redistribution of wealth through company taxes, sponsorship, and community/social leadership. …

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