THE RELATIONSHIP BETWEEN MULTIPLE MEASURES-BASED PERFORMANCE EVALUATION AND MANAGERIAL PERFORMANCE: ROLE OF PROCEDURAL FAIRNESS AND INTERPERSONAL

TRUST
AINUN NAIM Gadjah Mada University, Indonesia CHONG M. LAU The University of Western Australia MAHFUD SHOLIHIN Gadjah Mada University, Indonesia ABSTRACT The objective of this study is to investigate whether multiple measures-based performance evaluation affects managers performance; and if so, whether the effects are indirect through procedural fairness and trust . This study hypothesizes that multiple measures-based performance evaluation has indirect effects on managers performance through procedural fairness and trust. In addition, it also hypothesizes that procedural fairness has indirect effects on managers performance through trust. In order to test these hypotheses, this study employs a path analytical model to analyze the data collected from ! managers of various Indonesian manufacturing companies. The results indicate that the hypotheses are supported. The effects of multiple measures-based performance evaluation on managerial performance are partially mediated by procedural fairness and trust. This means that in addition to indirect effect via procedural fairness and trust, the use of multiple measures for performance evaluation in itself has a direct effect on managerial performance. "ith respect to the indirect effects of procedural fairness on managers performance, this study finds that trust fully mediates the effect of procedural fairness on managers performance. #ence it can be concluded that procedural fairness has no direct effects on managerial performance. $ey words% &anagerial performance; &ultiple measures; 'erformance evaluation; 'rocedural fairness; Trust

I. Introdu t!on (upervisory evaluative style (how superiors evaluate their subordinates) is an important topi in mana!ement a ountin!, whi h has earned spe ial attention in the literature ("artmann, #$$$)% &rior studies on this topi su!!est that the basis of mana!erial performan e evaluation used by superiors to evaluate their subordinates' performan e an affe t the subordinates' attitudes and behavior ((tley and &ollanen, #$$$)% )viden e from early resear h on supervisory evaluative styles (e%!%, "opwood, *+,# and (tley, *+,-), however, su!!ests that the effe ts of performan e measures on the subordinates' attitudes and behavior may be indirect throu!h some intervenin! variables% Their results su!!est that the effe ts of performan e measures used in performan e evaluation on the subordinates' attitudes and behavior is li.ely mediated by the subordinates' per eption of the fairness of the performan e measures used and the e/tent of interpersonal trust, whi h the use of su h performan e measures promotes% "owever, these issues are not investi!ated nor resolved in prior mana!ement a ountin! studies% Another important area in mana!ement a ountin! that has lon! been attra tin! the attention of mana!ement a ountin! resear hers is or!ani0ational performan e measurement. (tley (*+++, p% 121) su!!ested that 34the measurement of the performan e of business (and other) or!anisations has lon! been of entral interest to both mana!ers and mana!ement a ountin! resear hers5% (ne of the re ent developments in performan e measurement, whi h stimulates s holars to study is the use of multiple performan e measures whi h in orporate both finan ial and non6finan ial measures (e%!% 7aplan and 8orton, *++#, *++2b9 Ittner and :ar .er, *++-a)% "owever, most studies in this topi view from an or!ani0ational perspe tive (e%!% "o;ue and <ames, #$$$9 "o;ue et al%, #$$*) and there is a la . of empiri al eviden e on the effe ts of multiple measures usa!e on mana!ers' attitudes and behavior% Therefore, this study attempts to address this !ap in the literature, by empiri ally investi!atin! the behavioral onse;uen es of the use of multiple performan e measures for performan e evaluation% It will
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respond to (tley's (*+++, p% 1-*) hallen!e that 34performan e measurement pra ti es need to be evaluated 4from a so ial, behavioral and mana!erial perspe tive45 In addition, At.inson et al% (*++,) have also su!!ested that resear h in mana!ement a ountin! should address the issue of how performan e measurement systems an produ e desired behavior and out omes% To respond to su h on erns, this study is motivated to investi!ate empiri ally the effe ts of multiple measures usa!e on mana!ers' performan e% In studyin! the relationships between the multiple measures6based performan e evaluation and mana!erial performan e, this study is also motivated to investi!ate two other variables whi h are believed to a t as intervenin! variables% These are pro edural justi e (pro edural fairness) and interpersonal trust% These two important variables have !enerally been ne!le ted in prior mana!ement a ountin! studies% :au and :im (#$$#b) ar!ue that pro edural fairness is an important variable to be studied in mana!ement a ountin! resear h be ause of its effe ts on the or!ani0ational members' attitudes and behavior% Milani (*+,=) and 7enis (*+,+) both su!!ested that subordinates' per eption of justi e may be an important predi tor of subordinates' behavior and attitudes% :ind;uist (*++=, p%*>*) similarly ontended that 3fair pro edures4lead to enhan ements of satisfa tion and performan e% In addition, :ibby (*+++) found that a fair bud!etin! pro ess ould motivate subordinates' performan e% There are however, very few studies in mana!ement a ountin! on pro edural fairness (:au and :im, #$$#b)% This study may therefore provide important additional eviden e on the role of pro edural fairness in mana!ement a ountin! literature% The in lusion of interpersonal trust variable in this study is !rounded in "anderson's (*+-$) su!!estion that to perform a su essful performan e evaluation, it is ne essary to establish an environment where trust amon! members of the or!anisation an develop% Trust is an important feature in performan e evaluation be ause in reased trust amon! or!ani0ational members is li.ely to lead to improved ommuni ation (Merlin!er, *+=29 ?ead, *+2#)% @urthermore, in a trustin! environment, people are li.ely to feel free to relate to one another% This may lead to openness amon! or!ani0ational members (?eina and ?eina, *+++)% Aimmons (*+-*, p%#>1) su!!ested that 3trust is the !lue of effe tive, humane, and effi ient or!anisations%5 In the mana!ement a ountin! onte/t, some resear hers (e%!% "opwood, *+,#9 (tley, *+,-9 ?oss, *++>9 :au and Bu .land , #$$*) have investi!ated the role of trust in performan e evaluation, whi h ontrasted finan ial6based and non6finan ial6based performan e evaluation% They found that trust was a ontributin! fa tor in influen in! the relationships between the performan e evaluative styles and mana!erial attitudes and behavior% This urrent study is intended to provide additional eviden e as to whether, and in what role, trust also a ts as an important fa tor in performan e evaluation, whi h is based on multiple measures ( a mi/ed of finan ial and non6finan ial measures)% This study proposes that the relationship between multiple measures6based performan e evaluation and mana!ers' performan e is indire t throu!h pro edural fairness and interpersonal trust as modelled in @i!ure *%

