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Purpose The purpose of this paper is to analyze the relationships between different types of performance management system (PMS) and organizational performance. The main task is based on an empirical typology of PMS to show how the different types of PMS are related to organizational performance. Design/methodology/approach The empirical typology is used on the creation on the sample of Estonian and Finnish firms. Findings The results show that the highest performance out of the four clusters is achieved by firms from strategy-focused multi-level and strategy-focused one-level clusters. They also show the highest quality of the key characteristics of PMS. Firms from the not-strategy-focused one-level cluster have the lowest performance and quality of the key characteristics of PMS. Practical implications The findings give a set of consistent guidelines on how to develop a PMS to achieve high organizational performance in different situations. These give hints, if strategic objectives are important to firm, then for achieving these objectives, also a strong emphasis of strategic aspects in PMS is necessary to gain performance; if the firm suffers from a lack of strategy, the firm should invest on the information aspects of PMS to get more relevant information to increase performance; if the firm, however, decides to move more strategy-oriented, then the strategy aspects of the PMS should get relatively more attention than other aspects in PMS, and they should be developed with care, otherwise performance will suffer. Originality/value This paper shows relations between empirically extracted clusters and organizational performance. The results show that clusters of PMS are systematically associated with the level of performance. Firms with different aspects of PMS do not achieve the equal level of performance. Firms with higher performance inside different PMS types have more desirable characteristics and aspects of PMS.

Purpose The purpose of this paper is to use the logical chain of key factors (KFs) to explain the success of performance management systems (PMS) and corporate performance. Design/methodology/approach The authors use the strength of the KFs chain to capture PMS success. First, the authors assume that perceived environmental uncertainty (PEU) is positively associated with the strength (H1). The higher the PEU, the stronger is the chain as a response to uncertainty. Second, the authors assume that the strength improves performance (H2) but third, that the impact of the strength is negatively moderated by competition (H3). Fourth, the authors assume that this improvement leads to superior corporate performance (H4). The research model is tested by applying the partial least squares method for a sample of 61 Estonian and Finnish firms. Findings Empirical evidence shows that PEU is negatively correlated to the strength of the chain but when controlled for a set of control variables, the path coefficient is positive. The strength of the chain is positively associated with improvement in performance. The impact of the strength of the chain on financial performance is negatively moderated by competition. The improvement in performance is positively associated with the attainment level of strategic goals. The improvement in non-financial performance does not significantly affect corporate profitability. Practical implications The levels of PEU and competition should be taken into the account when designing, adjusting and assessing the PMS of organization. Originality/value The authors give explanation why evidence about the effects of PMS on the performance of the firm is mixed.

This paper focuses on the levels of formality of performance management systems (PMSs). The objective of the paper is to investigate the impact of the formality of PMS 1) on the key success factors (KFs) of PMS and 2) on the achievement of performance. The formality of PMS is investigated on three different levels: structured and formal PMS, formal PMS, and informal PMS. We define a PMS structured & formal when it is designed and built upon a well-known existing system structure, such as the BSC. It is regarded as formal when it is formal and designed by the own staff of the firm. PMS is considered informal when the firm does not use any formal system. The paper makes use of the chain framework developed by Kadak and Laitinen (2016) to assess the links between the formality and KFs. The links between the formality and performance are assessed by three different impact measures on performance. The results implicate that the usage of a structured & formal PMS has stronger links to KFs of PMS than the usage of the formal in-house designed PMS. Moreover, the usage of a formal PMS leads to stronger links with KFs than using an informal PMS. Formal PMSs make a stronger impact on financial performance than an informal PMS. The same finding can also be observed for achievement of strategic objectives and non-financial performance but the results are not statistically significant due to the small number of informal PMS (5) in the sample. Thus our empirical findings encourage organizations to implement PMSs based on the existing system structures rather than own in-house design and to move from the usage of informal PMSs to formal systems.