Strategic responses to Performance Measurement in Nonprofit ...

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Performance Measurement Systems in Non-profit Organisations as Management Tool
or an Option for Strategic Responses?
I. Introduction
Not only in the public sector but also in the non-profit sector we have seen an increase in
institutional pressure to introduce performance measurement systems (Greiling 2009, Murray
2010). In the past two decades there has been a significant change from a „trust me‟ to a
„show me‟-culture within the non-profit sector. There is not only a pressure of “doing well
while doing good” as Summers and Kanter (1987) stated more than two decades ago but also
the pressure to document it. Quality prizes, quality audits, funder-imposed accountability
obligations and increased reporting requirements are symptoms for this development. Non-
profit organisations are increasingly forced to demonstrate how they perform and whether
they are efficiently and effectively managed (LeRoux/Wright 2010). Performance
measurement systems are advocated not only to promote accountability but also as a
management accounting technique for decision-facilitating and decision-influencing purposes
(e.g. Demski and Feltham 1976, Chong 2003, Hall 2010).
There is a growing body of research which discusses methods, benefits and challenges of
performance measurement in the non-profit context (e.g. Greiling 2009, Moxham 2010,
Murray 2010). With some time lag to the public sector body of research, measurement
imperfections and challenges are discussed along with intended and unintended consequences
of performance measurement systems (Vakkuri and Meklin 2006, Pollock et al. 2007, Lehn
2008, Samples and Austin 2008, Moxham 2010).
When it comes to the implementation of performance measurement at least two research gaps
can be observed. Firstly, while we have a growing body of research which can be classified as
conceptual or normative papers. As illustrated by the works of Kaplan (e.g. Kaplan 2001 and