Understanding third sector performance measurement system design: a literature review

Purpose – The purpose of this paper is to examine the literature on third sector performance measurement system design. Design/methodology/approach – A systematic literature review was undertaken. The abstracts of 917 articles identified from a database search were examined and, of these, 110 papers were put forward for full paper review. Totally, 55 papers were subsequently selected for the literature synthesis. Findings – The findings examine the important questions of why and how the performance of third sector organizations is measured. The analysis of the sample of works suggests a potential methodological mismatch between the rationale for measuring the performance of third sector organizations and the measurement methods that are currently employed. Practical implications – The study raises provocative questions about the usefulness of third sector performance measurement approaches, which may lead third sector managers to critically examine current practice. Originality/value – As the papers in the synthesis are drawn from a broad range of journals, the review provides a multi-disciplinary discussion of the key themes of third sector performance measurement system design. Recent studies have been published simultaneously, suggesting that there has been limited opportunity for synthesis of this work. This study therefore offers a springboard for further research in this area.