Melco Management Accounting Research
Discussion Paper Series
No.MDP2018-004

Effects of disaggregated performance measures among managers withinterdependent self-construal

September 2018
Masafumi Fujino *Professor, Nihon University, College of Economics
3-2 Kanda-Misakicho 1-chome, Chiyoda-ku, Tokyo 101-8360 Japane-mail: fujino.masafumi@nihon-u.ac.jp
Yan Li
Associate Professor, Takushoku University
Faculty of Commerce
Norio Sawabe
Professor, Kyoto University
Graduate Schools Management*Corresponding author

The Melco Foundation
Nagoya, Japan
Discussion Paper Series of the Melco Management Accounting Research, in order to promote
the study of management accounting, has published this unfinished paper onto the Web. Pleaseobtain the permission of the author when citing this paper.

Effects of disaggregated performance measures among managers withinterdependent self-construal
Masafumi Fujino*Professor, Nihon University
Yan Li
Associate Professor, Takushoku University
Norio Sawabe
Professor, Kyoto University* Corresponding author: Phone: +81 3 3219 3453, E-mail: fujino.masafumi@nihon-u.ac.jp

This version: 15 September 2018
Abstract
The aim of this study is to explore the way in which relational role expectation isformed in the relationships between different managers with different performancemeasures. Drawing on the cross-cultural psychology literature, this study uses the concept
of interdependent self-construal as a framework. Interdependent self-construal sees the self
as part of an encompassing social relationship, which connotes Eastern collectivism. People
with interdependent self-construal seek to put themselves in others’ situation, show an empathetic attitude toward others, and internalize socially expected roles. The question that weare interested in here is how managers with the interdependent self-construal relate disaggregated performance measures to relational role expectation through interactions between the managers. To address this question, we select a Japanese manufacturing company
as our case site. Our case findings indicate that disaggregated performance measures canlead to a situation in which managers have oime, the feeling of being psychologically indebted to others. Oime can trigger the process of managers’ relational role development.
Relational role development is associated with the fact that managers take on roles to try to
improve not only their own performance measures but also other managers’ ones.

Key workds: disaggregated performance measure, role, interdependent self-construal,oime, functional manager, case study1

1. Introduction
Performance measures may be used to convey to managers what role is expected of them in the organizational hierarchy (Collins, 1982). In parallel with the
hierarchical and functional division of roles, performance measures are also disaggregated into departments and individuals (Kaplan & Norton, 2001). The management accounting literature examines how the disaggregation is related to individual managers’ understanding of their own roles (Hall, 2008; Dambrin & Robson,2011). However, little is known about how disaggregated performance measures
imply managers’ relational role expectation, that is, what roles are expected in therelationships between managers. The aim of this study is to explore the way inwhich relational role expectation is formed in the relationships between different
managers with different performance measures.
Prior management accounting literature argues that disaggregated performancemeasures can give rise to managers’ myopic understanding of roles (Lillis, 2002;
Hansen, 2010). However, recent studies on the incompleteness of performancemeasurement systems (PMSs) demonstrate that the low representational quality ofdisaggregated performance measures is not of major concern for managers (Jordan& Messner, 2012). These studies also illustrate how managers can understand role
expectation beyond what is desired by the measures (Ahrens, 1997; Dambrin &Robson, 2011). Ahrens (1997) shows how managers assume roles beyond formal
functional boundaries based on their private views. Dambrin and Robson (2012)suggest how managers who face imperfect performance measures understand theirroles as ambiguous. These studies focus on the process by which performancemeasures and individual managers’ knowledge and identity influence their own role
expectations. However, managers are informed about role expectation also throughinformal interactions with other managers (Preston, 1986).
Drawing on the cross-cultural psychology literature (Markus & Kitayama,
1991; Kitayama & Karasawa, 1995), this study uses the concept of interdependent
self-construal as a framework to analyze the process of forming relational role expectation through interactions between managers. While independent self-construal
views the self as independent and separate from the surrounding social context,
which is consistent with individualism often observed in the Western society, inter2

