452 M. Artz et al.

/ Accounting, Organizations and Society 37 (2012) 445–460

Table 2
Intercorrelation matrix.

1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 Functional strategic decision influence –
2 Decision-facilitating use .36 .68
3 Use for accountability .24 .50 .77
4 PM reliability .33 .49 .25 .69
5 PM functional specificity .31 .47 .25 .57 .80
6 Firm size .06 .04 .06 .07 .04 .61
7 Decision-influencing use .29 .47 .34 .33 .22 .01 –
8 Functional background of the CEO .10 .07 .12 .08 .12 .05 .04 –
9 Market environment uncertainty .04 .00 .05 .21 .10 .13 .03 .01 –
10 Strategic focus differentiation .36 .23 .21 .22 .23 .03 .17 .16 .05 –
11 Strategic focus cost leadership .16 .20 .23 .18 .31 .00 .24 .05 .04 .15 –
12 Functional performance .26 .13 .03 .26 .21 .03 .05 .11 .09 .34 .09 .73
13 Functional self-participation in PMS design .04 .02 .00 .08 .04 .05 .11 .05 .16 .06 .02 .09 –
14 VP Marketing professional experience .15 .03 .05 .09 .07 .09 .01 .11 .06 .25 .08 .12 .14 –

Note: PM = performance-measure; PMS = performance-measurement system; VP = Vice President. Sample based on n = 192 firms. Absolute values of cor-
relation coefficients above .13 (.17) are significant on a 5% (1%) level. Diagonal entries (in bold) denote the square root of the average variance extracted (not
calculated for index-based constructs). For adequate discriminant validity, the Fornell–Larcker criterion requires that each diagonal entry exceed the
corresponding off-diagonal entries. All constructs pass this test.

Table 3
Psychometric quality assessment.

Construct Theoretical range Empirical range Mean SD Cronbach’s alpha

Functional strategic decision influence 1–7 2.0–7 4.92 .96 Index
Decision-facilitating use 1–7 1.25–7 5.00 1.03 .77
Decision-influencing use 1–7 1.0–7 4.72 1.13 .81
Use for accountability 1–7 1.0–7 4.52 1.18 .70
Performance-measure reliability 1–7 1.7–7 5.27 1.09 .77
Performance-measure functional specificity 1–7 2.0–7 4.82 1.09 .73
Firm sizea NA 250–34,040 1310 2633 Single item
Functional background of the CEOb 0/1 0/1 NA NA Dummy
Market environment uncertainty 1–7 1.5–6.0 3.62 .97 Index
Strategic focus differentiation 1–7 1.8–7 5.43 .98 Index
Strategic focus cost leadership 1–7 2.0–7 4.59 1.05 Index
Functional performance 3 to +3 2.2 to 3 1.07 1.00 .88
Industry affiliationc 0/1 0/1 NA NA Dummy
Functional self-participation in PMS design 0–100 0–80 31.74 17.67 Single item
VP Marketing prof’l experience 0/NA 1–62 18.12 8.38 Single item

Note: NA = not applicable; PMS = performance-measurement system; SD = standard deviation; VP = Vice President.
a
Firm size is measured by the natural logarithm of the number of employees.
b
Measured by a dummy variable. 1 indicates a marketing background and 0 otherwise.
c
Measured by a dummy variable indicating the industry affiliation of the company (see Table 1, panel A).

