Int. J. Business Performance Management, Vol. 21, No. 4, 2020 385 Copyright © 2020 Inderscience Enterprises Ltd. Application of system dynamics methodology in performance management system: a case study of Indian automotive firm Neetu Yadav Department of Management, Birla Institute of Technology and Science, Pilani, India Email: neetuyadav@hotmail.com Abstract: The study aims at showcasing the application of system dynamic (SD) methodology for developing ‘system dynamics-based performance management model’ where one of the Indian automobile manufacturing firms has been chosen as the context. Flexible strategy game-card has been used as a theoretical basis for developing the performance management system (PMS). The model emphasises looking beyond the dynamics of leading and lagging performance indicators and capturing dynamics of strategic interventions and firm’s performance. The study adopts SD methodology, and it is tools as causal loop diagrams and feedback loops to capture dynamics of strategic interventions and lagging performance indicators. ISEE systems STELLA 10.0.2 software package has been used to develop the stock-and-flow diagram. The results of SD model simulation portray that introduction of new products in light commercial vehicles segment, and value-addition by training and development of staff lead to an increase in the sales volume, thus supporting formulated hypotheses. This study goes beyond the dynamics of leading-lagging performance indicators and highlights the interaction of strategic interventions/actions with firm’s performance that enables managers to visualise systems perspective and feedback on actions taken. Keywords: flexible strategy game-card; FSGC; firm’s performance; system dynamics modelling; strategic interventions; system dynamics-based performance management model. Reference to this paper should be made as follows: Yadav, N. (2020) ‘Application of system dynamics methodology in performance management system: a case study of Indian automotive firm’, Int. J. Business Performance Management, Vol. 21, No. 4, pp.385–399. Biographical notes: Neetu Yadav received his PhD from the IIT Delhi and is an Assistant Professor at Department of Management, Birla Institute of Technology and Science, Pilani Campus, Rajasthan, India. She has been awarded the most prestigious Paul R. Lawrence Fellowship to participate in the NACRA 2018 annual meeting and also a recipient of Emerald Literati Awards 2019. She has also been awarded as a Senior Research Fellow from University Grants Commission (UGC). She has published extensively in high-repute international journals, as Business Process Management Journal, International Journal of Productivity and Performance Management, Journal of Strategy and Management, etc. Her areas of research are Sustainability and Strategy and their inevitable interaction, enterprise performance management, strategic management, and system dynamics.