Managing the tensions in integrating global organisations: The role of performance management systems

The paper explores the role of performance management systems (PMSs) in integrating global organisations (GOs). It investigates the ways in which the diverse entities that comprise a GO can be co-ordinated and integrated to achieve a global unity of effort, while leaving space for local adaptation, differentiation and flexibility. The business literature on GOs highlights several tensions that characterise processes of integration: vertical vs. lateral relations; standardization vs. differentiation of practices; centralization vs. decentralization of decision making. Interpreting PMS as a series of practices that carry organisational knowledge and rationales across organisations, the paper relies on the case of Nestlé Waters to study how PMS can be used to manage the tensions involved in integrating GOs. On the one hand, PMS can be used to re-shape existing boundaries by supporting the development of new organisational arrangements, where standardization and centralization around shared strategies are achieved. On the other hand, PMS can become trapped by the contradictory forces emanating from multiple centres of decision making. Importantly, when attempting to bind together distant entities in the same “organisational space”, informal control mechanisms may become relevant, but they have the capacity to both reinforce and damage the potential of PMS in managing the tensions involved in integrating GOs.