Management Accounting Research 25 (2014) 147–156 Contents lists available at ScienceDirect Management Accounting Research jo ur nal homep age: www.elsevier.com/locate/mar The theory and practice of performance measurement Pietro Micheli a,* , Luca Mari b a Warwick Business School, University of Warwick, Coventry CV4 7AL, United Kingdom b Department of Quantitative Methods, Università Cattaneo – LIUC, Castellanza, Italy a r t i c l e i n f o Keywords: Performance measurement Measurement science Epistemology Performance management a b s t r a c t This paper builds on principles and techniques developed in measurement science, as cur- rently understood in physical sciences and engineering, to improve the theory and practice of performance measurement. To do so, it firstly discusses three fundamental positions on measurement, characterized as metaphysical, anti-metaphysical and relativistic. Sub- sequently, it lays the foundations of a pragmatic epistemology of measurement in both physical and social sciences. Finally, these insights are integrated through the examina- tion of possible advances in both the theory and practice of performance measurement in organizations. © 2013 Elsevier Ltd. All rights reserved. 1. Introduction Performance is a notion that permeates contemporary societies, as it is used to assess the quality of individual and collective efforts (Corvellec, 1997). In management research, performance is often perceived as encapsulating the unitary purpose of organizations (March and Sutton, 1997). Indeed, organizations are required to ‘perform’ and to communicate their achievements to key stakeholders. As a consequence, organizational functions and processes are increasingly demanded to demonstrate their contribution to performance. The need to establish links between planning, decision, action and results has generated substantial interest in the measurement of organizational performance. Schol- ars from management accounting and other areas of management research have examined a wide range of issues related to the design, implementation, use and review of performance measurement systems (see, for example, Chenhall and Langfieldsmith, 1998; Goold and Quinn, 1990; Hall, 2008; Henri, 2006; Ittner et al., 2003; Neely, 1999). In management practice, organizations have * Corresponding author. Tel.: +44 024 7615 0882. E-mail addresses: Pietro.Micheli@wbs.ac.uk (P. Micheli), lmari@liuc.it (L. Mari). invested considerable amounts of resources to measure and demonstrate their performance (Hood et al., 2000; Micheli and Manzoni, 2010). However, there is no con- clusive evidence over the benefits and shortcomings of introducing performance measurement systems in either private or public sector organizations (Griffith and Neely, 2009; Malina et al., 2007; Power, 2004; Townley et al., 2003). This paper argues that both research and practice in performance measurement (PM) suffer from an underde- veloped conceptualization of the notion of performance measurability, and of the derived measurement processes. While the study of PM has often led to the critique or sup- port of specific frameworks, such as the Balanced Scorecard (Kaplan and Norton, 1992, 2008), in physical sciences and engineering the very concept of measurement has been extensively debated also at a foundational level. Indeed, in this paper we argue that the current characterization of the concept in purely functional terms (Joint Committee for Guides in Metrology, 2008a) allows its application also to non-physical properties without any reductionist or phys- icalist implications and, as such, it could inform studies in management research. By examining PM epistemology, we aim at advancing both the theory and the practice of management in two major ways. First, we draw on fundamental debates on 1044-5005/$ – see front matter © 2013 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.mar.2013.07.005