dependent self-construal sees the self as part of an encompassing social relationship,
which connotes Eastern collectivism (Markus & Kitayama, 1991, Triandis, 1995).
People with interdependent self-construal seek to put themselves in others’ situation,
show an empathetic attitude toward others, and internalize socially expected roles(Kitayama & Karasawa, 1995). The question that we are interested in here is how
managers with the interdependent self-construal relate disaggregated performancemeasures to relational role expectation through interactions between the managers.
The cultural psychological literature argues that the interdependent view of theself has been historically formed in Eastern culture (Markus & Kitayama, 1991).
Similarly, the accounting literature suggests that the feature of the collectivism isidentified in the historical tradition of manufacturing sites at Japanese firms (Daniel& Reitsperger, 1991; Okano & Suzuki, 2007). To address the research question inthis study, we select a Japanese manufacturing company, which we call “Pack,” asour case site. About 10 years before our study, Pack removed profit centers from its
organization chart. At that time, financial and non-financial measures included in the
profit centers were disaggregated into different functional departments and different
levels of the departments. Disaggregated performance measures often gave rise touneven performance results between functional managers (see Lillis, 2002). How
did the managers, regardless of such trade-off, reach agreement in the planningmeeting and engage in negotiations with other managers? Our findings suggest thatmanagers have an empathetic attitude toward other managers and then take oncross-functional roles to improve other managers’ performance. Furthermore, by
seeking to fulfill the socially expected roles, managers’ capability of playing wider
roles beyond that represented by the disaggregated performance measures is developed (Oyabu, 2010).
Our analysis contributes to two strands of literature. First, we contribute to theliterature on the role of performance measures in informal interactions (Preston,
1986; Ahrens, 1997; Hall, 2010) by highlighting managers’ cooperative behavior
from the interdependent view of the self. In particular, we show how taken-for-granted rules in informal interactions imply managers’ relational roles. Second, our analysis contributes to prior literature on the effects of imperfect performance measures (Lillis, 2002; Andon, Baxter, & Chua, 2007; Dambrin & Robson,3

2011; Chenhall, Hall, & Smith, 2013) by focusing on the process of developing relational roles beyond that represented by such performance measures. While priorresearch has already mentioned managers’ acceptance of ambiguous roles (Dambrin& Robson, 2011), our analysis adds to this literature by showing how other managers’ performance measures are associated with the developing process of roles andcapabilities.
The reminder of the paper is structured as follows. In the next section, we provide our theoretical framework and literature review. Then, in the third section, we
describe our research design regarding data collection and our case site. The fourth
section presents findings from our field study. In the sixth section, we discuss themain insight that our study brings to the existing research. In the final section, we
conclude.

2. Theoretical framework
The individualism–collectivism contrast has been discussed in diverse fields,such as anthropology, sociology, psychology, and management, in which most of theresearch focus on which people prioritize individual or group interest (Hofstede,1980; Triandis, 1995). The accounting literature on national cultures also demonstrates what effects managers’ emphasis on group interests has on the use of management control systems (Chow, Kato, & Merchant, 1996; Adler & Chen, 2011).
However, some psychological studies argue that people’s behavior, such as sacrificing self-interest for the benefit of the group, come from not personal propensity but
cultural and historical features embedded in the social structure (Yamagishi, 1999).
Based on the cross-cultural psychology literature, this study adopts cultural construal of the self as a theoretical framework.
2.1 Independent and interdependent construal of the self
Markus and Kitayama (1991) suggest that cultural construal of the self gives
meaning to things and provides a frame for people’s thinking, feeling, and acting.
Self-construal can affect the way in which organizational members understand theirrelationships with superiors, peers, and subordinates. The literature on cross-cultural
psychology distinguishes between independent and interdependent self-construals4

(Markus & Kitayama, 1991; Triandis, 1995). The independent construal of the self
views the person as “a bounded, unique, more or less integrated motivational andcognitive universe, a dynamic center of awareness, emotion, judgement, and action
organized into a distinctive whole and set contrastively both against other suchwholes and against a social natural background” (Geertz, 1975, p. 48). Thus, an individual is seen as a self-contained entity who comprises a unique configuration ofinternal attributes (e.g., abilities, opinions, judgments, and competencies). The normative imperative of the independent self-construal is to discover and express such
unique internal attributes (Markus & Kitayama, 1991).
For managers with independent self-construal, performance measures canfunction as an instrument for highlighting the uniqueness of their internal attributes.
Roberts (1991) suggests that accounting is an instrument for “a restless and endlesscomparison and differentiation of self from others” (p. 360). The motives of managers with independent self-construal are linked to self-esteem and self-enhancement.
Some psychological studies show that independent self-construal involves a tendency to need to identify managers’ favorable attributes (Kitayama, Markus,
Matsumoto, and Norasakkunkit, 1997; Hein et al., 2001). Achieving performance
objectives helps managers express their favorable attributes, and therefore, is regarded as one of the best representative forms of self-enhancement.
Even people with independent self-construal should be responsive to the social
environment (Fiske, 1991). This responsiveness is often derived from the need to
strategically determine the best way to express their internal attributes (Markus &Kitayama, 1991). When the high degree of interdependency causes an individual’s
performance to be subject to others’ performance, disaggregated performancemeasures are likely to provide inadequate representation of his/her favorable attributes (Lillis, 2002). To improve the representation, managers with independent
self-construal may seek further information and engage in interactions with others.
The management accounting literature explains how performance measures cangenerate interactions among managers, for example, as follows: “managers dependon others to achieve their performance objectives, and spend much of their time
coaxing other units to act on their behalf” (Dent, 1987, p. 137). Similarly, Frow,
Marginson, and Ogden (2005) illustrate that it is essential for managers “to find a5

