How can performance measurement systems empower managers? An exploratory study in state-owned enterprises

Purpose – The purpose of this paper is to investigate how performance measurement systems (PMSs) might be designed in order to empower managers of state-owned enterprises (SOEs) towards an active work role. Design/methodology/approach – The study is based on a conceptual approach that combines insights from prior research on performance measurement with that on dimensions of psychological empowerment. An exploratory case study is used to further develop propositions for the design of an empowering PMS. Data from in-depth interviews with six managers of diverse SOEs located within a German city enables the tracing of underlying causal mechanisms. Findings – PMSs that are designed according to the principles of goal clarity, balanced goal difficulty, autonomy-enhancing measurement, and a broad goal scope can positively influence the four dimensions of empowerment: meaning, competence, self-determination, and impact. Practical implications – The study’s propositions can be used to enhance the governance of SOEs through a particular design of PMSs. This research thus responds to the call for a new generation of governance mechanisms within the complex setting of SOEs. Originality/value – Current research on PMSs is extended through the construct of psychological empowerment. Thus, an existing governance mechanism is further developed towards being more effective for use in the context of SOEs.