In"#rt F!$ur# % &'out (#r#

II. T(#or#t! &) '& *$round &nd (+,ot(#"#" d#-#)o,.#nt A. L!n*&$# '#t/##n .u)t!,)# .#&"ur#"-'&"#d ,#r0or.&n # #-&)u&t!on &nd "u'ord!n&t#" ,#r0or.&n # )/tant literature su!!ests that there is a relationship between performan e evaluation style that is based on a ountin! or finan ial data (bud!et emphasis) and subordinates' attitudes and performan e (7ren and :iao, *+--9 Briers and "irst, *++$9 :indsay and )hrenber!, *++19 (tley and @a.iolas, #$$$)% "en e, multiple measures6based performan e evaluation may also be asso iated with subordinates' behavior (e%!% performan e) be ause the multiple measurement system is apable of providin! ontinuous si!nals and motivatin! brea.throu!h improvements in riti al a tivities in su h riti al areas as produ t, pro ess, ustomer and mar.et development (7aplan and 8orton, *++19 "o;ue et% al%, #$$*)%
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The multiple measurement system an provide ontinuous si!nals be ause it in orporates both finan ial and non6finan ial measures% @inan ial measures provide information on past performan e and, 3indi ate whether the ompany's strate!y, implementation, and e/e ution are ontributin! to bottom6line improvement5 (7aplan and 8orton, *++#, p% ,,)% (n the other hand, non6finan ial measures (e%!% ustomer, internal business pro ess and innovation and learnin! perspe tives) provide the information on the driver of future su ess (7aplan and 8orton, *++#, *++2a)% In addition, a multiple measurement system also refle ts the omple/ities of the wor. environment, whi h enable mana!ers to re o!ni0e the various dimensions of their wor. (At.inson et al%, #$$*)% 7aplan and 8orton (*++2b) ar!ued that multiple measures mi!ht fun tion as the ornerstone for future su ess be ause, 34 ombinin! the finan ial, ustomer, internal pro ess and innovation, and or!ani0ational learnin! perspe tives4helps mana!ers understand 4many interrelationships% This understandin! an helps mana!ers 4and ultimately lead to improved de ision ma.in! and problem solvin!5 (7aplan and 8orton, *++#, p% ,+)% 7aplan and 8orton (*++1, *++2a) provide eviden e that ompanies whi h use the multiple measurement system an operate in a more effi ient way% In addition, "o;ue and <ames (#$$$) empiri ally found that the use of multiple measures performan e evaluation was asso iated with or!ani0ational effe tiveness% It is li.ely that in reased or!ani0ational effe tiveness was aused by improved mana!erial performan e% The improved mana!erial performan e was li.ely due to mana!ers' improved de ision ma.in! and problem solvin! arisin! from the use of multiple measures performan e% "en e, it is proposed in this study that the use of multiple measures is positively associated with managerial performance. "owever, as proposed in @i!ure l, the relationships between multiple measures usa!e and mana!ers' performan e may be indire t via pro edural fairness and interpersonal trust% The theoreti al supports for these e/pe tations are provided in the followin! se tions% B. L!n*&$# '#t/##n .u)t!,)# .#&"ur#"-'&"#d ,#r0or.&n # #-&)u&t!on &nd ,ro #dur&) 0&!rn#"" @ol!er and 7onovs.y (*+-+) define pro edural justi e as the per eived fairness of the means used to determine the amount of reward or ompensation the employees re eive% In the onte/t of performan e evaluation, pro edural fairness is li.ely to be the on ern of both the subordinates and the superiors% Aubordinates usually onsider performan e evaluation to be very important, be ause it is often lin.ed to the reward system that will determine their remunerations and promotions (:au and :im, #$$#a)% Cue to the importan e of performan e evaluation, subordinates normally e/pe t that the pro edures used for evaluatin! their performan e should be fair% "i!h pro edural fairness is also an important on ern of the superiors and the or!ani0ations as a whole% There is mu h eviden e, whi h indi ates that the implementation of pro edures per eived by subordinates as unfair is detrimental to the or!ani0ations' interest (e%!% @riedland et al%, *+,19 Thibaut et al%, *+,>9 :issa., *+-19 7anfer et al%, *+-,9 Greenber! *+-,)% Based on their review of pro edural justi e resear h, :ind and Tayler (*+--, p% *,+) on luded that, 3or!ani0ations that i!nore pro edural justi e on erns run the ris. of en!enderin! ne!ative or!ani0ational attitudes 4and4 lower performan e%5 Ain e the per eption of unjust pro edures an ne!atively affe t or!ani0ations, superiors are li.ely to maintain hi!h pro edural fairness in ondu tin! performan e evaluations% It is li.ely that the adoption of multiple measures, instead of solely finan ial measures in subordinate performan e evaluation, may be viewed as fair by subordinates for the followin! reasons% &erforman e evaluation that ta.es into a ounts both finan ial and non6finan ial indi ators relies on more than one aspe t or dimension of subordinates' performan e% Multiple measures6based performan e evaluation views subordinates' performan e in a broad s ope% 7aplan and 8orton (*++2a) ar!ue that multiple measures6based evaluation onsiders both la!!in! and leadin! indi ators, and both short and lon!6terms obje tives% It also in ludes both e/ternal measures and internal measures of riti al business pro esses, innovation, and learnin! and !rowth% In addition, it provides a balan e in terms of the out ome measures 6 the results from past efforts 6 and the measures that drive future performan e% @inally, this form of evaluation balan es obje tive and easily ;uantified out ome measures, with subje tive and somewhat jud!mental performan e drivers of the out ome measures% Aubordinates are li.ely to re!ard su h balan es in performan e evaluation as fair% @or e/ample, it is possible that in a ertain period, su h as in the resear h sta!e of developin! a produ t, subordinates may produ e unsatisfyin! finan ial results% Au h innovative a ts, however, may lead to a better or!ani0ational performan e in the lon! term% Therefore, if a
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subordinate is evaluated based only on finan ial performan e measures, the evaluation may view the subordinate as a poor performer% Au h an unbalan ed evaluation may lead the subordinate to per eive the evaluation pro ess as unfair% (n the other hand, if the performan e evaluation also onsiders the performan e in terms of resear h and innovation, the subordinate is li.ely to per eive that the evaluation pro ess is fair% Based on the above ar!ument, it is possible to on lude that subordinates whose performan e is evaluated based on both finan ial and non6finan ial measures are li.ely to per eive the evaluation pro edures in their or!ani0ation as fair% Donse;uently, in this study, it is proposed that multiple measuresbased performance evaluation is positively associated with procedural fairness. C. L!n*&$# '#t/##n ,ro #dur&) 0&!rn#"" &nd "u'ord!n&t#" ,#r0or.&n # )/tant literature in le!al, politi al and or!ani0ational onte/ts su!!est that pro edural fairness affe ts performan e (e%!% )arley and :ind, *+-,9 )arley, *+->9 Dornelius, *+-=9 Ale/ander and ?uderman, *+-,9 @ol!er and 7onovs.y, *+-+9 M @arlin and Aweeney, *++#)% Based on an e/tensive review of the literature on the relationships between pro edural justi e and performan e6behavior in various settin!s, :ind and Tayler (*++-) on lude that pro edural justi e does affe t performan e% In a mana!ement a ountin! onte/t, :ibby (*+++) also found that performan e was affe ted by parti ipation (voi e) and e/planation% Both voi e and e/planation are parts of pro edural fairness% In the same vein, Went0el (#$$#) and :ittle et al% (#$$#) found that pro edural fairness affe ted mana!erial performan e% "en e, overall, the literature su!!ests an asso iation between pro edural fairness and mana!ers' performan e% Additionally, e/pe tan y theory also su!!ests that when subordinates per eive that the pro edures used to evaluate their performan e are fair, they will have the motivation to perform better (Eroom, *+2>9 &orter and :awler, *+2-)% With fair performan e evaluation pro edures, the results of performan e evaluation are li.ely to refle t subordinates' performan e a urately% Therefore, subordinates will be motivated to perform better% This is li.ely to lead to improved performan e% In ontrast, when subordinates per eive that the performan e evaluation pro edures are unfair, they will not be motivated to perform well be ause with unfair evaluation pro edures, it is possible that !ood performan e may be evaluated as poor performan e (Eroom, *+2>9 &orter and :awler, *+2-)% Donse;uently, subordinates are li.ely to perform poorly when unfair performan e evaluation pro edures are employed% In on lusion, the dis ussion above su!!ests that multiple measures6based performan e evaluation may be asso iated with the subordinates' performan e (se tion a)% "owever, the dis ussion also indi ates that multiple measures6based performan e evaluation may also be positively related to pro edural fairness (se tion b)% &ro edural fairness, in turn, may be related to subordinates' performan e (se tion )% There is, therefore, theoreti al support for the e/isten e of indire t effe ts on the relationship between the use of multiple measures6based performan e evaluation and subordinates' performan e via pro edural fairness% A ordin!ly, the followin! hypothesis is testedF #)% There is an indirect relationship between multiple measures-based performance evaluation and subordinates performance through procedural fairness. D. Linkage between multiple measures-based performance evaluation and interpersonal trust Gand (*++,) ar!ues that a ompany's reward system an en oura!e trust as lon! as the reward system is ollaborative, inte!rative and 3win6win5% Win6win reward systems means, 3one person's !ain is a !ain for other person as well, and one person's loss is also loss for the other%5 (Gand, *++,, p% **-)% In line with Gand's (*++,) ar!ument, Whitener et al% (*++-) ontend that performan e evaluation and reward systems an fa ilitate mana!erial trustworthy behavior, whi h, in turn, an affe t the trust of subordinates to their superiors% Therefore, it is ne essary for or!ani0ations to desi!n their performan e evaluation systems in su h a way whi h fa ilitates the enhan ement of the subordinates' trust in their superiors% &erforman e evaluation whi h is based on multiple measures is li.ely to be one of su h means be ause su h evaluation is li.ely to promote the subordinates' trust in their superiors for the followin! reasons% It is possible at the time the performan e evaluation was ondu ted, a parti ular short-term ;uantitative performan e measure of subordinates' performan e may be unsatisfa tory% "owever, it is also possible that if the subordinates' performan e is viewed from a long-term perspe tive, whi h onsiders
