Strategy, performance-measurement systems, and performance: A study of Chinese firms

Numerous studies in developed Western countries have shown that firms' strategic choices are responsive to attributes of their external environment. In turn, performance-measurement systems are used to support strategy implementation, which then affect firm performance. However, institutional factors may limit the extent to which these linkages exist in the transitional Chinese economy. We analyze survey and publicly available data for 104 listed Chinese manufacturing firms and find that, despite a number of identifiable impediments, these firms' strategic emphasis on growth is responsive to the competition and uncertainty that they face. In the case of uncertainty, the relationship goes in the opposite direction to that found in Western firms. Like their Western counterparts, Chinese firms with greater emphasis on growth also tend to make greater use of balanced/integrated performance measurement systems, and, in turn, they perform at a higher level.