performance measures (Abernethy, Bouwens, & van Lent,
2004). Therefore, we developed two novel constructs. With
regard to decision-facilitating use, we asked to what extent
the marketing function employed performance measures
for (1) decision making, (2) budget allocation, (3) variance
analyses with regard to planned performance, and (4)
tracking progress to pre-defined goals.6 For performance-
measure use for accountability, we developed a new
measure based on the work of Evans et al. (1994). The
6
As items 3 and 4 could potentially refer to decision-influencing use, we
ran a principal component analysis over all eight items for both types of
use. Items 3 and 4 loaded strictly on the first component (construct
decision-facilitating use) as intended, and not on the second component
(construct decision-influencing use). Additionally, we ran all analyses
excluding both items when measuring the construct decision-facilitating
use. The results remained stable.
instrument relies on three items that reflect the extent to
which the functions use performance measures to account
for differentiated budget spending, functional performance,
and contribution to organization performance in quantita-
tive terms.
Performance-measure properties
We developed the items for functional specificity from
the work of Arya et al. (2005) and Lipe and Salterio
(2000). The scale consists of four indicators that measure
the extent to which performance measures are linked to
disaggregated marketing-related objectives and activities.
We surveyed reliability with two items that assess
whether the performance measures the function employs
are precise and actually represent what they purport to
represent (Christensen & Demski, 2003; Ittner & Larcker,
2001).
 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
Control variables
To control for contextual factors that might affect the
dependent variable of our model, we include a series of
covariates. The performance-measurement literature rec-
ommends that empirical research consider firm-related
factors and industry characteristics (Chenhall, 2003; Ittner
& Larcker, 2001). We therefore control for firm size and
industry affiliation, which prior research regards as impor-
tant context factors (Chapman, 1997; Waterhouse & Thies-
sen, 1978). Additionally, we control for the functional
background of the CEO, which may affect decision processes
at the top management level (Glaser, Lopez-de-Silanes, &
Sautner, 2012). We measure firm size using the natural
logarithm of the number of employees, and we assess
industry affiliation and the CEO’s background by dummy
variables that indicate the specific industry type and pri-
mary functional background of the CEO. We predict that
when the CEO has a marketing background, the marketing
function should wield more influence. With respect to firm
size and industry affiliation, we make no specific predic-
tions about the signs of effects.
We also control for firms’ strategic focus and the level of
market environment uncertainty. We assess these variables
with scales developed on the basis of prior studies in the
literature (Duncan, 1972; Govindarajan & Gupta, 1985).
The instrument for strategic focus considers the character-
istics of cost leadership and differentiation strategies and
allows these dimensions to vary independently rather than
classifying firms as either cost leadership or differentiation
strategy archetypes.7 From a theoretical perspective, market
environment uncertainty and a differentiation strategy
should relate positively to the influence of the marketing
function, because these conditions emphasize exploration
of evolving customer needs and adaptation of products
and services to effectively meet those needs (Verhoef & Lee-
flang, 2009). Conversely, if the firm adopts a strategic focus
on costs and efficiency, the influence of the marketing func-
tion should be lower.
Further, we control for function-specific variables. The
first of these is functional performance, measured by a con-
struct employed in prior research to assess the perfor-
mance of the marketing function (Vorhies & Morgan,
2003). As high-performing functions should have more
clout in strategic decision making by virtue of being good
performers (Jensen & Zajac, 2004), we expect a positive
association with functional influence. Controlling for this
effect allows us to explore empirically whether perfor-
mance-measurement practices affect power structures be-
yond effects attributable to subunit performance. We also
control for the degree of the functional self-participation in
performance-measurement system design, which may be
related to the independent and interacting variables (e.g.,
functional specificity of performance measures). Using a
7
The original taxonomy of business strategies developed by Porter
(1980) assumes that firms focus their strategy exclusively on either
differentiation or cost leadership. More recent examinations suggest that
firms may also follow joint strategies aiming to achieve differentiation and
cost leadership simultaneously (Hill, 1988; Miller & Dess, 1993). Following
recent work in the accounting literature, our measurement approach takes
this view into account and includes variables for a differentiation and a cost
leadership focus side-by-side (Lillis & van Veen-Dirks, 2008).
453
scale ranging from 0 (no participation at all) to 100
(complete determination), we measure the level of partic-
ipation by asking respondents to indicate to what extent
their function participated in the system’s development
and design. We make no specific prediction for the sign
of this effect. We also control for decision-influencing use
of performance measures. We surveyed how intensively
functions employ performance measures in evaluating
managerial performance, determining compensation, and
applying sanctions concerning budget responsibility and
decision rights (Abernethy, Bouwens, & van Lent, 2010).
As decision-influencing use should be more relevant for
solving ‘‘local’’ incentive and control problems on the func-
tional level, we refrained from making a specific prediction
for the sign of the effect.
Finally, we control for respondent-specific variables. To
avoid bias resulting from different hierarchical positions,
we control for the influence of formal authority, defined
in terms of positions on the organization chart (Abernethy
& Vagnoni, 2004). As we describe above, our sample collec-
tion procedure implicitly controls for this type of bias, not
only by surveying a sample of firms whose top manage-
ment team includes a VP for the examined function but
also by discarding questionnaires that were answered by
a person other than the functional VP. Additionally, we
control for the VP Marketing’s professional experience. We
expect this variable to have a positive effect, because exec-
utives develop more effective interpersonal influence tac-
tics over time and can draw on their observations and
experiences from prior decision situations to attain greater
sway in strategic decision making (Mowday, 1979).
Analytical approach and model estimation results
To estimate our empirical model, we employed multivar-
iate regression analysis with an ordinary least squares (OLS)
estimator and heteroscedasticity-robust standard errors
(White, 1980). The variance inflation factors of all constructs
indicate no substantial degree of multicollinearity (Woold-
ridge, 2002). For interpretation purposes, we mean-cen-
tered all independent variables, and all interaction terms
are the product of their underlying constructs. The estima-
tion of our model followed a three-step approach.
First, we analyzed a controls-only model to assess
whether the control variables relate to strategic decision
influence as predicted (model 1 in Table 4). By and large,
the effects of the covariates reflect prior expectations. While
no statistically significant coefficient sign is opposite to our
predictions, nonsignificant effects might be attributable to
the fact that, so far, no complex model has tested these con-
structs simultaneously.8 In a second step, we included the
main effects of performance-measure use (model 2 in Table 4),
with the values for the performance-measure properties equal
8
We conducted an additional analysis to test variations in the extent of
marketing’s strategic decision influence across different industries and
found only modest differences at the industry level. All means for
marketing’s influence within a particular type of industry are less than
half a standard deviation below or above the overall sample mean,
indicating that most of the variance in marketing’s influence is attributable
to firm-specific and environmental drivers, as our research model suggests.
454 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460