way of influencing the behavior of others so as to enable achievement of their own
individual targets” (p. 280). These explanations suggest that managers use interactions as a means of improvement by self-enhancing expression of their internal attributes. Hamaguchi (1988) argues that people with independent self-construal
should dissolve interpersonal relations if the relations become useless for them. If
managers secure better representation and are satisfied with it, then the interactions
mentioned in the above management accounting literature might discontinue.
On the other hand, the interdependent construal of the self views the person as“part of an encompassing social relationship and recognizing that one’s best behavior is determined, contingent on, and, to a large extent, organized by what the actor
perceives to be the thoughts, feelings, and actions of others in the relationship”(Geertz, 1975, p. 227). This view features the person not as separate from the social
context but as more connected with and less differentiated from others. The normative imperative of interdependent self-construal is to maintain relationships amongindividuals (Markus & Kitayama, 1991).
People with the interdependent self-construal understand their internal attributes as relational. Internal attributes, such as abilities, judgements, and opinions, areassigned only secondary positions. While people with independent self-construal
need interactions for the expression of their attributes, people with the interdependent self-construal control and regulate their attributes to accept the roles desired in
the interactions. Managers with interdependent self-construal are motivated to find away to blend in with relevant others and to gain and fulfill the roles expected in therelationship with others. Performance measures are linked not to the expression ofmanagers’ internal attributes but to the role expectation in their relationship.
In the formation of the interdependent self, others become an integral part ofthe context to which the self is connected, fitted, and absorbed. The manner inwhich an individual perform the roles desired in the relationship depends on the nature of the context and the others present in the context. Therefore, managers withinterdependent self-construal are constantly aware of others and focus on their needs
and goals. This focus may bring the experience of seeing others’ goals as a part ofpersonal goals. As well as managers’ own performance measures, others’ measures
may allow managers to understand the goals of others. Caring about and fulfilling6others’ performance objectives may be a necessary requirement for satisfying managers’ own goals. However, this is premised on the reasonable expectation that interdependent others could attend to the goals of the managers. People with interdependent self-construal do not necessarily pay attention to the goals of all others.
2.2 Behavioral patterns of interdependent self-construal
Interdependent self-construal shows two dimensions of behavioral patterns:role orientation and empathetic attitude. Role orientation is seeking to internalize theroles expected in the relationship and to fulfill them (Kitayama & Karasawa, 1995).
For an individual with interdependent self-construal, seeking to live up to the expectations of others around him/her is an indication of his/her intention to be actively involved with them. On the contrary, when an individual with interdependent
self-construal is independent and separate from the role structure within the relationship, he/she experiences lack of stability and loss of identity (Lebra, 1976; Plath,
1980; Azuma, 1994).
Role orientation is related to striving toward what is socially desired, a part ofwhich is represented as the performance objectives of both an individual’s and others’ measures. This behavior entails a self-criticizing tendency to identify some deviations from what is socially desired as drawbacks and shortcomings (Kitayama etal., 1997). While people with independent self-construal are motivated to evaluate
their favorable attributes with a self-enhancing tendency, people with interdependent
self-construal are encouraged to find their negative attributes with a self-criticizing
tendency, and then to correct them through constant efforts. A feature of thisself-criticizing tendency is that it suggests that an average feeling that one can do atleast what is expected from others can provide a basis for the satisfaction of people
with interdependent self-construal (Kitayama & Karasawa, 1995).
Role orientation may involve a receptive attitude in that people seek to fit
themselves into what is socially expected. However, role orientation is not necessarily seen as passive and compulsory (Azuma, 1994). People are allowed to gain
their roles in the relationship actively (Nakane, 1970; Azuma, 1994). Since what issocially desired is changeable in nature, the process of striving to minimize the deviation can continue endlessly. This process is positively perceived as7

