Effects of Performance Measurement System Uses on Organisational Ambidexterity and Firm Performance.

This study considers how performance measurement systems (PMS) can be used to foster organisations' exploitative and explorative orientations, and impact company performance. Drawing on the levers of control framework, the results of a survey of 153 Italian firms show that a diagnostic use of PMS has a positive impact on both exploitation and exploration, whereas an interactive use has no effect on exploitation and only a marginal one on exploration. However, the dynamic tension created by a joint diagnostic and interactive use has the most positive effect on organisational ambidexterity. Contrary to extant research, these findings depict the relationship between diagnostic and interactive uses not as one of opposing forces, but rather as one of synergy where the diagnostic is necessary to guide opportunity search and to establish an appropriate scope for exploration-related activities. Moreover, the use of PMS is found to positively impact organisational performance, although this depends on an organisation's capacity to promote both explorative and exploitative orientations. Finally, we identify the combination of PMS uses as an important antecedent of organisational ambidexterity and show that ambidexterity positively impacts firm performance. [ABSTRACT FROM AUTHOR]