{"title":"Strategy, Incentive Design and Performance: Empirical Evidence","authors":"Dipankar Ghosh, Joanna L. Y. Ho, H. Miya","doi":"10.2139/ssrn.1659689","DOIUrl":"https://doi.org/10.2139/ssrn.1659689","url":null,"abstract":"Firms pursuing different business strategies should align these strategies to incentive design. This study uses both archival and survey data on 110 stores of a Japanese high-end bakery chain to provide empirical evidence that misalignment between an organization’s business strategy and incentive design (i.e., weights for financial and non-financial performance measures) adversely affects firm performance. Our results suggest that a decline in the firm performance may be caused by managers’ shifting their focus toward financial measures that are inconsistent with a customer-oriented strategy. Although the firm requires the exclusive usage of non-financial measures in determining promotions, as expected, our results show that financial measures affect managers’ promotions. Additional analyses show that the influence of non-financial measures in promotion decisions becomes less pronounced after the firm shifts to a primarily financial-focused bonus plan.","PeriodicalId":409424,"journal":{"name":"Performance Measures and Strategy","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125025596","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}