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other indi ators, either finan ial or non6finan ial, the subordinates' performan e may be benefi ial to the or!ani0ation's su ess (7aplan, *+-1, <ohnson and 7aplan, *++*)% Ain e multiple measures usa!e is li.ely to onsider various fa tors and fa ets of performan e that are important to or!ani0ational su ess, subordinates may per eive superiors who employ multiple measures in performan e evaluation as havin! ability in ondu tin! performan e evaluation, whi h, in turn, may lead subordinates to trust their superiors more% It is also possible that superiors who evaluate subordinates solely on short6term ;uantitative indi ators may be re!arded by subordinates as lac*ing in ability in evaluatin! their performan e properly% The subordinates may thin. that the superiors do not understand performan e measurement be ause of the la . of re o!nition !iven to other aspe ts of performan e% In ontrast, superiors who onsider both short6term and lon!6term perspe tives, and both finan ial and non6finan ial measures (multiple measures), are li.ely to be viewed by the subordinates as havin! ability in ondu tin! performan e evaluations% This may lead to hi!her trust toward the superiors% Aubordinates may per eive su h superiors to have trustworthy behavior (Mayer et al%, *++=)% Auperiors who evaluate subordinates usin! multiple measures may also be per eived by subordinates as superiors who demonstrate concerns be ause the use of multiple measures may 34refle t the omple/ities of the wor. environment and ( onsider) the variety of ontributions that employees ma.e5 (At.inson et al%, #$$*, p% >$,) (parentheses added)% It is possible that a subordinate may a hieve below tar!et for a ertain performan e indi ator but easily obtain above tar!et for other indi ators (:ipe and Aalterio, #$$#)% This may ause subordinates to feel that their areers are prote ted% In turn, this may lead subordinates to view their superiors as a tin! benevolently in evaluatin! the subordinates' performan e% The hi!her the per eption of benevolen e, the hi!her the per eption of trustworthy behavior is li.ely to be (Whitener et al%, *++-)% If subordinates per eive that the superior is trustworthy, they will trust their superior more% This will lead to hi!her subordinates' propensity to trust (Mayer et al%, *++=)% With this in mind, it is reasonable to propose that there is a positive relationship between the use of multiple measures-based performance evaluation and trust in superiors. E. L!n*&$# '#t/##n !nt#r,#r"on&) tru"t &nd "u'ord!n&t#" ,#r0or.&n # Gand (*++,) defines trustin! behavior as a willin!ness to in rease vulnerability to another person whose behavior annot be ontrolled, in situations in whi h a potential benefit is mu h less than a potential loss if the other person abuses the vulnerability% @urther, he su!!ests that two people who trust ea h other will !reatly in rease their problem solvin! effe tiveness% This will in rease their ommitment to ea h other and they will e/perien e !reater satisfa tion with their wor. and their relationships% &eople who trust ea h other an syn hroni0e, help ea h other and wor. to!ether onstru tively% Trustin! behavior an improve de ision ;uality and its implementation% It is li.ely that the hi!her the de ision ;uality, the hi!her is the performan e% :ippit (*+-#) ar!ues that the e/isten e of trust between or!ani0ational members an in rease both problem solvin! and performance% Aimilarly, ?eina and ?eina (*+++, p% -) note that 3dire tly or indire tly trust is related to individual, !roup, and or!anisational performan e5 (emphasis added)% In summary, based on the dis ussion above, multiple measures6based performan e evaluation is e/pe ted to be positively related to trust in superiors (se tion d)% Trust in superiors, in turn, is e/pe ted to be positively related to subordinates' performan e (se tion e)% These relationships su!!est therefore, that the effe t of multiple measures6based performan e evaluation on subordinates' performan e may be indire t throu!h trust in superiors% The followin! hypothesis is therefore testedF #+% There is an indirect relationship between multiple measures-based performance evaluation and subordinates performance through the subordinates trust in their superiors. F. L!n*&$# '#t/##n ,ro #dur&) 0&!rn#"" &nd tru"t !n "u,#r!or" &revious studies in various settin!s have shown that pro edural fairness has a positive influen e on trust% In a politi al settin!, :ind and Tyler (*+--) reported that U%A% iti0ens' trust in their national !overnment was hi!hly orrelated with the per eived fairness of the !overnment's de ision6ma.in! pro edures% @urther analysis found that, trust jud!ments were mu h more stron!ly affe ted by pro edural justi e than by distributive justi e% They also found that iti0ens' trust in le!al institutions was stron!ly related to pro edural fairness% In the or!ani0ational arena, 7onovs.y and &u!h (*++>) found a very hi!h orrelation between
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subordinates' jud!ments of their superior's pro edural fairness and their trust in their supervisor% (ther studies in the or!ani0ational area (e%!% Ale/ander and ?uderman, *+-,9 @ol!er and 7onovs.y, *+-+9 M @arlin and Aweeney, *++# 7ors!aard et al%, *++=) and in a bud!etin! onte/t (Ma!ner and Wel.er, *++>9 Ma!ner et al%, *++=) have also demonstrated that per eptions of pro edural fairness are positively related to trust in the leaders and de ision ma.ers% "en e, this study proposes that procedural fairness is positively associated with trust% As previously dis ussed, pro edural fairness is e/pe ted to be asso iated with mana!ers' performan e (se tion )% Ain e pro edural fairness is also e/pe ted to be positively related to trust (se tion f), and trust, in turn, may be related to mana!ers' performan e (se tion e), it is therefore possible to on lude that the effe t of pro edural fairness on subordinates' performan e may be mediated by the intervenin! effe t of trust% A ordin!ly, the followin! hypothesis is testedF "1% There is an indirect relationship between procedural fairness and subordinates performance through trust. III. R#"#&r ( .#t(od A. D&t& &nd "&.,)# Cata for this study were olle ted usin! a ;uestionnaire survey sent to ##+ mana!ers wor.in! in or!ani0ations listed as manufa turin! ompanies in the ,a*arta (toc* -.change% The names of the ompanies were published in the Indonesian /apital &ar*et 0irectory (#$$$)% The mana!ers were sele ted from various manufa turin! ompanies% This approa h avoids e/ternal validity problems and enhan es the possibility of !enerali0in! results (Dhon! and Bateman, #$$$)% (nly those manufa turin! ompanies employin! more than *$$ employees ea h were studied, as firms with fewer than *$$ employees may not have formali0ed ontrol systems, and are unli.ely to have learly defined areas of responsibilities (Brownell and Cun., *++*)% In addition, the sele tion of or!ani0ations with more than *$$ employees is useful for the ontrol of the si0e of the or!ani0ations (:au and :im, #$$#a)% The manufa turin! se tor was sele ted for this study be ause it is the lar!est se tor (=#H) published in the Indonesian /apital &ar*et 0irectory. It is very ommon in mana!ement a ountin! resear h to study a sin!le se tor, but involvin! a number of or!ani0ations (e%!% Aimon, *+-29 Brownell and Cun., *++*9 :au et al%, *++=9 :ibby and Waterhouse, *++29 "o;ue and <ames, #$$$9 :au and :im, #$$#a, b)% :isted ompanies were sele ted be ause almost all the lar!est and most advan ed Indonesian ompanies were listed in the ,a*arta (toc* -.change% This permits the sele ted sample to in lude the lar!est and most advan ed ompanies in Indonesia% Althou!h the sample was derived from manufa turin! or!ani0ations, it was not the intention of this study to investi!ate a parti ular fun tion (e%!% manufa turin!)% In order to as ertain if the results are !enerali0ed a ross fun tional areas, followin! previous mana!ement a ountin! studies (e%!% "opwood, *+,#9 (tley, *+,-9 Brownell, *+-#9 Brownell and Cun., *++*9 (tley and &ollenan, #$$$9 :au and :im, #$$#b), this study sele ted samples from a ross fun tional areas% In order to provide some de!ree of ontrol over the seniority of the respondents a ross or!ani0ations, only fun tional heads were sele ted% The fun tional heads were sele ted as follows% Telephone alls were made to the se retary of ea h ompany to obtain the names of the fun tional heads% This method ensured that the fun tional heads would re eive the ;uestionnaires and that they would be the only ones who answered the ;uestionnaires% In addition, to avoid bias, only a ma/imum of > mana!ers were sele ted from ea h ompany% (n avera!e, ea h ompany provided the names of two mana!ers% Based on the Indonesian /apital &ar*et 0irectory (#$$$), there are *>2 manufa turin! ompanies% (ne ompany has less than *$$ employees% "en e, it was e/ luded from the sample% (ne ompany re!arded itself as a servi e rather than a manufa turin! or!ani0ation% Donse;uently, this ompany was also e/ luded from the sample% Thirty two ompanies informed the resear hers that it was their poli ies not to dis lose the name of their mana!ers% As a result, the resear her was able to obtain the names of ##+ mana!ers from **# ompanies% Table * and Table # present the industry types of the tar!eted sample ompanies and the sample sele tion pro ess, respe tively%