Table 4
Regression analysis results.

Variable Prediction Model 1 Model 2 Model 3

(controls-only) (main effects) (with interactions)
Decision-facilitating use of performance measures + .125 (.076) .180 (.084)*
Performance-measure use for accountability + .061 (.064) .080 (.059)

Decision-facilitating use  performance-measure reliability + .012 (.060)

Use for accountability  performance-measure reliability + .106 (.057)*
Decision-facilitating use  performance-measure functional specificity Np .127 (.063)*
Use for accountability  performance-measure functional specificity – .118 (.055)*
Controls
Decision-influencing use of performance measures Np .081 (.062) .057 (.056)
Performance-measure reliability + .138 (.077)* .165 (.070)**
Performance-measure functional specificity Np .057 (.066) .029 (.062)
Firm size Np .066 (.093) .052 (.084) .096 (.088)
Functional background of the CEO (dummy) + .135 (.171) .082 (.168) .146 (.172)
Market environment uncertainty + .097 (.072) .141 (.067)* .123 (.066)*
Strategic focus differentiation + .278 (.078)** .182 (.075)** .185 (.074)**
Strategic focus cost leadership – .078 (.055) .021 (.060) .077 (.061)
Functional performance + .178 (.088)* .129 (.076)* .110 (.074)
VP Marketing professional experience + .008 (.008) .013 (.008) .015 (.009)*
Functional self-participation in PMS design Np .003 (.003) .004 (.003) .004 (.003)
Industry affiliation (dummy) Np Included Included Included
Constant 2.063** 2.857** 2.642**
Number of observations (n) 192 192 192
R-square .29 .40 .44
Partial R-square added (incremental F-test) .11** .04**
Adjusted R-square .20 .31 .34

Note: PMS = performance-measurement system; VP = Vice President. The table reports nonstandardized coefficients. Robust standard errors are shown in
parentheses. Significance levels are one-tailed for variables with a directional prediction and two-tailed otherwise +/–/Np denote positive/negative/non-
predicted relations.
*
Significance at the 5% level.
**
Significance at the 1% level.

