Impact of PMS on organizational performance and moderating effects of context

The purpose of this paper is to explore the impact of performance measurement systems (PMS) on organizational performance in public sector. In addition, it investigates the moderating effects of the organizational context.

Using a multivariate analysis, the authors investigate the extent of PMS used among Portuguese Government agencies and their effects on organizational performance. Data were gathered from the only survey (based on their Comparative Public Organization Data Base for Research and Analysis survey) applied to the Portuguese Government agencies.

The authors find that the extent to which agencies use PMS is positively associated with the organizational performance (in a multidimensional perspective). Moreover, the organizational performance is contingent upon the fit between PMS and the agency’s context in light of the contingency theory (especially the orientation to citizens and the level of competition).

Although prior research has studied the use of PMS in public sector organizations, one question that has not been effectively answered is whether performance information is effectively used to improve public sector performance. In this way, this paper contributes to the understanding of the impact of PMS on the organizational performance, providing empirical evidence in a country that is in a period of “transition” in the introduction of NPM reforms.