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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In"#rt T&')# % &nd 1 &'out (#r#

B. Sur-#+ &d.!n!"tr&t!on A ;uestionnaire to!ether with a prepaid return addressed envelope and a overin! letter e/plainin! the obje tives of the resear h was mailed to ea h of the ##+ intended respondents% As the instruments used to measure the variables e/amined in this thesis were developed in )n!lish, and )n!lish is not widely used in Indonesia, it was ne essary to translate the instruments into Indonesian% The translation pro ess involved three separate steps as re ommended by "ofstede (*+-$)% 1irst, the resear hers, who are Indonesian national and hi!hly profi ient in the Indonesian lan!ua!e, translated the ;uestionnaire from )n!lish into Indonesian% (econd, a university professor in Indonesia, who is bilin!ual and also an Indonesian national, translated the Indonesian version of the ;uestionnaire ba . into )n!lish% Third, a ross6 he . of the latter )n!lish version with the ori!inal )n!lish version was performed% This third step was to ensure that the translation was a urately done, and was underta.en by one of the authors who spea.s )n!lish% (nly the Indonesian version of the ;uestionnaire was used in the survey% The ;uestionnaires were mailed out in 8ovember #$$*% A reminder letter was mailed after three wee.s% Mana!ers who did not respond to the ;uestionnaire two wee.s after the reminder letters were sent out, were onta ted by phone% (ut of the ##+ ;uestionnaires mailed, -1 responses (12H) were returned% Thirteen responses were e/ luded from the study be ause of the failure of the respondents to omplete the whole ;uestionnaire% As a result, there were ,$ usable responses% Given that the survey was underta.en in Indonesia, su h a response rate may be onsidered very hi!h% Gudono and Mardliyah (#$$*) noted that response rates in Indonesia !enerally ran!e from *$H to *2H% C. V&r!&')#" &nd t(#!r .#&"ur#.#nt" C.%. Mu)t!,)# .#&"ur#"-'&"#d ,#r0or.&n # #-&)u&t!on The multiple measures6based performan e evaluation was measured usin! a modified #$6item instrument developed by "o;ue et al% (*++,) and subse;uently used by "o;ue and <ames (#$$$) and "o;ue et al% (#$$*)% The ;uestionnaire was modified be ause it was ori!inally developed to measure or!ani0ational performan e% In this study, it was used to measure individual employee performan e% The #$ items were derived from 7aplan and 8orton's (*++#) four dimensions of the Balan ed A ore ard, namely finan ial, ustomer, internal6business6pro ess, and or!ani0ational learnin! and !rowth perspe tives% Whilst "o;ue and <ames (#$$$) and "o;ue et al% (#$$*) used a five6point :i.ert s ale ran!in! from * (not at all) to = (a !reat e/tent), this study employed a seven6point :i.ert6type s ale, ran!in! from * (never important) to , (always important), to provide respondents with the opportunity to identify more learly where their responses fit on the ontinuum (?oss, *++>)% The instrument as.s respondents to indi ate how mu h importan e their superior atta hes to the twenty items when their superiors evaluate their performan e% Cetails of the instrument are presented in Appendi/ *%a% @ollowin! "o;ue and <ames (#$$$) and "o;ue et% al% (#$$*), a prin ipal omponents analysis with varima/ rotation was ondu ted to assess whether the #$ items ould be !rouped a ordin! to the four dimensions of the Balan ed A ore ard% The result indi ates that items *1 and *,, whi h were e/pe ted to load on the ustomer perspe tive, did not load into this perspe tive satisfa torily% Donse;uently, those two items were not in luded for further analyses% To test the reliability of the *- remainin! items, a reliability test was underta.en% The result of reliability test produ ed a ronba h alpha oeffi ient (Dronba h, *+=*) of $%+= for this instrument% C.1. Pro #dur&) 0&!rn#"" &ro edural fairness was measured usin! a four6item, five6point :i.ert6type s ale instrument developed by M @arlin and Aweeney (*++#), and subse;uently used by :au and :im (#$$a, #$$#b)% It as.s respondents to rate the fairness of the pro edures used to evaluate their performan e, to ommuni ate performan e feedba ., and to determine their pay in reases and promotion ran!in! from *(very unfair) to = (very fair)%
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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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An overall measure of pro edural fairness was obtained by summin! up responses to the four individual items% Cetails of the instrument are presented in Appendi/ *%b% A reliability he . for this measure in this study produ ed a ronba h alpha of $%,,, whi h is onsidered a eptable (8unnaly, *+2,9 Dhenhall and Morris, *+-2)% The fa tor analysis e/tra ted only one fa tor with an ei!envalue !reater than one (ei!envalueI #%1=*9 total varian e e/plainedI=-%,,*H)% This supports the unidimensional nature of this instrument% C.2. Tru"t !n "u,#r!or" Trust was measured usin! a four6item instrument developed by ?ead (*+2#) to measure the level of trust held by subordinates in their superiors% This instrument had been used by "opwood (*+,#), (tley (*+,-), ?oss (*++>), Ma!ner and Wel.er (*++>) and Ma!ner et al% (*++=)% It as.s the respondents to indi ate to what e/tent they trust or have onfiden e in their superiors' motives and intentions with respe ts to matters relevant to their areer and status in the or!ani0ation, ran!in! from * (to a very little e/tent) to = (to a very !reat e/tent)% An overall measure of trust was obtained by summin! up responses to the four individual items% Cetails of the instrument are presented in Appendi/ *% % The ronba h alpha oeffi ient for this instrument in this study is $%,+, whi h is lose to the $%-* reported by ?oss (*++>)% The fa tor analysis e/tra ted only one fa tor with an ei!envalue !reater than one (ei!envalueI #%>,,9 total varian e e/plainedI2*%+*>H)% This supports the unidimensional nature of this instrument% C.3. M&n&$#r!&) ,#r0or.&n # There are two instruments to measure mana!erial performan e, namely Mahoney et al%'s (*+21, *+2=) and Govindarajan and Gupta's (*+-=) instruments% While the former is a self6ratin! measure, the latter onsiders the e/pe tation of top mana!ement% The Mahoney et al% (*+21, *+2=) instrument is mu h more established, and has been used e/tensively by many prior mana!ement a ountin! studies (e%!% Brownell, *+-#9 Brownell and "irst, *+-29 Govindarajan, *+-29 Brownell and M Innes, *+-29 Brownell and Cun., *++*9 7ren, *++#9 :au et al%, *++=9 :au and Tan, *++-9 Dhon! and Bateman, #$$$9 :au and :im, #$$#a)% Govindarajan (*+-2) and Brownell and M Innes (*+-2) both provided eviden e of its reliability and its onstru t validity% Brownell (*+-#, pp% *,6*-) ontended that, 3 the nine6dimensional stru ture of the measure learly aptures the multidimensional nature of performan e without introdu in! the problem of e/ essive dimensionality%5 Givindarajan (*+-2, p% =$=) similarly noted that, 3the Mahoney measure offered two advanta!es% @irst, independent assessments of reliability and validity of this measure have yielded satisfa tory results in other studies% Ae ond, this measure e/pli itly re o!nises the multidimensional nature of mana!erial performan e, while at the same time, avoidin! the problems inherent in measures with e/ essive dimensions%5 Cue to these advanta!es, Mahoney et al%'s (*+21, *+2=) instrument was sele ted in this study% Cetails of the instrument are presented in Appendi/ *%d% Mahoney et al%'s instrument (*+21, *+2=) omprises ei!ht dimensions of performan e and a sin!le overall performan e ratin!% In order to as ertain that Brownell's (*+-#, pp% *,6*-) ontention that, 3 the nine6dimensional stru ture of the measure learly aptures the multidimensional nature of performan e without introdu in! the problem of e/ essive dimensionality5 holds, a re!ression analysis was ondu ted by re!ressin! the overall performan e ratin! onto the other ei!ht items% The result indi ates that the majority of the variation in the overall ratin! was e/plained by the ei!ht items% An ? # of $%2> (pI$%$$*) was obtained% This value was onsidered favorable when ompared with the ? # of $%== in the overall ratin! as su!!ested by Mahoney et al% (*+21, *+2=)% In addition, a fa tor analysis also revealed that the ei!ht dimensions loaded satisfa torily on one fa tor% @ollowin! 7ren (*++#), in this urrent study, the measure of performan e was obtained by summin! up responses to the ei!ht individual items of performan e% IV. R#"u)t &nd d!" u""!on The study investi!ates whether multiple measures6based performan e evaluation is asso iated with subordinates' performan e and if so, whether su h relationships are indire t throu!h pro edural fairness and interpersonal trust% A path analysis is onsidered as an appropriate te hni;ue to investi!ate su h relationships% Dohen and Dohen (*+-1, p%*#2) su!!est that to assess the ade;ua y of re!ression models, the residuals of the estimated values of the re!ression should be tested% Therefore, before testin! the
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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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hypotheses, tests were performed to ensure that the inherent assumptions of the re!ression models were satisfied% Tests underta.en in luded testin! for the normality of residual, homo!eneity of varian e of residuals and the appropriateness of the linear models% The results of these tests indi ate that the inherent assumptions of the models used were validated% In addition, it is also important to ondu t non6response bias test before analy0in! the data as su!!ested by (ppenheim (*+22)% The test is underta.en to as ertain whether there are systemati differen es between responses that ame in early, and those whi h arrived late% In ondu tin! these tests, the responses were divided into two !roups based on their dates of arrival% The first half omprises the =$ per ent of responses, whi h ame in early, and the se ond half omprises the last =$ per ent of responses re eived% These tests were performed by runnin! t6tests to ompare the mean of responses for ea h variable between the two !roups% The results indi ate that there are no si!nifi ant differen es between the early responses and the late responses for all the variables e/amined in this thesis% Based on these results, it an be on luded there is no non6response bias% The 0ero6order orrelations between the variables e/amined in this study are presented in Table 1% These results provide preliminary support for all the hypotheses% Multiple measures usa!e is positively asso iated with mana!erial performan e% Additionally, Table 1 shows that both pro edural fairness and trust are positively and si!nifi antly asso iated with mana!erial performan e% The results also indi ate that pro edural fairness and trust are positively and si!nifi antly related to ea h other, su!!estin! that multi olinearity may e/ist% Therefore, in addition to the three inherent assumptions of re!ression models, the presen e of multi olinearity was also assessed by performin! toleran e and varian e inflation fa tor (EI@) tests for ea h re!ression model% The results, presented in Table >, indi ate that multi olinearity amon! variables was not dete ted% Therefore, there is no problem with the re!ression models used in this study% In"#rt T&')# 2 &nd 3 &'out (#r#

