Multiple Performance Measures, Causality and Decision Making - Exploring Ostensive and Performative Aspects of Causality: Evidence from a New Product Development Process

The notion of causality is continuously being mobilized in discussions on the design of strategic performance measurement systems. So far, the debate on causality has primarily focused on general and abstract relationships among multiple organizational performance measures depicted in business models or strategy maps. These conceptualizations of causal relationships among multiple performance measures represent what in this paper is described as the ostensive aspect of causality. This type of causal knowledge is an important input for designing management control practice and facilitating decision making in many cases, however, it deflects attention away from the performative aspect of causality, which relates to how cause-and-effect relations among performance measures are performed in specific decision-making situations. In some situations, the ostensive aspects of causality outlined in business models do not represent the causal relationships at play in specific value creation processes that have implications for the extent to which the causal knowledge embedded in business models can be used for designing management control practices and facilitating decision making. This paper illustrates the performative aspects of causality by means of an in-depth case study of a new product development process. The case study focuses on product design decisions and illustrates how the mobilization of and interrelations between four performance measures, each of which is embedded in a business model in the company (component sharing, product costs, product quality and flexibility), changed from one decision to another. This study reflects how the constituents of value creation in these decision-making situations were not given ex ante, but were mobilized and related in situ. This paper concludes that the two perspectives (the ostensive and performative view) do not conflict, but rather supplement one another. The performative approach is well adapted to revealing the bidirectional and reciprocal causal relationships among performance measures at play in some value creation processes, but it cannot specify structural aspects of value creation in individual organizational settings. While both the ostensive and the performative view on causality have blind spots, a combination of the two might provide seeds for a more complete approach to understanding value creation in organizations and to understanding the limits of causal maps with regard to decision making and designing control practices. This paper contributes by expanding the conceptualization of the causality of importance to the design of a strategic performance measurement system by distinguishing between two different types of causality when it comes to understanding value creation in an organization. Second, this study documents the dynamics and complexities of causal relationships among performance measures in practice. Finally, this paper discusses the implications these dynamic aspects of causality have in terms of designing management control and facilitating decision-making in practice.