self-improving in terms of interdependent self-construal (Kitayama & Karasawa,
1995). People who can sense what is expected and act that way with no regard to
initially assigned roles are often called “attentive.” Obtaining competence as an attentive person through the self-improving process is recognized as a part of the capability development process of future managers (Oyabu, 2009).
An empathetic attitude is related to interactions in which an individual places
himself/herself in others’ positions and tries to understand their feelings (Kitayama& Karasawa, 1995). People with interdependent self-construal seek to project theiractions and judgements onto others’ situations. Maintaining relationships and ensuring harmonious interactions require full understanding of others, that is, knowing
how they are feeling, thinking, and likely to act in the context of the relationship(Markus & Kitayama, 1991). An empathetic attitude entails interpersonal skills that
help people maintain emotional and personal relationships with others.
When an individual has an empathetic attitude toward others, there is often anelement of reciprocity: he/she expects that others will show the same attitude toward
him/her, too. The expectation of trust and gratitude from others is one of the elements that can bring a sense of relief for people with the interdependent
self-construal. In the boss–subordinate relationship, the delegation of power to thesubordinate is understood as a form of trust from the boss and raise the morale ofthe subordinate.
Role orientation and empathetic attitude can be paradoxical (Kitayama &Karasawa, 1995). In particular, if an individual excessively seeks role orientation,
he/she cannot afford to show sensitivity to others. By contrast, if strong empathy isevident, favoritism may prevail. However, people with interdependent self-construal
conceive these two dimensions as mutually complementary. The integration of roleorientation and empathetic attitude is illustrated by Kitayama and Karasawa (1995)
as follows: “since one places oneself in others’ positions and understands that theothers should be in trouble and feel sadness if one fails to fulfill roles for the others,
one is motivated to internalize the roles socially expected” (p. 141).
Role orientation and empathetic attitude can constitute morality for those withinterdependent self-construal. When people fail to adopt role-oriented and empathetic behavior, they would have oime, the feeling of being psychologically indebted
8to others (Markus & Kitayama, 1991; Kitayama & Karasawa, 1995). Oime involves
the strong feeling of unpleasantness, which suggests the aversive nature of unmet
obligations and the press of the need to fulfill one's obligations to others and to return favours. People with interdependent self-construal do not always have oime toall others. Oime tends to emerge only when, for example, an individual cannot meetthe expectations of others who accept wider roles themselves and place a lot of trustin him/her. Oime also underscores the significance of balanced and harmonious relationships in the life of people with interdependent self-construal (Markus &Kitayama, 1991).
2.3 Performance measurement systems and roles
A PMS may be used to inform organizational members what is expected ofthem in their roles (Collins, 1982). Here, a role refers to a set of regular and enduring behavior pertaining to a particular task or social function (Katz & Kahn, 1967).
The recent literature on PMS demonstrates that PMS affects the extent to which
managers understand their role expectations (Franco-Santos, Lucianetti, & Bourne,2012). Some studies examine to what extent the design characteristics of PMS, suchas its comprehensiveness and the number of performance measures, affect managers’
understanding of what role is expected of them (Burney & Widener, 2007; Hall,2008). Others suggest the extent of the effect that individuals’ experiences and theirperceptions of goal difficulty have on the association between PMS and role expectation (Burney & Widener, 2007; Cheng, Luckett, & Mahama, 2007).
Research on role stress argues that, when performance indicators inform a focal
person of two (or more) roles simultaneously, or the existence of the lack of agreement among roles, it may cause organizational stress, such as role conflict or ambiguity (Kahn, Wolfe, Quinn, Snoek, & Rosenthal, 1964; Lock et al., 1994; Cheng etal., 2007). Hierarchical organization disaggregates strategic performance indicators
into operational indicators of its subordinate units (Kaplan & Norton, 2001). Thus, it
is considered that disaggregated performance indicators could mitigate such organizational stress, because they may define a focal person’s role narrowly.
Disaggregated performance measures have its own shortcomings. Prior research on PMS has long illustrated that disaggregated performance measures face9the problem of representational incompleteness, which means that disaggregatedperformance indicators cannot reflect the implications of the complex patterns ofinterrelated activities (Hopwood, 1973; Lillis, 2002). Lillis (2002) and Hansen(2010) address how such complex interrelations can be designed into individual
performance measures.
To improve PMS’s representational quality, some studies focus on the design
characteristics of PMS. Hall (2008) suggests that comprehensive PMS can positively affect managers’ understanding of their roles, as it provides information ofcross-functional relationships and the role of a subunit within the whole organization. The richness of information quantity, information flow channel, and use ofnon-financial indicators as a part of interactive control process are also considered
important factors in designing and using PMS to improve the clarity of organizational members’ understanding of their roles (Marginson, 2006; Marginson,
McAulay, Roush, & Van Zijl, 2014). These studies consider the perspective of top
management and strategic business unit (SBU) managers rather than a functionallydisaggregated viewpoint. It is still unclear how these sophisticated design characteristics reduce managers’ role stress at the disaggregated functional level (see also
Lillis, 2002).
According to Collins (1982), social context should be considered in the processof the management accounting system informing organizational members about
their role expectations. Jordan and Messner (2012) argue that disaggregated performance measures are problematic not because of their low representational quality
but because of the context in which managers use the measures. Recent literaturesheds more light on the context in which PMS is used by managers, and demonstrates that disaggregated incomplete performance measures might have influenceon managers’ understanding of their roles. Dambrin and Robson (2011) argue that
incomplete performance measures are associated with the acceptance of ambivalentroles. Dambrin and Robson (2011) illustrate that, in a case study of the French
pharmaceutical industry, pharmaceutical sales representatives can express theiridentity as both medical professionals and salespeople. Even though the two roles
remain ambiguous, managers accept their co-existence in the process of their enrolment in the performative networks, which involves various actors, including in10