H+,ot(#"#" t#"t!n$ #ypothesis #) states that there is an indirect relationship between multiple measures-based performance evaluation and subordinates performance through procedural fairness. #ypothesis #+ states that there is an indirect relationship between multiple measures-based performance evaluation and subordinates performance through the subordinates trust in their superiors. 2s indicated in Table 3, there is a significant zero order correlation between multiple measures-based evaluation and managerial performance. The indirect effects of multiple measures-based performance evaluation on subordinates performance consists of the following paths and are calculated as follows based on the values of the path coefficient in Table 4% 'ath 5)6 && 7 '1 - &' !.3!8 . !.!43 !.!)9 'ath 5+6 && 7 '1 7 T - &' !.3!8 . !.3:9 . !.)43 !.!); 'ath 536 && 7 T 7 &' !.+93 . !.)43 !.!8! Total indirect effect . !" 'ath 5)6 indicates the indirect effect e.clusively via procedural fairness, which is !.!)9. 'aths 5+6 and 536 indicate the indirect effect through trust, which is !.!4;. These results show that the relationship between multiple measures-based performance evaluation and subordinates performance comprises two effects. 1irst, there is a direct effect of !.+88 5see Table 46 and second, there is an indirect effect of !.! 8, which can be further decomposed into the portion attributable to procedural fairness 5!.!)96 and the portion attributable to trust 5!.!4;6. <ased on <artols 5):;36 contention, those combined indirect effects may be considered meaningful because they e.ceed an absolute amount of !.!4.

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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In"#rt T&')# 4 &'out (#r#

Table 2 presents a summary of the de omposition of the 0ero6order orrelations into the dire t, indire t and spurious effe ts% In order to assess whether the relationship is fully or partially mediated by pro edural fairness and trust, Baron and 7enny's (*+-2) approa h is used% This approa h ar!ues that a full mediation e/ists if a si!nifi ant relationship (i%e% a si!nifi ant 0ero order orrelation) between the independent variable and dependent variable be omes insi!nifi ant (i%e% an insi!nifi ant path oeffi ient) after ontrollin! for the effe ts of the intervenin! variables% (n the other hand, the mediation is only partial if the relationship between the independent and dependent variable is still si!nifi ant after ontrollin! for the effe ts of intervenin! variables (8ouri and &ar.er, *++-9 :au and Bu .land, #$$*)%