to zero (i.e., without interactions). The estimation of the model
does not provide support for H1. Both coefficients are positive,
but not significant on a 5% level (H1a: decision-facilitating use:
b = .125, p > .05; H1b: use for accountability: b = .061, p > .05).
Given that zero values of the performance-measure properties
represent the sample average (owing to mean-centering), by
implication the use of performance measures does not affect
functional strategic decision influence ‘‘on average’’ (Hart-
mann & Moers, 1999; Moers, 2006).
A third model then examined whether including perfor-
mance-measure properties provides additional explana-
tory power (model 3 in Table 4). With respect to the
property of reliability, we find significant positive interac-
tions with the use for accountability (b = .106, p < .05),
whereas the interaction term with decision-facilitating
use is nonsignificant (b = .012, p > .05).9 These results pro-
9 analyzed the following equations:
As a valid theoretical rationale exists for expecting a significant positive
interaction effect, an important question is whether our sample size is
powerful enough to find an existing effect. Therefore, we analyzed whether
our sample has adequate statistical power to reject the null hypothesis of
no effect. We investigated this possibility, dubbed the type II error
(Verbeek, 2008), by computing the power of H2a using a critical signifi-
cance level of a = 5%. We found that we can detect a true effect size of .050
with about 90% power and a true effect size of .037 with about 80% power—
a threshold suggested by Cohen (1992) and previously applied in the
accounting literature (e.g., Abernethy et al., 2010). The significant interac-
tions (Table 4) have effect sizes greater than .050. Therefore, we conclude
that if an effect exists, our setting is powerful enough to find it. We still
have to reject H2a.
vide partial support for H2. Regarding the property of
functional specificity, we find a negative interaction effect
for the use for accountability (b = .118; p < .05), as
predicted by H3. We also tested the interaction with
decision-facilitating use, for which we made no explicit
inferences about the signs of the interaction term. We
find a positive and significant interaction (b = .127, p < .05).
Notably, model 3 explains significant incremental variance
to both other models as indicated by an adjusted R2 measure
of .44 (vs. .29 and .40 in model 1 and model 2 respectively).
A closer examination of the economic interpretations of
the interaction effects is worthwhile. To this end, we deter-
mined the partial derivatives of functional strategic deci-
sion influence to performance-measure use. This analysis
allows us to test how different levels of the performance-
measure properties affect the baseline effect of perfor-
mance-measure use on the dependent variable. We
@ functional strategic decision influence
@ decision  facilitating use
¼ :180 þ :127  functional specificity þ :012  reliability
@ functional strategic decision influence
@ use for accountability
¼ :080  :118  functional specificity þ :106  reliability
 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
These partial derivatives describe the impact of the two
uses of performance measures on functional strategic deci-
sion influence as a function of the performance-measure
properties. Table 5 provides the marginal effects of the
relationships depending on selected values of the interact-
ing variables. The slope values allow some insightful inter-
pretations. For constant values of reliability at the mean of
zero, the data show that for high functional specificity of
performance measures, a positive association exists be-
tween decision-facilitating use and functional strategic
decision influence. Further, this effect is stronger the high-
er the level of specificity (e.g., .459, p < .01 at the highest
sample value). The slopes for lower levels of specificity
are negative, but not significant (e.g., .175, p > .05 at the
lowest sample value).
Regarding the use of performance measures for
accountability, we find a similar pattern for the interaction
with reliability. Negative (nonsignificant) slopes measured
for low values (e.g., .253, p > .05 at the lowest sample va-
lue) change to positive, significant slopes for higher values
of reliability (e.g., .273, p < .05 at the highest sample value).
However, the interaction effect of functional specificity
operates in the opposite direction. Slopes are positive for
low values (e.g., .408, p < .01 at the lowest sample value)
and negative (but nonsignificant) for high values of func-
tional specificity (e.g., .178, p > .05 at the highest sample
value).
Additional analyses
Possibly our results are affected by organizational struc-
tures within the firm. In particular, the more homogeneous
the various subunits within an organization are, the fewer
subunit-specific measures in the whole firm are likely to
exist. In such organizations, measures peculiar to a partic-
ular function may be better understood, because fewer
other measures exist to which outsiders (in our case the
top management team) must attend. For our research
model, we expect a less negative effect of performance-
measure specificity if performance measures are used for
accountability purposes in more homogenous organiza-
tions. We empirically tested this proposition by employing
