Managing multiple dimensions of manufacturing performance — an exploratory study Anne M. Lillis* Department of Accounting, University of Melbourne, Parkville 3010, Victoria, Australia Abstract Drawing on qualitative data collected during semi-structured interviews with 36 profit centre managers in manu- facturing firms in Victoria, Australia, this study seeks to explore the mechanisms used to manage multiple manu- facturing performance dimensions arising from the pursuit of profit centre strategy. Where measures capture potentially conflicting influences on the manufacturing cost function, strategy implementation is facilitated by loosen- ing control reactions to cost variances and through explicit attempts to integrate multiple measures. However, a joint emphasis on performance dimensions relating to manufacturing efficiency and customer responsiveness emerges as problematic. In contrast, a joint emphasis on quality and efficiency is relatively easily managed. It is suggested that in the context of responsiveness strategies, the difficulty of designing complete measures inhibits the effectiveness of per- formance measurement systems as a facilitator of strategy implementation. # 2002 Elsevier Science Ltd. All rights reserved. 1. Introduction The importance of designing performance measurement systems that capture a range of strategically important criteria in financial and non-financial terms is well established in the lit- erature. Dominant themes in the performance measurement literature relate to integration (Nanni, Dixon, & Vollman, 1992), coherence (De Haas & Kleingeld, 1999), the notion of a balanced scorecard (Kaplan & Norton, 1992, 1996a, 2001), and defining the performance variables that represent important dimensions of a given strategy (Simons, 1995). In all cases the message is that effective performance measures must be able to assess the firm’s progress on strategic initiatives (Ittner & Larcker, 2001; Langfield-Smith, 1997; Moon & Fitzgerald, 1996). The literature that deals with the effective design of performance measurement systems (PMSs) incorporating multiple financial and non-financial measures emphasizes many attributes. These include causal connections with strategy (Kaplan & Norton, 1996a) integrating actions across func- tional boundaries (De Haas & Kleingeld, 1999; Nanni et al., 1992) and supporting critical strate- gic measures with effective target setting and reward systems (Moon & Fitzgerald, 1996; Otley, 1999). It has, however, been suggested that many issues relating to implementation of multiple per- formance measures remain unresolved (Hemmer, 1996) and that ‘‘research is needed on the treat- ment of the inevitable trade-offs that managers 0361-3682/02/$ - see front matter # 2002 Elsevier Science Ltd. All rights reserved. PII: S0361-3682(01)00032-0 Accounting, Organizations and Society 27 (2002) 497–529 www.elsevier.com/locate/aos * Tel.: +61-3-8344-5351; fax: +61-3-9349-2397. E-mail address: alillis@unimelb.edu.au (A.M. Lillis).