In"#rt T&')# 5 &'out (#r#

@or this study, the relationship between multiple measures6based performan e evaluation and subordinates' performan e is si!nifi ant (r I $%1*-9 pJ$%$*, Table 1)% After ontrollin! for the indire t effe ts via pro edural fairness ($%$*2) and trust ($%$=-), the path oeffi ient between multiple measures6based performan e evaluation and mana!ers' performan e is still mar!inally si!nifi ant ($%#>>, pJ$%$=2, Table =)% This means that pro edural fairness and trust mediate partially the relationship between multiple measures6 based performan e evaluation and mana!ers' performan e% In summary, apart from an indire t effe t via pro edural fairness and trust, multiple measures6based performan e evaluation itself has a positive and si!nifi ant dire t effe t on mana!erial performan e% Based on these results, hypotheses "* and "# are supported% #ypothesis #3 states there is an indirect relationship between procedural fairness and subordinates performance through trust. The indirect effect and the spurious effect consist of the following paths and are computed as follows based on the values of the path coefficients in Table 4% 'ath 586 '1 7 T 7 &' !.3:9 . !.)43 !.!9) 'ath 546 '1 7 && 7 &' !.3!8 . !.+88 !.! 8 'ath 596 '1 7 && 7 T 7 &' !.3!8 . !.+93 . !.)43 !.!)+ Total indirect effect .#"! 'ath 586 indicates the indirect effect e.clusively via trust is !.!9). 'aths 546 and 596 indicate a total spurious effect of !.!;9. 2s the indirect effect via trust is in e.cess of an absolute amount of !.!4, it is considered meaningful 5<artol, ):;36. Thus, #ypothesis #3 is supported. =ecall that there is a significant zero order correlation between procedural fairness and managerial performance 5!.+!!; p>!.!4, Table 36. 2fter controlling for the indirect and spurious effects, the effect of procedural fairness on managerial performance is not significant 5!.!43; p>!.9;:, see Table 46. This means that trust mediates fully the relationship between procedural fairness and managerial performance. V. Con )u"!on" &nd )!.!t&t!on" The objectives of this study are 5)6 to investigate whether multiple measures-based performance evaluation affects managers performance; 5+6 if so, whether the effects are indirect through procedural fairness and trust. /onse?uently, this study hypothesizes that multiple measures-based performance evaluation has indirect effects on managers performance through procedural fairness and trust. In addition, it also hypothesizes that procedural fairness has indirect effects on managers performance through trust. In order to test these hypotheses, this study employed a path analytical model to analyze the data collected from ! managers of various Indonesian manufacturing companies. The results indicate that
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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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there is a significant association between multiple measures-based performance evaluation and managerial performance. 1urther analyses indicate that such relationships are indirect and mediated by procedural fairness and trust. The effects of multiple measures-based performance evaluation on managerial performance are partially mediated by procedural fairness and trust. This means that in addition to the indirect effect via procedural fairness and trust, the use of multiple measures for performance evaluation in itself has a direct effect on managerial performance 5<aron and $ennys, ):;96. "ith respect to the indirect effects of procedural fairness on managers performance, this study found that trust fully mediates the effect of procedural fairness on managers performance #ence it can be concluded that procedural fairness has no direct effects on managerial performance. <ased on these results, the overall findings of this study are generally in accordance with e.pectations. That is, 5)6 multiple measures-based performance evaluation has indirect effects on managerial performance through procedural fairness and trust; 5+6 procedural fairness has indirect effects on managerial performance via trust. 2s with other empirical studies, there are limitations associated with this study. @irst, there are limitations associated with the survey ?uestionnaire method. These include low response rates and the possibility of respondents bias in filling in the ?uestionnaire due to the lac* of control from the researcher. Therefore, future studies could employ other methods 5e.g. case study6 in e.ploring the issues studied here. Ae ond, although the sample of this study was selected from across functional areas, the number of responses from a particular area is small. #ence, analyses of the results on functional basis were not underta*en. 1uture research should investigate if variation across functional areas may influence the results. In addition, since the sample was selected from larger-sized organizations with more than )!! employees each, it is unclear if the results can be generalized to smaller-sized organizations with less than )!! employees. @inally, as this study only selected samples from the manufacturing sector and only among Indonesian managers, generalizing the results to non-manufacturing sectors and to other 2sian countries should be made with caution. These limitations provide opportunities for future research to study these issues in other sectors and in other 2sian and "estern countries. @otwithstanding the aforementioned limitations, this study, at best of our *nowledge, is the first to e.plore the relationships between multiple measures usage in managerial performance evaluation and managerial performance. These results provide timely evidence, which may have important theoretical and practical implications for the adoption of multiple measures-based evaluation, which is gaining popularity in increasing number of organizations in both 2sian and "estern countries. REFERENCES Ale/ander, A and ?uderman, M% *+-,% KThe role of pro edural and distributive justi e in or!ani0ational behavior'% (ocial ,ustice =esearch, *F *,,6*+-% At.inson, A%A%, Ban.er, ?%C%, 7aplan, ?%A% and Loun!, A%M% #$$*% &anagement 2ccounting% 1rd edition% 8ew <erseyF &renti e "all International, In % Baron, ?%M% and 7enny, C%A% *+-2% KThe moderator6mediator variable distin tion in so ial psy holo!i al resear hF on eptual, strate!i and statisti al onsiderations'% ,ournal of 'ersonality and (ocial 'sychology, =* (2)F **,16**-#% Bartol, 7%M% *+-1% KTurnover amon! C& personnelF a ausal analysis'% /ommunications of the 2/&, #2 (*$)F -$,6-**% Briers, M% and "irst, M% *++$% KThe role of bud!etary information in performan e evaluation'% 2ccounting, Arganizations and (ociety, *= (>)F 1,161+-% Bro .ner, <% and Aie!el, &% (*++2)% Understandin! the intera tion between pro edural and distributive justi eF role of trust% In ?%M% 7ramer and T%?% Tyler (eds%)% Trust in organizations% frontiers of theory and research% :ondonF AAG) &ubli ations% Brownell, &% *+-#% KThe role of a ountin! data in performan e evaluation, bud!etary parti ipation, and or!ani0ation effe tiveness'% ,ournal of 2ccounting =esearch, #$ (*)F *#6#,% Dohen, <% and Dohen, &% *+-1% Applied multiple re!ressionM orrelation analysis for the behavioural s ien es%#nd edition% 8ew <erseyF :awren e )rlbaum Asso iates%