service (vs. manufacturing) firms as a proxy variable for
homogeneity of business functions.10 We added a triple
interaction term to our model 3 shown in Table 4, including
use for accountability, performance-measure specificity, and
an indicator variable classifying service firms. In line with
our expectation, we find a positive triple interaction
(p < .10), which indicates that the negative effect of account-
ability use for a high level of functional specificity of
10
We argue that, in service firms, the operations or research and
development function is more closely related to marketing, whereas in
manufacturing firms, operations or research and development is substan-
tially different from marketing. We classified financial services, retailing,
logistics and transportation, and IT and telecommunication as mainly
service-driven firms and automotive, chemicals, pharmacy, mechanical
engineering, consumer goods, utilities, metal production, electronics, and
building and construction as mainly manufacturing-driven firms. As we
could not classify the ‘‘other’’ firms appropriately, we performed the
analysis with n = 187 firms.
455
performance measures is decreasing in the homogeneity of
business functions within the firm.
Moreover, in empirical research on performance-mea-
surement system choices, an important factor is the possi-
bility of different causal flows of effects (Chenhall & Moers,
2007). For our study, an alternative explanation could sub-
stantiate an inversely specified model in which functional
strategic decision influence affects the use of performance
measures in the function, and not vice versa. Agency the-
ory predicts that when a firm allocates more decision
rights to a particular function, the firm is likely to subject
the function to tighter control to ensure that its use of deci-
sion rights produces organizationally desirable outcomes
(Abernethy et al., 2004). Thus, for an inverse effect (i.e.,
functional strategic decision influence affects the use of
performance measures), we should observe a negative cor-
relation between functional strategic decision influence
and the function’s self-participation in the design of its
performance-measurement system. However, we do not
observe this condition empirically. As Table 2 shows, this
correlation is close to zero and nonsignificant. In untabu-
lated analyses, we regressed functional self-participation
in designing the performance-measurement system on
functional strategic decision influence (including controls)
and find a nonsignificant association as well. These results
provide no evidence for the validity of an inversely speci-
fied model.
Additionally, we employed two specification tests to as-
sess whether our model specification fits the data. In the
first test, we estimated a model in which all controls and
property variables feed back to all three uses of perfor-
mance measures, thus treating the different uses as endog-
enous variables. We used four interrelated regressions and
the seemingly unrelated estimator (SUR) to account for
systematic correlations between the error terms (Woold-
ridge, 2002). The results of our main predictions do not
change substantially, which is consistent with the specifi-
cation of functional strategic decision influence as the
independent variable in the analysis. As a second test, we
estimated a recursive model with the three types of perfor-
mance-measure use as dependent variables and functional
strategic decision influence as the independent variable,
including all controls. In conformity with our interpreta-
tion of results, we find no significant effects when strategic
decision influence serves as the independent variable.
Thus, our tests do not support reverse causation.
Discussion and conclusions
Although prior investigations make a strong conceptual
case for an association between a function’s performance-
measurement practice and its influence on strategic deci-
sion making (Markus & Pfeffer, 1983; Saunders, 1981; Wick-
ramasinghe, 2006), empirical research investigating this
phenomenon is lacking. Drawing on institutional theory,
this study analyzes how the use of performance measures
for decision facilitation and accountability in the marketing
function affects the function’s influence over strategic deci-
sion making. Furthermore, this investigation is the first to
consider interaction effects of performance-measure
456 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
Table 5
Partial derivatives (slopes) of significant interactions.
Interaction term
Decision-facilitating use  PM reliability
Decision-facilitating use  PM functional specificity
Use for accountability  PM reliability
Use for accountability  PM functional specificity
Note: PM = performance-measure; SD = standard deviation. Robust standard errors are shown in parantheses. Significance levels based on two-tailed tests.
*
Significance at the 5% level.
**
Significance at the 1% level.
properties, extending prior research in this area of inquiry
that has so far neglected the role of information properties.
The model was tested using a large sample of top executives
across a range of industries, thus meaningfully extending
extant empirics.
Analysis of the main effects shows that neither decision-
facilitating use nor use for accountability has significant
associations with functional strategic decision influence
when the effects of the properties are not considered. How-