complete performance measures.
Instead of formal information systems, managers might be informed about theirroles through informal channels (Preston, 1986; Hall, 2010). Preston (1986) argues
that managers inform each other through the arrangement of informal social order.
Managers place considerable value on the arrangements in order to perform theirroles and to be seen well informed in the eyes of others. Taken-for-granted rules ofreciprocity form the basis of the informing process. To be reliably and accurately
informed, managers have to in turn reliably and accurately inform others. Preston(1986) illustrates how informal interactions help managers understand their roles in
the reciprocal interactions.
Chenhall et al. (2013), drawing on a case study of a non-government organization, address how incomplete PMS can sustain continuous interactions between
managers. Even when managers focus on competing strategic objectives, they cancontinue to be involved in “give-and-take” relationship, and the continuous interactions can create a fertile arena for productive debate. An important feature of thisprocess that enable organized dissonance (Stark 2009) is what Chenhall et al. (2013)
call “concurrent visibility.” Concurrent visibility refers to the process of organizational members making visible the attributes of accounts that are important to organizational actors with different evaluative principles (Chenhall et al, 2013, p.269).
They argue that concurrent visibility can provide confirmation and reassurance thata particular mode of evaluation is recognized and respected.
As noted in the previous subsections, the nature of an individual’s relationshipand attitude to others is fundamentally different between independent and interdependent self-construals.

For people with independent self-construal, interactions

with others are seen as a means of expressing their internal attributes. Although
Preston (1986) argues that managers understand their roles in the interactions withothers, he also suggests that the interactions are regarded as a means of obtaining
valuable information from others. Chenhall et al. (2013) illustrate that concurrent
visibility is created through the continuous relationship between managers with different principles. However, this process rests on the premise that individual managers seek to express the desired features of their own principles.
By contrast, interdependent self-construal characterises the individual not as
11separate from the social context but more connected and less differentiated fromothers, and therefore, maintaining the relationships among individuals itself becomes the normative imperative.
From the perspective of interdependent self-construal, this study addresses how
managers take not only their own performance goals but also other managers’ performance goals into consideration and how role orientation and empathetic attitude
are integrated in the design and use of PMS.

3. Research design
3.1 Case company
Data were collected from a case-based field study at “Pack,” the packaging
manufacturing company in our study. We adopted a case study approach because we
focus on the detailed process by which managers with interdependent self-construal
deal with disaggregated performance measures.
Pack manufactures and sells packaging products, such as paper cups, foodcontainers, and plastic items. Its head office is located in Tokyo, and it has one R&D
center, five factories, and four sales representative offices in different parts of Japan.
As of 2012, Pack employed approximately 1200 people and generated about 60 billion yen (500 million euros) of sales revenue. Pack’s sales revenue continued to increase slightly but steadily during our study.
Pack is a packaging supplier with over 70 years of experience. Pack holds thelargest share (about 55%) of the domestic paper packaging market, which gives it adominant position (the second-place with 20% market share). Pack’s competitive
advantage is its large-scale production capacity of high-quality products and its relationship of trust with its customers developed over years.
Since it is well established that Japanese firms tend to have significant featuresof collectivism (Chow, Kato, & Merchant, 1996; Okano & Suzuki 2007), a Japanesemanufacturing company, like our case company Pack, should be viewed as a suitable setting for exploring the significance of collectivism on the relationship between
disaggregated performance measures and managers’ role expectations. In particular,
most managers and employees at Pack joined the company soon after graduatingfrom universities and high schools and then worked for several decades until re12

tirement age. Actually, some managers interviewed entered Pack in their early 20s
and were supposed to reach retirement age within a few years. Young managers
have such managers around them and take it for granted that they will follow suit.
This work environment is likely to be appropriate for the purpose of our study toobserve long-term relationships among managers and to investigate how they understand the relationships.
Figure 1 shows Pack’s functionally differentiated organizational structure. Under a president and management committee, departments for sales, production, development, and administration are differentiated. Two different sales departments
sell products manufactured using different materials. Each sales department has
several sections. There are also two production departments. Geographically dispersed factories are placed under each production department. Each factory has afactory manager. The factory manager supervise three sub-functional units: Technology Unit is responsible for infrastructure and equipment; Manufacturing Unit for
production processes; and Planning Unit for production planning and material procurement. Furthermore, Manufacturing Unit has managerial hierarchy which consists of a manager, assistant managers, and chiefs.
Figure 1 Functional organization of Pack

