TY - JOUR
T1 - The role of non-financial measures in controlling myopic activities
T2 - The case of hard selling
AU - Srinivasan, Dhinu
AU - Thevaranjan, Alex
N1 - Publisher Copyright:
© Copyright 2016 Inderscience Enterprises Ltd.
Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2016
Y1 - 2016
N2 - Using a principal-agent framework, many analytical studies have examined the role of non-financial or additional performance measures in enhancing long-run efforts such as customer service. However, myopic activities that enhance short-term firm performance at the expense of long-term profitability are prevalent across industries (and perhaps nations). Accordingly, the purpose of this paper is to investigate when and how non-financial measures may be used to control such myopic activities. Specifically, we investigate the interaction between a myopic behaviour known as hard selling and a specific non-financial measure (customer satisfaction), often used to measure the customer irritation that results from hard selling. Prior studies suggest that non-financial measures are always a valuable addition because they increase the level of long-run efforts and decrease the (over) reliance on financial incentives. In contrast, we find that non-financial measures may not always be valuable in controlling myopic activities, and when valuable, they may either increase or decrease the reliance on a financial measure such as accounting earnings. In addition, the impact of non-financial measures on myopic activities varies widely, ranging from no impact at all to complete elimination. Overall, these insights enhance our understanding of the role of non-financial measures in controlling myopic activities, in contrast to enhancing long-run efforts.
AB - Using a principal-agent framework, many analytical studies have examined the role of non-financial or additional performance measures in enhancing long-run efforts such as customer service. However, myopic activities that enhance short-term firm performance at the expense of long-term profitability are prevalent across industries (and perhaps nations). Accordingly, the purpose of this paper is to investigate when and how non-financial measures may be used to control such myopic activities. Specifically, we investigate the interaction between a myopic behaviour known as hard selling and a specific non-financial measure (customer satisfaction), often used to measure the customer irritation that results from hard selling. Prior studies suggest that non-financial measures are always a valuable addition because they increase the level of long-run efforts and decrease the (over) reliance on financial incentives. In contrast, we find that non-financial measures may not always be valuable in controlling myopic activities, and when valuable, they may either increase or decrease the reliance on a financial measure such as accounting earnings. In addition, the impact of non-financial measures on myopic activities varies widely, ranging from no impact at all to complete elimination. Overall, these insights enhance our understanding of the role of non-financial measures in controlling myopic activities, in contrast to enhancing long-run efforts.
KW - Customer Satisfaction
KW - Hard-Selling
KW - Non-Financial Measures
KW - Sales Force Incentives
UR - http://www.scopus.com/inward/record.url?scp=84966267401&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84966267401&partnerID=8YFLogxK
U2 - 10.1504/IJAAPE.2016.075614
DO - 10.1504/IJAAPE.2016.075614
M3 - Article
AN - SCOPUS:84966267401
VL - 12
SP - 103
EP - 130
JO - International Journal of Accounting, Auditing and Performance Evaluation
JF - International Journal of Accounting, Auditing and Performance Evaluation
SN - 1740-8008
IS - 2
ER -