Competitive strategy and performance measurement in the Malaysian context

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to contribute to a better understanding of competitive strategy and performance measurement in the Malaysian context by applying a modified version of Conant et al's generic strategy scale and categorizing Malaysian firms along the Miles and Snow business strategy typology. Design/methodology/approach -Competitive strategy and performance measurement were assessed via survey. A total of 975 firms were randomly selected from the directory of Federation of Malaysian Manufacturers (FMM) as listed in 2003. Overall, 133 surveys were returned, 120 of which were usable for analysis. Findings -Results suggest that Malaysian firms view competitive strategy differently and are more likely than their Western counterparts to emphasize the use of financial measures of organizational performance. Findings also highlight the difficulties faced when Western measurement scales are employed in non-Western emerging nations. Research limitations/implications -Because greater emphasis was placed on financial rather than non-financial measures, results indicate a statistically significant different improvement only in sales growth and ROI performance among the three strategy categories. Strategy researchers should focus their attention to the use of multiple performance measures in assessing firm's performance as shown by the significant different in the use of customer satisfaction and loyalty measures, as well as employee satisfaction and training measures. Originality/value -These findings hold relevance for executives responsible for the formulation and implementation of business strategy. A better understanding of the relationship between business strategy and performance measures using the BSC perspectives of measures has been provided. The study provides some useful insights into the role of performance measures. In addition, this study conveys the message to top managers and designers of performance measurement tools -most notably the balanced scorecard -should pay particular attention to non-financial performance measures in implementing their organization's strategy.

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“…The general use of financial measures of performance is consistent with other studies (see for example, Joshi (2001);Phadoongsitthi (2003); Abdel-Kader and Luther (2006);and Jusoh and Parnell (2008). Phadoongsitthi (2003) reported that most Thai firms still focus on financial performance measures such as budget variance analysis, return on investment, cash flow return on investment, and divisional profit.…”

“…Phadoongsitthi (2003) reported that most Thai firms still focus on financial performance measures such as budget variance analysis, return on investment, cash flow return on investment, and divisional profit. Similarly Jusoh and Parnell (2008) revealed that many Malaysian manufacturing firms placed a greater emphasis on financial rather than non-financial measures.…”

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“…Measuring organizational performance was also necessary, and doing so always represents a challenge in strategy-performance studies, as measurement choices can influence findings (Cavalieri, Gaiardelli, & Ierace, 2007;Jusoh & Parnell, 2008;Pongatichat & Johnston, 2008). Performance is an elusive construct and can be evaluated from a narrow, profit-oriented viewpoint or from a broader perspective that also includes considerations such as market share, firm growth, and the attainment of organizational objectives.…”

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“…Kaplan and Norton (1996) developed a comprehensive performance measurement system known as the balanced scorecard (BSC), a multidimensional approach that includes financial and nonfinancial measures. Because communicating business strategy and aligning individual goals with corporate goals are critical in many organizations, a BSC approach can provide a means for communication and alignment of corporate strategies by cascading and linking measures to each level of organization, including business units, support units, and employees (Jusoh & Parnell, 2008).…”

“…Proponents of using financial measures emphasize the objectivity associated with comparing the performance level of various business units along standardized lines. Although such measures do not result in the valid valuation of intangible assets (Huselid, 1995), financial measures remain a common, widely accepted approach in strategy-performance studies (Jusoh & Parnell, 2008).…”