Source: Compiled by the authors from internal documents of Pack13

We discussed our research interest with business support staff and then selected
as our main research cite one sales section and one factory that are in charge of thesame product category. In this product category, managers face day-to-day customer
requests to change order quantity and make delivery dates sooner. To deal with therequests, close cooperation between the sales section and factory is needed. Thisfactory is the oldest among Pack’s factories. There are many operators with longevity at this factory. In our interview, a manager who was recently transferred fromanother factory said, “There are many masters here.”
As shown in Figure 1, there are several organizational layers under both thesales and production departments. To show managers’ hierarchical relationships, thefigure depicts the layers and managers in each layer. The managers, however, are
not included in the organizational chart originally provided by Pack. The original
chart shows only boxes for each department and section and lines between the boxes.
An organizational chart without managers is one of the characteristics of Japanesemanagement (Yoshino, 1968). From the perspective of interdependent self-construal,
this style of organizational chart, which shows only departmental relationships, may
represent one of the features of role orientation in that managers should find theirroles in the given relationships.
3.2 Data collection
Data collection was conducted over 3 years from June 2010 to June 2013. Our
deadline was unspecified, and we kept in touch with the company throughout. The
data for the study were collected from three primary sources (interviews, documentation, and archival documents) and two secondary sources (a published company
history and in-house journals). The use of multiple sources of evidence enabled acomprehensive exploration of the organization’s performance measurement procedures and practices.
Interviews were held at Pack’s head office and factories and consisted of threeparts, between which there was some overlap. The dates and times of the interviews
and the identities of the interviewees are listed in Appendix A. First, a series of pilot
interviews was held with corporate planning staff at the head office. These interviews explored issues regarding company strategy and PMSs, providing the basis
14for the later, more focused research agenda. Second, we conducted interviews withan executive director who helped to develop Pack’s management systems over decades. His experience, along with the internal documentation and archival documents,
deepened our understanding of the background to and current problems with the
PMSs. The third and main part consisted of interviews with functional managers.
We conducted interviews with sales managers at the head office and with production
managers and assistant managers at three factories. The sales department and one of
the three factories (Factory C) engage in the business of the abovementioned product category. We focused on the middle and middle-lower managers, because they
directly interact with each other on a day-to-day basis to respond quickly to customer requests. Interview data quoted were all obtained during the interviews held at
the sales department and Factory C. All interviews were recorded. Interview summaries were prepared after each interview in Part 1. All interviews in Parts 2 and 3
were transcribed later.
We also used documentation, such as organizational charts (for the entire company and the factories), strategic analyses, and the former management accounting
system implementation. We also obtained copies of archival documents, such as theformer and current middle-range plans, departmental performance reports, the annual factory policy, and the factories’ monthly performance reports. Appendix B
presents a list of these documents.
Data analysis was carried out in an abductive way, that is, by going back andforth between empirical data and theoretical concepts until we reached the development of a theorized story (Lukka & Modell, 2010). First, we sought to understandthe whole picture of the case company. In particular, by having a series of discussions with corporate planning staff as well as the Part 1 interviews, we realized that,in some cases, disaggregated performance measures could bring about various
problems in relation to coordination between functional managers, but in other cases,
could facilitate coordination. To understand the logic of practice (Czarniawska,
2001) associated with disaggregated performance measures, we conducted interviews with the executive director in Part 2 and with middle and middle-lower managers from sales and production departments in Part 3. As shown in Appendix A,
Parts 1, 2, and 3 include partly overlapped processes, in which managers and re15

searchers had a series of discussion on Pack’s performance measurement. The discussion process can help us seek reflexivity in this interpretive case study and makesense of our empirical data in an abductive manner. Through taking these steps, werealized that some elements of Japanese collectivistic values are plausible for explaining the surprising theoretical empirics regarding disaggregated performancemeasures. We also sought to enhance authenticity by asking iterative questions ofseveral interviewees about the same topic (Lukka & Modell, 2010).

4. Case findings
4.1 Disaggregated performance measures
Pack used to have a divisional structure in which each division had sales andproduction departments up until the early 2000s. Under the divisional structure,sales and production managers of a division shared same performance targets set intheir divisional income statement.
The divisional structure was taken over by a functional divided structure illustrated in the figure 1 in 2004. According to an internal document, “in order to makeclear departmental performance accountability,” the division structure was abolished.
Since the introduction of new functionally divided organizational structure, the sales
and production departments report directly to the top management. Revenue andcost items that used to be included in the former divisional income statements are
now disaggregated and attributed to each department.
Sales revenues and contribution margins are made accountable for the sales
departments. Sales managers perceive that they are required to get as many orders as
possible without taking the effects on production fixed costs into consideration.
Our performance, in the performance sheets we regularly make, is measured, in terms of numbers, by sales revenues, and marginal profits. Our profits are calculated by subtracting standard[variable] costs from sales revenues, so they are [in practice] never negative. (Senior SalesManager)
Probably I should put profits the first, but actually, I make sales the first. (Sales Manager)

Cost metrics, such as variable and fixed manufacturing costs, are made accountable for production departments. Pack categorizes labor costs as well as depreciation costs into fixed costs. Production managers recognize that factory per16

formance reports, which do not include sales revenues, convey the message thatthey are not accountable for revenues. They understand that the new performancemeasures, i.e., various cost metrics, urges them to focus on cost reduction and production efficiency.
We increase productivity as one of our metrics. For example, as a mission, we have to reduce
fixed costs and then make profits.

