Enabling integration in complex contexts: the role of process based performance measurement systems

Abstract

Managing firms in complex contexts demands high levels of integration. In order to satisfy this increasing need, firms facing competitive environments are extensively investing in IT, namely in ERP systems. As matter of fact, the mere implementation of ERP systems can only support one of the dimensions through which integration is enacted: the information dimension. Other dimensions (cognitive and managerial) have to be reinforced in order to get effective integration. Moving from the proposition of a multidimensional concept of organizational integration, the paper analyses the integrative properties of process based performance measurement systems. It is contended that process based performance measures, on the one hand, make processes visible and relevant to people, so addressing their decisions and actions in an integrative perspective; on the other hand, the same measures drive performance improvement based upon effective integration. The paper is structured in three parts. The first part proposes a multidimensional view of the concept of integration. The second part presents a framework for the design of process based performance measurement systems. The third part discusses the case of a large multinational chemical company that has re‐focused its performance management systems on the process dimension, after the partially successful implementation of a company wide ERP system.