The indirect effects of PMS design on Malaysian service firms' characteristics and performance

Purpose – The purpose of this paper is to gain deeper understanding of whether a fit between the organizational characteristics and PMS design may enhance organizational performance. This study presents evidence on PMS attributes and use as intervening variables on the relationships between service firms' characteristics and performance in Malaysia. Design/methodology/approach – The issues were tested using a mixed method approach with the collection of survey questionnaires and a series of post‐survey interviews. Stronger emphasis was placed on a quantitative approach as the objective was to develop generalized PMS findings in the service sector. Findings – Findings indicate that the attributes and use of PMS have significant indirect effects on the relationships between the differentiation strategy, environmental competitiveness and organizational performance for both professional and mass services. Additionally the interpretation of the interviews underlines the complementing roles of each of the design elements in building an effective PMS. Originality/value – The evidence removes the traditional assumption that accounting formal control is only applicable to mass service firms. Instead, the findings show that PMS design of professional service firms is not much different from that of mass services.