Non-financial measures are also disaggregated and made accountable for sales
and production departments. For example, sales departments became accountablefor product stock turnover rates, while production departments are for capacity utilization rates and defect rates. In the production departments, performance measures
are further disaggregated hierarchically: labor costs and depreciation costs to production managers and capacity utilization rates and defect rates to production assistant managers.
The new functionally divided structure which replaced the old divisional
structure draw a boundary between sales and production departments. In parallelwith the organizational structural change, financial and non-financial performancemeasures are disaggregated and made accountable for each department. With thesearrangements, both sales and production managers understands that their performances are evaluated on the basis of the disaggregated measures.
Stretched performance targets are set by Pack in the middle range plan。Thosetargets are cascaded down to lower management level in annual budgets. The
stretched targets in the annual budget remains unchanged during the year. The demand of packages for dairy products, which is the main market for the departmentsthat we study, changes unpredictably. Both sales and production managers should
achieve stretched and fixed targets in changing market demands. They believe thatthey do not have time to wait for top management’s commands to keep up withchanging market demands. Instead of waiting for top management commands, functional managers take initiatives to fine-tune operational parameters, such as production schedules, labor hours, and delivery dates.
Adjusting to changing market demands means to Pack that it should meet sudden increase in order size with a tight delivery schedule, which often results in exceeding the planned production capacity. Producing greater volumes of orders than
17

planned within a short delivery period would generate a positive impact on the performance of sales departments and, by contrast, a negative impact on that of production departments with the disaggregated performance measures set at Pack. Sales
managers enjoy the improved sales revenues and marginal profits from the acceptance of such orders. By contrast, production managers often need to accept
lower production efficiency and increased fixed costs because, for example, quicker
delivery orders cause extra work and thereby increase labor costs that is a part of
fixed production costs. Functional managers understand that these demanding orders
would bring uneven performance results to sales and production managers.
In summary, functional managers understand that disaggregated performancemeasures require sales managers to increase the quantity of orders and sales revenues, and production managers to improve production efficiency. However, responding to market changes can cause uneven performance results between sales
and production managers, which could give rise to myopic role understandings byfunctional managers (Lillis 2002, Hansen 2010). If managers at the Pack understoodtheir role myopically, it could have become difficult for them to coordinate their activities to meet with the changing market demands. It turns out at Pack that the myopic role understanding that is consistent with what is represented by the disaggregated performance measures does not take place. On the contrary, disaggregatedperformance measures activate social interactions that facilitate managers to conceive wider role perceptions than what is represented by the disaggregated performance measures.
4.2 Role orientation, empathy and Oime (indebtedness to others)
While production managers should face low performance due to their responses
to demanding requests, they showed an empathetic attitude toward sales managers(Kitayama & Karasawa, 1995). Production managers understand how sales managers think in the context of changing market demands, and thus, in combination with
their role orientation, they assume roles expected in the relationship with sales
managers that resulted in the lower production efficiency.
Production managers understand that stretched targets are imposed on sales
managers and show their sensitivity to sales managers’ tough situation. In the inter18

views, several production managers mentioned such consideration for sales managers’ position as follows:
I know, salespeople work hard because they are told to sell as many products as possible.
(Production manager)
The demanded quantity very often changes a lot. We talk with salespeople about that, but, in
their shoes, the sales quotas are raised and they are also struggling to deal with them … (Production manager)

Production managers place themselves in sales managers’ positions and understandthat sales managers should be in trouble if production managers fail to fulfil theirroles. Based on this sensitivity, production managers internalise the roles expectedin the relationship with sales managers. A production manager explains his expectedroles as follows:
Sales told us they are getting this kind of orders, which would increase labour costs and require
holiday work. If we meet deadline as we were told, it might be good this month. But next
month, if they failed to receive the orders, we might have idle capacity. […] Budget was made.
But it is a given fact that actual production would deviate from the budget. “A given fact”
might be an overstatement. At the factory, the deviation is an unspoken agreement. We allknow that. We respond to changes. We feel responding to changes is our job. (Production
manager)

As this quote shows, while production managers understand the decrease in
their performance, they perceive the response to market changes required by sales
managers as one of their roles. However, because of the limitation of production
capacity, production managers sometimes fail to meet the expected roles. Production
managers have a self-criticizing tendency to identify this deviation from what is expected by sales managers as their shortcomings.
Thanks to explosive sales power, we can make business sense. Nowadays everyone is devoted
to sales. But within the company, production capacity is strictly limited. Even if we want to
respond, we cannot do sometimes. It’s painful. (Production manager)

