Toward a theory of information choices in organisations: an integrated approach
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This thesis develops an integrative model of the factors that may influence the choices of quantitative financial and quantitative non-financial performance indicators managers use for monitoring purposes in organisations. Financial information expressed in the monetary metric has traditionally been seen as the principal ingredient of the managers' information menu for performance monitoring purposes. In contrast, stories and anecdotes in the business and investor communities suggest that managers also rely heavily on a handful of critical performance indicators expressed in non-monetary metrics, such as the rate of raw materials overuse or the number of products returned by customers, for monitoring purposes. In an attempt to understand the factors influencing managers' information choices, this thesis draws from the management, judgement and decision-making, management accounting, and organisational literatures to identify potential factors that could help in explaining the managers' mix of financial and non-financial information.
The thesis begins with theory-building involving the development of a preliminary model and research propositions. A field study was then conducted in six firms of different sizes and from different industries in the manufacturing and service sectors. During the field work, data were gathered through direct observations, archival data, and a questionnaire and interview of 42 managers working in the production-operation, marketing-sales, and human resources areas. Using an individual level of analysis, the data revealed patterns of information use and allowed for the identification of seven potential factors or determinants of the managers' choice of performance indicators.
The field results suggest that managers from all levels of decision making who work in throughput (output) functions, such as production-operation and human resources (marketing-sales) involving different levels of perceived external environmental uncertainty, tend to use a mix of information that includes a greater proportion of non-financial (financial) information than financial (non-financial) information. Along with the managers' level of experience and perceptions of their work as routine or nonroutine, the nature of the performance indicators they perceive their superiors use to reward their performance, including the managers' focus on a limited number of critical cause-effect relationships between non-financial and financial performance indicators, all tend to influence the proportion of non-financial and financial information they use for monitoring purposes. As a result, the theoretical model and the ten analytical generalisations developed in this thesis call for future model testing.