Awareness, practices and treatment of extra-role behaviour (ERB) in performance measurement systems (PMS) of Malaysian small and medium enterprises (SME)

Abstract

The importance of performance measurement system (PMS) is unquestionably accepted by both academics and practitioners to help a business organization to achieve its desired objective of increasing overall effectiveness and performance. It has been studied extensively for decades in the literature, in order to find the appropriate and best features of a PMS that could adapt to vibrant and ever-changing business environments surrounding the organization, and thus eventually drive superior performance. However, there is a lack of studies in the PMS literature of a good and suitable framework designed specifically for small and medium sized enterprises (SMEs), as most previous frameworks adopted from large organizations fail to fit the smaller sized business unit. The importance and emergence of human or behavioural elements and the positive impact of extra-role behaviour (ERB) on business performance have motivated this study to explore and study the possibility of formally embracing ERB as a part of performance measures in a PMS for SMEs. This study also aims to make a significant contribution to the existing dominant European and Western literature by focusing on fieldwork in Asian businesses (Malaysian SMEs). Evidence from 26 semi-structured face-to-face interviews with employees and owner-managers in six SMEs provides a new set of empirical data in the PMS area, which was previously dominated by larger organizations. The findings of this study show that the criteria for the PMS in our respondents' SMEs are directly and closely related to human and behavioural factors. Both quantitative and qualitative evidence show that respondents perceived and admitted that their employees' behaviour is very important in their day-to-day working environment. Most of them also opted for the formal treatment of ERBs in their organization in the future, as they perceived positive effects from formally measuring ERBs. This study contributes to both academic literature and to practice. Several factors have been drawn from the fieldwork evidence in supporting ERB as an appropriate new measure for PMS. ERB as workplace spiritual element, innovative action, and its relationship with the PMS and working environment are all highlighted by this study in contributing to the overall effectiveness of an organization. At the same time, this study contributes to the recent discussion on the definition of ERB which advocates different levels of volunteering in ERB. As far as practice is concerned, managers could benefit from this study by getting valuable information on the effects and barriers of formally measuring ERB. Finally a new conceptual model for the design and development of PMS, incorporating the working environment, extra-role behaviour, and performance measurement system, is developed and discussed. It is anticipated that this model could be applied in practice by SMEs wishing to improve their PMS.The importance of performance measurement system (PMS) is unquestionably accepted by both academics and practitioners to help a business organization to achieve its desired objective of increasing overall effectiveness and performance. It has been studied extensively for decades in the literature, in order to find the appropriate and best features of a PMS that could adapt to vibrant and ever-changing business environments surrounding the organization, and thus eventually drive superior performance. However, there is a lack of studies in the PMS literature of a good and suitable framework designed specifically for small and medium sized enterprises (SMEs), as most previous frameworks adopted from large organizations fail to fit the smaller sized business unit. The importance and emergence of human or behavioural elements and the positive impact of extra-role behaviour (ERB) on business performance have motivated this study to explore and study the possibility of formally embracing ERB as a part of performance measures in a PMS for SMEs. This study also aims to make a significant contribution to the existing dominant European and Western literature by focusing on fieldwork in Asian businesses (Malaysian SMEs). Evidence from 26 semi-structured face-to-face interviews with employees and owner-managers in six SMEs provides a new set of empirical data in the PMS area, which was previously dominated by larger organizations. The findings of this study show that the criteria for the PMS in our respondents' SMEs are directly and closely related to human and behavioural factors. Both quantitative and qualitative evidence show that respondents perceived and admitted that their employees' behaviour is very important in their day-to-day working environment. Most of them also opted for the formal treatment of ERBs in their organization in the future, as they perceived positive effects from formally measuring ERBs. This study contributes to both academic literature and to practice. Several factors have been drawn from the fieldwork evidence in supporting ERB as an appropriate new measure for PMS. ERB as workplace spiritual element, innovative action, and its relationship with the PMS and working environment are all highlighted by this study in contributing to the overall effectiveness of an organization. At the same time, this study contributes to the recent discussion on the definition of ERB which advocates different levels of volunteering in ERB. As far as practice is concerned, managers could benefit from this study by getting valuable information on the effects and barriers of formally measuring ERB. Finally a new conceptual model for the design and development of PMS, incorporating the working environment, extra-role behaviour, and performance measurement system, is developed and discussed. It is anticipated that this model could be applied in practice by SMEs wishing to improve their PMS