Relationship between information systems sophistication and performance measurement

Abstract

Purpose Studies in performance measurement systems (PMS) seem to receive little attention in the information system (IS) literature. The purpose of this paper, therefore, is to contribute to the stream of research in the fields of performance measurement and ISs. Design/methodology/approach The paper examines how IS sophistication is linked to PMSs by investigating the use of performance measures in the Malaysian financial services industry. Data were collected from 140 financial institutions through self‐administered questionnaire survey of top‐level executives. A component‐based structural equation modelling, partial least squares, was used to test the research model. Findings The results indicate that IS sophistication is a determinant of performance measures. The results also indicate that different dimensions of IS sophistication affect different dimensions of performance measures usage. Originality/value The paper significantly extends prior research on performance measures by establishing IS sophistication links to the different types of performance measures. Further, the findings clarify the distinct and important roles of each IS dimension's influence on performance measures.