ever, including interaction effects shows that the use of per-
formance measures can have either a positive or a negative
effect on functional strategic decision influence. We find
evidence that the effect of performance-measure use for
accountability is positive and significant for high levels of
performance-measure reliability. On the other hand, how-
ever, the use for accountability has no effect for very low
levels of reliability. These findings are consistent with the
theoretical rationale of our model, which states that top
executives face institutionalized expectations to account
for their function’s performance and value contribution.
In view of these expectations, employing reliable perfor-
mance measures for accountability may enhance the func-
tion’s legitimacy and perceived image, giving functional
VPs more weight in strategic decision making. However,
the use of less reliable measures for accountability does
not seem to confer legitimacy in the same way.
With respect to the functional specificity of perfor-
mance measures, the data support the hypothesized inter-
action effect with the use for accountability. Using
performance measures for accountability has a positive ef-
fect on functional influence when the measures are less
specific to the particular function and thus better reflect
congruity with organizational goals. These findings echo
prior accounting research, which argues that standardized
measures offer more meaningful opportunities for relative
performance evaluation. Managers outside a particular
function may be unable to fully exploit the information
found in a diverse set of measures unique to that particular
function (Arya et al., 2005). Similarly, our findings are con-
sistent with previous experimental evidence suggesting
that top managers evaluating multiple subunits place more
weight on measures common to many subunits than on
those specific to particular subunits (Lipe & Salterio, 2000).
Regarding decision-facilitating use, underlying theory
does not clearly point toward the signs of interaction effects
with functional specificity. Tests of these interactions show
Value of interaction variable
Lowest Sample Sample mean Sample Highest
sample value mean  1 SD (centered at zero) mean + 1 SD sample value
Not tested because of nonsignificant interaction term
.175 (.162) .042 (.086) .180 (.084)* .319 (.127)** .459 (.187)**
.253 (.184) .040 (.084) .080 (.059) .199 (.090)* .273 (.122)*
.408 (.163)** .208 (.083)** .008 (.059) .049 (.085) .178 (.136)
a positive interaction term, indicating that the use of more
specific metrics in decision making has a positive effect.
This finding lends support to the perspective that custom-
ized measures designed specifically for a particular subunit
can be better targeted to the subunit’s idiosyncratic needs
and are therefore more helpful in supporting the function’s
decision processes (Arya et al., 2005). An alternative line of
reasoning might argue that outsiders may see the use of
specific performance measures in decision making as an
indication of a parochial, self-centered perspective of the
function’s management practices, resulting in decisions
that are less congruent with organizational goals. However,
we find no empirical support for this argument.
A further interesting insight is that the property of reli-
ability does not exert a significant interaction effect for
decision-facilitating use. Thus, employing precise mea-
sures in decision making apparently is not required for a
positive effect. Although surprising at a first glance, this
finding coincides with anecdotal evidence that the use of
accounting information for decision making may enhance
the legitimacy of individual or group activities, regardless
of the actual information value (Markus & Pfeffer, 1983).
In other words, for performance-measure use in decision
making to confer legitimacy, how decisions and actions
were actually affected by the systems may be less relevant.
Proponents of institutional theory have also noted that
organizational legitimacy may occasionally derive from a
superficial adoption of techniques or policies and that for
some expectations of the institutional environment, a mere
‘‘ceremonial conformity’’ may placate potential sources of
support (Meyer & Rowan, 1977, p. 340; Scott, 2001). This
theoretical view might offer a possible interpretation for
our results. While reliability is plausibly an important
quality for measures used for accountability, which should
be beyond debate (Gjesdal, 1981; Ijiri, 1975), top managers
may not attach the same importance to reliability with re-
gard to the use for decision making. In a similar vein, prior
studies in the accounting literature conducted in different
functional settings argue that reliability of performance
measures is less critical for decision-facilitating use be-
cause the role of behavioral risk in this context is less rel-
evant (e.g., van Veen-Dirks, 2010).
Overall, our findings provide empirical evidence that
functional performance-measurement practices may affect
the ability of functions’ top managers to promote strategic
initiatives at the top management level. Moreover, our
 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
study provides evidence that the accountability demand
for accounting information (Evans et al., 1994) plays a role
for organizational power structures. However, the proper-