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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Dornelius, G%W% *+-=% -valuation fairness and wor* motivation, Master thesis, Dhampai!nF University of Illinois% Dronba h, :%<% *+=*% KDoeffi ient alpha and the internal stru ture of tests'% 'sychometri*a, *2F #+,611>% Cun an, (%C% *+22% K&ath analysisF so iolo!i al e/amples'% 2merican ,ournal of (ociology, ,#F *6*2% )arley, &%D and :ind, )%A% *+-,% K&ro edural justi e and parti ipation in tas. sele tionF the role of ontrol in mediatin! justi e jud!ments'% ,ournal of 'ersonality and (ocial 'sychology, =# (2)F **>-6**2$% )arley, &%D% *+->. Informational mechanisms of participation influencing goal acceptance, satisfaction and performance% Co toral dissertation, Dhampai!nF University of Illinois% @ol!er, ?% and 7onovs.y, M% A% *+-+% K)ffe ts of pro edural and distributive justi e on rea tions to pay raise de isions'% 2cademy of &anagement ,ournal, 3+ 5)6% ))4-)3!. @ol!er, ?%, ?osenfield, C%, and ?obinson, T% *+-1% K?elative deprivation and pro edural justifi ation'% ,ournal of 'ersonality and (ocial psychology, >=F #2- N #,1% Govindarajan, E% *+->% KAppropriateness of a ountin! data in performan e evaluationF an empiri al e/amination of environmental un ertainty as an intervenin! variable'% 2ccounting, Arganizations and (ociety, + (#)9 *#=6*1=. Greenber!, <% *+-,% K?ea tions to pro edural justi e in payment distributionsF do the ends justify the means'% ,ournal of 2pplied 'sychology, ,#F==62*% Gudono and Mardliyah% #$$*% KThe effe ts of environmental un ertainty and de entrali0ation on mana!ement a ountin! systems hara teristi s% ,ournal of Indonesian 2ccounting =esearch, *> (*)F * 6 #,% "air, <%?%, Anderson, ?%:%, Tatham, ?%)%, and Bla . W%D% *++-% &ultivariate data analysis with reading% )n!lewoods, 8%<F &renti e6"all International% "anderson, ?% *+-$% 'erformance appraisal% theory and practice% Eir!iniaF ?eston% "artmann, G% "% #$$$% KThe appropriateness of ?A&MF toward the further development of theory'% 2ccounting, Arganizations and (ociety, +4% 84) - 8;+% "artmann, G% "% and Moers, @% *+++% KTestin! ontin!en y hypothesis in bud!etary resear hF an evaluation of the use of moderated re!ression analysis'% 2ccounting, Arganizations and (ociety, +8% +:) 7 3)4. "irst, M%7% *+-*% KA ountin! information and the evaluation of subordinate performan eF a situational approa h'% The 2ccounting =eview, =2F ,,*6,-> "ofstede, G%"% (*+-$)% /ultures conse?uences% international differences in wor*-related values% Beverly "ills, DAF Aa!e% "opwood, A% G% *+,#% KAn empiri al study of the role of a ountin! data in performan e evaluation'% )mpiri al resear h in a ountin!F sele ted studies, Aupplement to ,ournal of 2ccounting =esearch, )!% )49-);+. "o;ue, G%, Mia, :%, Alam, M% *++,% KDompetition, new manufa turin! pra ti e, han!in! in MAA and mana!erial hoi e of the 3Balan ed A ore ard5 approa h to performan e measuresF an empiri al investi!ation'% 'aper 'resented at the ):: -uropean 2ccounting 2ssociation 2nnual /ongress in Braz% "o;ue, G% and <ames, W% #$$$% K:in.in! balan ed s ore ard measures to si0e and mar.et fa torsF impa t on or!ani0ational performan e'% ,ournal of &anagement 2ccounting =esearch, )+% )-) . "ou;e, G%, Mia, :%, and Alam, M% #$$*% KMar.et ompetition, omputer6aided manufa turin! and use of multiple performan e measuresF an empiri al study'% <ritish 2ccounting =eview, 11F #1 N >=% Institute for ) onomi and @inan ial ?esear h% Indonesian /apital &ar*et 0irectory #$$$ Ittner, D%, and :ar .er, C% *++-a%' Innovations in performan e measurementF trends and resear h impli ations'% ,ournal of &anagement 2ccounting =esearch, *$F #$= N #1-% Ittner, C% and :ar .er, @% *++-b% KAre nonfinan ial measures leadin! indi ators of finan ial performan eO an analysis of ustomer satisfa tion'% ,ournal of 2ccounting =esearch, 12, supplementF *6>2% <ohnson, "%T% and 7aplan, ?%A% *++*% =elevance lost% the rise and fall of management accounting% BostonF "arvard Business A hool &ress% 7anfer, ?%, Aawyer, <%, )arly, &%D%, and :ind, )%A% *++,% K&arti ipation in tas. evaluation pro eduresF the effe ts of influential opinion e/pression and .nowled!e of evaluative riteria on attitudes and performan e'% (ocial ,ustice =esearch, *F #1=6#>+%
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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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7aplan, ?%A% *+-1% KMeasurin! manufa turin! performan eF a new hallen!e for mana!erial a ountin! resear h'% The 2ccounting =eview, =- (>)F 2-26,$=% 7aplan, ?%A% and At.inson, A% *++-% 2dvanced &anagement 2ccounting% 8ew <erseyF &renti e6"all% 7aplan, ?% A% and 8orton, C% &% *++#% KThe balan ed s ore ardF measures that drive performan e'% #arvard <usiness =eview. (<anuary N @ebruary)F ,*6,+% 7aplan, ?% A% and 8orton, C% &% *++1% K&uttin! the balan ed s ore ard to wor.'% #arvard <usiness =eview. (Aeptember6( tober)F *1>6*>,% 7aplan, ?% A% and 8orton, C% &% *++2a% The balanced scorecard% translating strategy into action% Boston, MAF "arvard Business A hool &ublishin!% 7aplan, ?% A% and 8orton, C% &% *++2b%' :in.in! the balan ed s ore ard to strate!y'% /alifornia &anagement =eview, 1+, *F =16,+% 7aplan, ?% A% and 8orton, C% &% *++2 % KUsin! the balan ed s ore ard as a strate!i mana!ement systems'% #arvard <usiness =eview. (<anuary6@ebruary)F ,=6-=% 7enis, I% *+,+% K)ffe ts of bud!etary !oal hara teristi s on mana!erial attitudes and performan e'% The 2ccounting =eview, => (>)F ,$,6,#*% 7onovs.y, M%A% and &u!h, A%C% *++>% KDiti0enship behavior and so ial e/ han!e'% 2cademy of &anagement ,ournal, 1,F 2=2 N 22+% 7ren, :% *++#% KBud!etary parti ipation and mana!erial performan eF the impa t of information and environmental volatility'% The 2ccounting =eview, 2, (1)F =**6=#2% :au, D% M% and Bu .land, D% #$$*% KBud!etin!6role of trust and parti ipationF resear h note'% 2bacus, 1, (1)F 12+61--% :au, D% M% and :im, )% #$$#a% KThe effe ts of pro edural justi e and evaluative styles on the relationship between parti ipation and performan e'% 2dvances in 2ccounting, *+F *1+6*2$% :au, D%M and :im, )%W% #$$#b% KThe intervenin! effe ts of parti ipation on the relationship between pro edural justi e and mana!erial performan e'% <ritish 2ccounting =eview, 1> (*)F ==6,-% :au, D%M%, :ow, :%D%, and )!!leton, I% *++=% KThe Impa t of relian e on a ountin! performan e measures on job6related tension and mana!erial performan eF additional eviden e% 2ccounting, Arganizations and (ociety, #$ (=)F 1=+61-*% :au, D%M%, :ow, :%D%, and )!!leton, I%?%D% *++,% KThe intera tive effe ts of bud!et emphasis, parti ipation and tas. diffi ulty on mana!erial performan eF a ross6 ultural study'% 2ccounting, 2uditing and 2ccountability ,ournal, *$ (#)F *,=6*+,% :au, D%M% and Tan, <% *++-% KThe intera tive effe ts of bud!et emphasis, parti ipation and tas. diffi ulty on mana!erial performan eF a ross6 ultural study of the Ain!aporean and Australian finan ial servi e Ae tor'% &anagement 2ccounting =esearch, +F *216*-1% :awler, )%)% *++*% KThe desi!n of effe tive reward systems'% In Ateers, ?%M% and &orter, :% W% (eds)% &otivation and "or* <ehavior% 8ew Lor.F M Graw6"ill, In % :eventhal, G%A%, 7aru0a, <%, and @ry, W%?% *+-$% KBeyond fairnessF a theory of allo ation preferen es'% In G% Mi.ula (ed)% ,ustice and social interaction% 8ew Lor.F Aprin!er Eerla!% :ibby, T% *+++% KThe influen e of voi e and e/planation on performan e in parti ipative bud!etin! settin!'% 2ccounting, Arganizations and (ociety, #> (#)F *#=6*1,% :ind, )%A% and Tyler, T%?% *+--% The social psychology of procedural justice% 8ew Lor.F &lenum &ress% :ind;uist, T%M% *++=% K@airness as ante edent to parti ipative bud!etin! F )/aminin! the effe ts of distributive justi e, pro edural justi e and referent o!nitions on satisfa tion and performan e'% ,ournal of &anagement 2ccounting =esearch, ,F *##6*>,% :indsay, ?% M% and )hrenber! A% D% *++1% KThe desi!n of repli ated study'% The 2merican (tatistician, >, (1)F #*,6##-% :ippe, M%G% and Aalterio, A%)% #$$$% KThe balan ed s ore ardF jud!mental effe ts of ommon and uni;ue performan e measures'% The 2ccounting =eview, ,=, 1F #-16#+-% :ippe, M%G% and Aalterio, A%)% #$$#% A note on the jud!mental effe ts of the balan ed s ore ard's information or!ani0ation% 2ccounting, Arganization and (ociety, #,F =1*6=>$% :ippit, G%:% *+-#% Arganizational renewal% a holistic approach to organizational renewal% )n!lewood Dliffs, 8<F &renti e "all%

