The Importance of the Information Flow in the Use of a Comprehensive Performance Management System:

Focus on the Frequency of Informal Communication and the Contents of Communication

Abstract

This study examines the interaction effects of comprehensiveness as a design feature of PMS, diagnostic use (interactive use) as a usage of PMS, and information flow (Informal Communication and the Contents of Communication) on managers’ decision-making behavior. The analyses using survey data from 317 SBU managers in Japanese companies indicate some findings as follows. First, informal communication positively complements the effects of diagnostic use of comprehensive PMS, while inhibiting the effects of interactive use of comprehensive PMS. Second, when used diagnostically, a comprehensive PMS positively influence managers’ decision making by communicating content that is congruent with corporate strategy.