ties of performance measures need particular attention, as
they seem to determine whether the effect of perfor-
mance-measure use is positive or negative.
Limitations and directions for future research
While our study addresses important research issues,
some interesting directions for future research arise from
our findings. Perhaps the most challenging task that re-
mains is to extend the present study to other functional
contexts. Our study analyzes the strategic decision influ-
ence of the marketing function in a cross-industry sample
of German business firms. Surveying the same function in
each organization facilitated the collection of a sizable
sample, and it also mitigates methodological problems re-
lated to function-specific unobserved heterogeneity that
would occur in a cross-functional sample. Nonetheless, fu-
ture research should assess the stability of our findings in
other functional contexts. In particular, the top manage-
ment team of all firms in our sample included a VP for
the marketing function, which indicates that the function
is regarded as influential and important. Further research
could explore whether less important functions whose
measures possess the same characteristics would benefit
in the same way.
Scholars should also more closely examine some of the
effects studied in our model. Significant potential seems to
exist for further research regarding the use of accounting
information for accountability in organizational contexts.
An interesting investigation would be to explore what
makes the use of information to account for functions’
achievements more or less effective. For instance, previous
experimental research has analyzed how the organization
and presentation of performance measures in a balanced
scorecard affect evaluators’ perceptions of business unit
performance (Cardinaels & van Veen-Dirks, 2010; Lipe &
Salterio, 2002). Further investigations could explore in
more depth how functions should use performance infor-
mation within the organization to achieve the strongest
impact on their strategic influence. Furthermore, the fact
that reliability does not affect the efficacy of decision-facil-
itating use warrants further examination. Although prior
conceptual work offers a plausible explanation for the ob-
served result, our findings contain a residual degree of
ambiguity. As to the best of our knowledge our study offers
the first empirical test of the effect, future research should
assess whether our findings can be replicated.
Some other limitations of our study imply further direc-
tions for future research. As surveys targeting top manage-
ment representatives face restrictions regarding the length
of the research instrument, we were unable to include all
possible antecedents of functional strategic decision influ-
ence. While our study takes into account important covari-
ates such as functional performance and respondents’
professional experience, future research should explore
whether including additional variables explains incremen-
tal variance in the dependent variable and affects the
457
stability of our findings. In this regard, a particularly valu-
able contribution would be the investigation of the effects
of personality characteristics such as executives’ leadership
effectiveness, interpersonal skills, or decision effectiveness.
Additionally, investigators should address three main
methodological concerns. First, our measurement instru-
ments require further testing. This study relies on both
newly developed constructs and established scales drawn
from previous research. Although sound theoretical con-
ceptualizations in the accounting literature facilitated the
development of the new scales, further research should
provide support for their psychometric properties. Second,
the survey-based approach has a potential for measure-
ment error. Our choice of key informants and our specific
study design may alleviate this concern to some extent.
We restricted the analysis to top management representa-
tives responsible for the marketing function and collected
additional data from a second respondent group to assess
the validity of key informant perceptions for the most crit-
ical constructs. Notwithstanding these efforts, we cannot
completely rule out measurement errors. Lastly, cross-sec-
tional data cannot establish the causality of purported rela-
tionships. While evidence from previous literature and
additional econometric tests lend support to our interpre-
tation of results, any implied causality reflects the theoret-
ical position taken (van Lent, 2007), and substantiating the
purported flow of effects, as for instance with a longitudinal
analysis design, remains a challenge left to future research.
Acknowledgments
The authors are listed alphabetically and contributed
equally to this paper. We appreciate helpful comments of
Markus Glaser, Martin Holzhacker, Christian Kunz, Matth-
ias Mahlendorf (our discussant), David Marginson, Alexan-
der Schmidt, Dirk Totzek, participants of the 3rd Annual
Conference for Management Accounting Research (AC-
MAR) and of the 34th Annual Congress of the European
Accounting Association (EAA). We further thank Michael
Shields (Editor) and two anonymous reviewers for con-
structive suggestions for improvement.
Appendix A
Measurement instruments.
I. Functional strategic decision influence
Seven-point scale: ‘‘very little influence’’ to ‘‘very
