Accounting for external turbulence of logistics organizations via performance measurement systems

Purpose - This paper aims to investigate the role of upper management in designing performance measurement systems (PMS) that account for external turbulence of the organization and to show how this PMS design for turbulence impacts organizational resilience and distribution service performance. Design/methodology/approach - Hypotheses are developed by integrating management accounting and strategic management perspectives into supply chain management and subsequently tested based on data from 431 logistics organizations (i.e. both logistics companies and internal logistics departments of manufacturing and retailing companies). Findings - Attention focusing usage type of the PMS by the upper management fosters incorporating the element of risk into the PMS of the company. Further, PMS design for turbulence enhances organizational resilience, and, indirectly, this also leads to improved distribution service performance. Originality/value - This paper is the first to introduce the concept of PMS design for turbulence to the literature and to show that it is relevant for supply chain risk management by fostering the capabilities and the performance of logistics organizations. Further, it is shown that a seemingly detached issue such as the general PMS use focus of the upper management impacts supply chain risk management.