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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:issa., ?%I% *+-1% 'rocedural fairness% how employees evaluate procedures% Co toral dissertation% Dhampai!nF University of Illinois% :ittle, "%T%, Ma!ner, 8%, and Wel.er, ?%B% #$$#% KThe fairness of formal bud!etary pro edures and their ena tment'% Broup C Arganization &anagement, #,, #F #$+6##=% Ma!ner, 8 and Wel.er, ?%B% *++>% K?esponsibility enter mana!ers' rea tion to justi e in bud!etary resour e allo ation'% 2dvances in &anagement 2ccounting, 1F #1,6#=1% Ma!ner, 8%, Wel.er, ?%B%, and Dampbell, T%:% *++=% KThe intera tive effe t of parti ipation and bud!et favorability on attitudes toward bud!etary de ision ma.erF a resear h note'% 2ccounting, Arganizations and (ociety, #$ (,M-)F 2**62*-% Mahoney, T%A%, <erdee, T%"%, and Darrol, A%<% *+21% 0evelopment of managerial performance% 2 =esearch 2pproach% Din innatiF Aouth Western &ublishin!% Mahoney, T%A%, <erdee, T%"%, and Darrol, A%<% *+2=% KThe jobs of mana!ement'% Industrial =elations, >F +,6 **$% Malmi, T% (#$$*)% Balan ed s ore ards in @innish ompaniesF a resear h note% &anagement 2ccounting =esearch, *# (#)F #$,6##$% M @arlin, C%B% and Aweeney, &%C% *++#% KCistributive and pro edural justi e as predi tors of satisfa tion with personal and or!ani0ational out omes'% 2cademy of &anagement ,ournal, 34 536% 9+9-93 . Merlin!er, G% *+=2% KInterpersonal trust as fa tor in ommuni ation'% ,ournal of 2bnormal and (ocial 'sychology, =#F 1$>61$+% Milani, 7%W% *+,=% KThe relationship of parti ipation in bud!et6settin! to industrial supervisor performan e and attitudesF a field study'% The 2ccounting =eview, =$ (#)F #,>6#->% 8orere.lit, "% #$$$% KThe balan e on balan ed s ore ard6a riti al analysisi of some of its assumptions'% &anagement 2ccounting =esearch, **F 2= N --% 8ouri, &% and &ar.er, <% *++-% KThe relationship between parti ipation and job performan eF the roles of bud!et ade;ua y and or!ani0ational ommitment'% 2ccounting, Arganizations and (ociety, #1 (=6 2)F >2,6>-1% 8unnaly, <%D% *+2,% 'sychometric Theory% 8ew Lor.F M Graw6"ill% (ppenheim, A%8% *+22% Duestionnaire design and attitude measurement% 8ew Lor.F Basi Boo.% (tley, C% T% *+,-% KBud!et use and mana!erial performan e'% ,ournal of 2ccounting =esearch, )9 5)6% )+)8;. (tley, C% *+++% K&erforman e mana!ementF a framewor. for mana!ement ontrol systems resear h'% &anagement 2ccounting =esearch, *$F 12161-#% (tley, C% T% and @a.iolas, A% #$$$% K?elian e on a ountin! performan e measuresF dead end or new be!innin!O' 2ccounting, Arganizations and (ociety, +4% 8: -4)!% (tley, C and &ollenan, ?%M% #$$$% KBud!etary riteria in performan e evaluationF a riti al appraisal usin! new eviden e'% 2ccounting, Arganizations and (ociety, +4% 8;3 7 8:9. &aese, &% *+-=% K&ro edural fairness and wor. !roup responses to performan e evaluation pro edures% Unpublished masters thesis% University of Illinois, Dhampai!n% &orter, :%W% and :awler, )%)% *+2-% &anagerial attitudes and performance% IllinoisF ?i hard C% Irwin% ?ead, W%"% (*+2#)% KUpward ommuni ation industrial hierar hies'% #uman =elations *=F 3 7 )4. ?eina, C%A and ?eina, M%<% *+++% Trust and <etrayal in the wor*place% building effective relationships in your organization% Aan @ran is oF Berrett67oehler &ublishers, In % ?oss, A%, (*++>)% KTrust as a moderator of the effe t of performan e evaluation style on job related tensionF a resear h note'% 2ccounting, Arganizations and (ociety, *+ (,)% 9+:-934. Ail., A% *++-% KAutomatin! the balan e s ore ard'% &anagement 2ccounting, May, 1-6>>% Aimmons, ?%"% *+-*% 2chieving #umane Arganization% DaliforniaF Caniel Apen er% Aimmon, ?% *+-2% A ountin! ontrol systems and business strate!yF an empiri al analysis% 2ccounting, Arganizations and (ociety, *# (>)F 1=,61,>% Thibaut, <%, @riedland, 8% and Wal.er, :% *+,>% KDomplian e with ruleF some so ial determinants'% ,ournal of 'ersonality and (ocial 'sychology, 1$F ,-#6-$*% Thibaut, <% and Wal.er, <% *+,=% 'rocedural justice% a psychological analysis% 8ew Lor.F Wiley% Thibaut, <% and Wal.er, :% *+,-% KA theory of pro edure'% /alifornia Eaw =eview, 22F =>*N =22% Eroom, E%"% *+2>% "or* and motivation% 8ew Lor.F <ohn Wiley P Aons, In %
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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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Went0el, 7% #$$#% KThe influen e of fairness per eption and !oal ommitment on mana!ers' performan e in a bud!et settin!'% <ehavioral =esearch in 2ccounting, *>F #>, N #,*% Whitener, )%M%, Brodt, A%)%, 7os!aard, M%A%, and Werner, <%M% *++-% KMana!ers as initiators of trustF an e/ han!e relationship framewor. for understandin! mana!erial trustworthy behavior'% 2cademy of &anagement =eview, #1 (1)F =*1 N =1$% Eaivio, <% *+++% K)/plorin! a 3non6finan ial5 mana!ement a ountin! han!e'% &anagement 2ccounting =esearch, *$F >$+6>1,% Gand, C%)% (*++,)% The leadership triad% *nowledge, trust, and power% 8ew Lor.F (/ford University &ress%

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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Figure 1
The relationships between multiple measures-based performance evaluation and managerial performance, job satisfaction and job-related tension

rocedural fairness

Multiple measuresbased performance evaluation

Interpersonal trust Managerial performance

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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Table 1. Industr! t!pes of targeted sample Industr! T!pe Food and beverages Tobacco Textile mill prod cts !pparel and ot"er textile prod cts # mber and $ood prod cts %aper and allied prod cts &"emical and allied prod cts !d"esive %lastics and glass prod cts &ement 'etal and allied prod cts Fabricated metal prod cts (tone) cla*) glass and concrete prod cts 'ac"iner* &able +lectrics and electronic e, ipment ! tomotive and allied prod cts %"otograp"ic e, ipment %"armace ticals &ons mer goods Total Table 2. Sample selection process &escription Targeted compan* sample -as less t"an 100 emplo*ees .egarded itsel/ as a service organisation 0ill not disclose t"e name o/ t"eir managers Final compan! sample

"umber of #ompanies 21 3 8 15 5 6 8 4 11 3 11 3 4 2 6 5 16 3 8 4 1$%

"umber of companies 146 1 1 32 11'

Table () &orrelation matrix among variables

MM-based evaluation rocedural fairness Trust 11 p20.01 314tailed5 1 p20.05 314tailed5 rocedural fairness 0.30411 Trust 0.38311 0.47611 Managerial performance 0.31811 0.2001 0.2721

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The e!at"o#$h"% &et'ee# Mu!t"%!e Mea$ure$(&a$e) Per*or+a#,e -.a!uat"o# A#) Ma#a/er"a! Per*or+a#,e0 o!e O* Pro,e)ura! 1a"r#e$$ A#) I#ter%er$o#a! Tru$t

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Table $) ' lticolinearit* detection $it" managerial per/ormance as dependent variable. *ariable &onstant ''4based eval ation %roced ral /airness Tr st #olinearit! statistics Tolerance *IF n6a n6a 0.834 1.199 0.756 1.322 0.711 1.404

T&')# 4. &ath analysis results of mana!erial performan e, multiple measures, pro edural fairness, and trust% &ependent Independent ath t-value p-value variable variable coefficient F MM 0.304 2.629 0.011 T MM 0.263 2.434 0.018 F 0.396 3.664 0.000 M MM 0.244 1.944 0.056 F 0.053 0.402 0.689 T 0.153 1.126 0.264 F+ rocedural fairness MM+ Multiple measures-based performance evaluation T+ Trust M + Managerial performance Table %) 7ecomposition o/ t"e observed correlations 3managerial per/ormance5 .elations ,bserved &irect Indirect Spurious #orrelation effect effect effect 0.31811 0.244+ 0.074 MM 6 MP MM - F 0.30411 0.30411 F-T 0.47611 0.39611 0.080 MM - T 0.38311 0.2631 0.120 T-M 0.2721 0.153 0.119 F-M 0.2001 0.053 0.061 0.086 11 p20.01 1 p20.05 + p<0.10

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