The significant of business strategy in improving organizational performance

Abstract

Purpose This research aims to investigate the extent to which business strategy mediates the relationship between reliance on integrative strategic performance measurement (RISPM) and organisational performance. Design/methodology/approach A self-administered survey of 157 managers in Indonesian financial institutions was used to test direct and indirect effects among the hypothesised variables. Findings The findings indicate that business strategy has a full mediating effect on the relationship between RISPM and organisational performance. Originality/value This study indicates that performance measurement systems should be designed in conjunction with business strategies to obtain superior performance. More specifically, in the Indonesian financial institutions, applying a differentiation strategy is found to be most effective in gaining competitive advantage and superior performance.