Contingency theory, performance management and organisational effectiveness in the third sector

Abstract

Purpose – The purpose of this paper is to develop a theoretical framework that explains how performance management (PM) affects the organisational effectiveness in the third sector. Design/methodology/approach – The authors adopt a two stage process in developing the theoretical framework; a systematic review of literature and theoretical developments of the framework. The underlying principles for developing the theoretical framework are mainly based on prior theoretical justification and empirical research in management accounting and international development fields. Findings – Drawing upon contingency theory, the authors propose a theoretical framework explaining how the contingency variables affect PM and organisational effectiveness in the third sector. The authors discuss the justification for contingency theory as well as its weaknesses in the PM research. The authors also highlight how a modified Performance Management and Control Framework could be used to identify PM practices in the third sector. The organisational effectiveness can be measured using the four domains the authors suggest in this paper. Finally the authors put forward propositions that can be empirically tested in future studies. Research limitations/implications – This conceptual paper opens an opportunity for future empirical research to cross-validate the model in a large survey through confirmatory factor analysis and structural equation modelling. Practical implications – This paper helps researchers and practitioners to understand how modern PM tools integrate with third sector characteristics to optimise the effectiveness of individual organisations. Originality/value – Integrating insights across disciplines, this paper strengthens cumulative knowledge on conceptualisation of PM and effectiveness within the third sector.

Contingent Factors and Sustainable Performance Measurement (SPM) Practices of Malaysian Electronics and Electrical Companies

“…In the context of the sustainable practices, the stakeholder theory suggests that stakeholders play an important role in pressuring companies to adopt SPM practices, which in turn can lead to a competitive advantage [40,41,57]. As such, the four contingent factors that influence SPM practice are: (1) The organizational learning culture, (2) the advancement of technology, (3) globalization and (4) pressure from stakeholders, in line with the studies of [55][56][57][58]…”

Fatores Contingenciais Externos E a Mensuração De Desempenho: Um Estudo Em Ongs Brasileiras

“…In order to facilitate the understanding of the effect of the external contingency factors in the NGOs through the environmental contingency variable, this study uses the taxonomy suggested by Wadongo and Abdel-Kader (2014), which classifies the external environment into three variables. The first is the degree of unpredictability or environmental uncertainty.…”

“…In turn, environmental uncertainty was negatively related to data collection and performance-based rewards, while at the same time being positively related to performance indicators, strength and consistency of the performance management system and information flows of the performance management system.The second variable used in the study was the degree of intensity of environmental competition among NGOs. Normally, environmental competition is associated with private-sector companies (Wadongo & Abdel-Kader, 2014). This characteristic is normal, as private companies aim to make a profit, considering all aspects of the market, such as scarcity of resources, dispute for customers, suppliers, internal competitions, among others, which encourage the adaptation of management controls to these environmental conditions.…”

“…The NGOs also need to respond to growing market pressures and competitiveness in the third sector though, so competition is characterized by intense competition by staff and volunteers, external funding, new innovative projects and community resources (Wadongo & Abdel-Kader, 2014).…”

“…Some international evidence points to a positive relationship between the contingency variables and the managerial practices of performance measurement of the third-sector entities in relation to the external environment (Kaplan, 2001;Beamon & Balcik, 2008;Wadongo, & Abdel-Kader 2014). Brazilian studies have only been focusing on for-profit firms (Guerra, 2007;Junqueira, 2010;Beuren & Fiorentin, 2014;Leite, Diehl & Manvailer, 2015;Lavarda, Gorla, Lavarda & Angonese, 2016;Klein & Almeida, 2017).…”