Examining factors influencing the use of multi-dimensional performance measures in the banking sector of a developing country: the case of Bangladesh

Multi-dimensional performance measures (MPM) take into account qualitative, non-financial performance measures that have been practised worldwide including in developing countries in recent decades. Traditional accounting-based measures, when used alone, have been criticised as delineating incomplete, inadequate, past-oriented pictures of performance, whereas MPM that constitute financial and non-financial performance measures are perceived as leading indicators of organisational performance in many dimensions such as employees, customers, internal business processes, suppliers, communities and the environment. However, there is very little research that has examined the relationships between the use of MPM, the factors that influence their use and the effects of MPM on organisational performance in the banking industry. Similarly, there is very little systematic understanding of the use of MPM in the context of developing countries. The current thesis fills this gap in the extant performance measurement (PM) literature by examining the factors that influence the use of MPM and the effect of MPM on organisational performance. This PhD study is in publication format comprising three academic papers. The first paper focuses on a review of the MPM literature in the context of developing countries. For the purpose of this review, the existing literature was classified into four topic areas, namely: (a) the use of MPM; (b) contextual factors and their role in MPM and organisational performance; (c) comparative studies on MPM; and (d) others. The paper also identifies internal and external factors that influence the use of MPM in developing countries and provides areas for future research. A number of research gaps identified in the first paper are empirically examined in the second and third papers. The second paper which examines the role of institutional factors on MPM use is informed by the new institutional sociology theory. The paper also examines the mediating effects of top management participation in the relationship between central bank influence and MPM use and the moderating effects of market competition in understanding the relationship between top management participation and the use of MPM. The third paper examines the mediating effects of MPM use in the relationship between change in investment in intangible assets and organisational performance using contingency theory. Additionally, the moderating effects of external factors (e.g., market competition) and internal factors (e.g., banks‟ size) in understanding the relationship between the change in investment in intangible assets and organisational performance relationship have also been tested in the paper. To validate the models in the second and third papers, the thesis used both quantitative and qualitative approaches: a cross-sectional survey as a quantitative method, semi-structured interviews as a qualitative method and component-based structural equation modelling – partial least squares – as a data analysis technique. Based on data collected from all commercial banks in Bangladesh, the findings of the second paper show that central bank influences, market competition, success of key competitors and banks‟ size have a significant positive association with the use of MPM. In addition, the study revealed that the use of MPM is influenced by the participation of top management. The paper also reveals the partial mediating effects of top management participation in the relationship between central bank influence and MPM use. Top management participation in the use of MPM is moderated by market competition. The third paper found that the change in investment in intangible assets has a direct and mediating role in the use of MPM, and in improving organisational performance. The findings of the study further show that change in investment in intangible assets and its relationship with organisational performance is moderated by market competition and banks‟ size. In terms of its theoretical contribution, the thesis extends PM research by conceptualising the factors that influence MPM use and their impact on MPM, and the impact of MPM on organisational performance in the context of the banks of a developing country (e.g., Bangladesh). Furthermore, the thesis provides new insights towards understanding the moderating effects of market competition in the relationship between top management participation and MPM use. This line of understanding has attracted limited attention in earlier studies in the PM literature. Likewise, the findings of this thesis on the mediating effects of MPM in the relationship between change in investment in intangible assets and organisational performance contributes to the PM literature. Lastly, findings of the moderating effects of market competition and size of banks on the relationship between change in investment in intangible assets and organisational performance indicate the importance of these two factors for understanding the change in investment in intangible assets and organisational performance relationship. For managers and practitioners in Bangladesh, the thesis provides evidence that various factors have influenced the use of MPM which necessitate them taking into account these factors in their use of MPM.