Hassan HassabElnaby
Virginia State University
Amal Said
Virginia Commonwealth University
Benson Wier
Virginia Commonwealth University
Abstract: This paper examines firmsÂ’ decision to retain or discard the use of nonfinancial measures. Firms are using different performance measurement systems in an effort to track nonfinancial metrics such as customer and employee satisfaction, quality, market share, productivity, and innovation. A typical use of nonfinancial measures presumes augmentation of firm performance. This study finds that firm performance is a crucial determinant in deciding to retain using nonfinancial measures. The analysis also demonstrates that the mismatch between firm characteristics and the use of nonfinancial measures fails to enhance performance for those firms that discard nonfinancial measures. The results suggest that the impact of nonfinancial measures on firm performance varies across firms contingently on their specific characteristics. This underscores the significance of considering such characteristics prior to adopting nonfinancial measures and before determining the weight placed on nonfinancial measures. These results have crucial implications for managers and researchers.
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