strong influence’’ (1–7).
Please provide your assessment of the influence of the
marketing function in the following decision areas:
1. Strategic direction of the company.
2. Expansion in new geographic markets.
3. Customer satisfaction measurement and
management.
4. New product development.
5. Major capital expenditures.
6. Pricing decisions.
(continued on next page)
458 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
Appendix A (continued)
7. Choice of strategic business partners.
8. Design of customer service and support.
II. Decision-facilitating use of performance measures
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Please indicate whether performance measures are
used in your function for the following:
1. Decision making.
2. Budgeting.
3. Variance analyses of planned performance.
4. Tracking progress to pre-defined goals.
III. Decision-influencing use of performance measures
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Please indicate whether performance measures are
used in your function for the following:
1. Evaluating employee performance within the
function.
2. Rewarding employee performance within the
function.
3. Determining compensation practices within the
function.
4. Applying sanctions within the function (e.g.,
concerning decision rights, budgets).
IV. Use of performance measures for accountability
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Please indicate whether performance measures are
used in your function for the following:
1. To account for the function’s budget spending.
2. To account for the function’s performance.
3. To illustrate the function’s contribution to firm
performance relative to other functions in
quantitative terms.
V. Performance-measure reliability
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Please indicate whether the performance measures
used in your function show the following
characteristics:
1. The performance measures used in our function
are reliable.
2. The performance measures used in our function
represent what they purport to represent.
VI. Performance-measure functional specificity
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Please indicate whether the performance measures
used in your function show the following
characteristics:
1. The performance measures are relevant for the
marketing function.
2. The performance measures put special weight on
customer-, competitor-, and market-related
measures.
Appendix A (continued)
3. Besides results-oriented measures (e.g., sales,
customer satisfaction), the performance measures
also include input- (e.g., meeting the marketing
budget) and process-related measures (e.g., length
of marketing processes).
4. The performance measures provide a balanced
picture of the marketing function.
VII. Firm size
What is the approximate number of full-time
employees in your company?
VIII. Functional background of the CEO
Dummy variable indicating the primary functional
background of the CEO.
1. Marketing.
2. Sales.
3. Research and development.
4. Purchasing/production/logistics.
5. Finance/controlling.
IX. Market environment uncertainty
Seven-point scale: ‘‘very rarely’’ to ‘‘very frequently’’
(1–7).
Please indicate how frequently the following aspects
change in the market:
1. Products and services offered by competition.
2. Marketing and sales strategy of competitors.
3. Customers’ preferences for product features.
4. The price-to-value ratio customers expect.
X. Strategic focus (differentiation; cost leadership)
Seven-point scale: ‘‘totally disagree’’ to ‘‘totally agree’’
(1–7).
Items 1–4 refer to a differentiation strategy, items 5–8
refer to a cost leadership strategy.
To what degree does the competitive strategy of your
company emphasize the following goals?
1. Building up premium product or brand image.
2. Offering highly differentiated/innovative
products.
3. Obtaining high prices.
4. Creating superior customer value by knowledge
of customers’ preferences and customized products.
5. Standardization of products and services with few
variants and ancillary services.
6. Standardization of processes in production and
sales.
7. Using economies of scale in purchasing volumes.
8. Cost efficiency in overhead functions and general
administration.
XI. Functional performance
Seven-point scale from ‘‘much worse than
competition’’ [3] to ‘‘much better than
competition’’ [+3].
How would you rate your function’s performance in
relation to its competition during the past 3 years
with respect to the following aspects?
(continued on next page)
 M. Artz et al. / Accounting, Organizations and Society 37 (2012) 445–460
Appendix A (continued)
1. Achieving customer satisfaction.
2. Creating customer utility.
3. Achieving customer loyalty.
4. Acquisition of new customers.
5. Achievement of growth targets.
6. Achievement of planned market share.
XII. Industry affiliation
Dummy variable indicating the industry affiliation of
the company.
XIII. Functional self-participation in performance-
measurement system design
To what extent does your function participate in
designing its performance-measurement system
compared to other actors outside the function?
Scale ranging from 0 to 100. 0 = no participation at all;
100 = complete determination.
XIV. VP Marketing professional experience
How many years of professional experience do you
have? Approx. _________ years.
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