On the other hand, some sales managers take an empathetic attitude and understand production managers’ situation. Sales managers have oime, the feeling of indebtedness (Markus & Kitayama, 1991), in that production managers show sensitivity to sales managers and their role orientation made them assume a socially expected role in spite of the decrease in production efficiency. The uneven improve19

ment of performance favorable only to sales managers further strengthens sales
managers’ oime. In an interview, one sales manager explained the uneven performance results in the changing market demands. He emphasizes the importance ofunderstanding production managers’ position:
We exceed sales targets and profit targets. We are happy to receive a good evaluation. But on
the production side, when sales increases, it becomes more costly for them. Their evaluation
becomes lower. […] When I talk with, for example, a production manager, what I actually hear
him saying is that “I envy salespeople. If something good happens, they can enjoy it.” […] We
can’t do our job if we don’t understand manufacturing. (Sales Manager)

This sales manager believes that his performance improvement was derived not
only from his own efforts to obtain more orders but also from production managers’
acceptance of the changes of production schedules and of the decrease in production
efficiency. In addition, another sales manager expresses oime because he proposed
inaccurate sales forecasts in the process of making the middle-range plan.
This is partly our fault. Sales dropped last year. That’s why it’s true that we prepared a sales
budget in a weak attitude. (Sales General Manager)

This manager understands that the reason production managers are reluctant toaccept urgent orders is that they were requested to reduce their production capacity.
The request was based on the forecasts prepared by sales managers in which estimated sales revenues was lower than it should have been. At the time of the middle
range planning where the forecasts were used, it should have been difficult to anticipate the subsequent demand surge. One sales manager explains a factor that could
influence the change of demands as follows:
Early this year, [Dairy Product A] was covered by a TV program on NHK 1 because of its immune function. After that, there was a boom in demand, which continued until late June. But
then, temperatures went up, and so consumers are not eating such sugary and gooey foods.
(Sales Manager)

As this quotation shows, because of such unforeseen events at the planningstage as television broadcasts and weather, it is very difficult to accurately forecast
market demands in this product category. At Pack, it is a norm that inaccurate sales
forecast should not be blamed on sales managers. Sales managers are not regarded1

NHK is the only public broadcast station in Japan.

20responsible nor formally accused for this kind of inaccurate sales forecast. Nevertheless, as the above quotation shows, the sales general manager tells us that the inaccurate forecasts are “our fault.”
At Pack, sales managers expresses that it is their fault to inaccurately forecast
market demands, which resulted in deteriorating production managers’ performance,
rather than their own. The expression of responsibility “our fault” is associated withthe feeling of oime. The feeling of oime comes from sales managers’ sensitivity to
the situation in which production managers suffer from deteriorating production efficiency. The deterioration of the production efficiency does not occur if sales forecast was accurate. It does not take place if production managers refused to cope with
the increased market demands. In reality, sales managers prepared inaccurate forecast which resulted in smaller planned production capacity in the mid-range plan,
nevertheless role orientation of production manager made them assume socially expected role to increase production volume to cope with the sudden surge of market
demand, which resulted in uneven performance favorable only to sales managers.
Sales managers understood in this situation that they were given the gift of production managers’ sensitivity. According to Markus and Kitayama (1991), people withinterdependent self-construal have oime when they do not fulfill the roles associatedwith being interdependent with relevant others. Sales managers understand that it isa part of their role in the relationship with the production managers to prepare accurate forecast. They felt oime to production managers for the failure to get it right.
4.3 Empathetic managers take on cross-functional roles
Sales managers have oime, a feeling of indebtedness, to production managers
and, through formal and informal interactions, try to show sensitivity to production
managers’ lower performance. One example of their sensitivity at Pack is observedin the process of monthly production planning. Production managers prepare a draftof production plans in which they select a particular product groups, which they call“Priority Specs”. Priority Specs are these product groups whose market demands are
expected to be very high for the immediate months so that they are likely to cause
shortage of production capacity. Between 5 to 10% of product groups are selected as
Priority Specs. In order to meet with the increased production volume which ex21

ceeds the originally planned production capacity, Priority Spec requires speciallyarranged operation such as “break-time operation”. would not stop production.
Specifying Priority Specs in the monthly production plans help production
managers to arrange production schedules so they increase production volume while
controlling the labour costs as low as possible.
Production managers bring up the monthly production plan proposal at thesales–production meeting. Both sales and production managers participate in themeeting and reach agreement on the production plan with Priority Specs. In mostcases, the proposal was adopted with only minor changes. The selection of Priority
Specs is beneficial also for sales managers in that the factory ensures the increase of
production outputs in line with market demand.
However, production scheduling for Priority Specs causes the increase inproduct stocks, which is likely to generate a negative effect on sales managers’
non-financial measures, such as stock turnover rates. Sales managers understandthat they have to accept the increase in product stocks due to the abovementioned
production scheduling. Knowledge about production scheduling for Priority Specs
operations is needed. In an interview, one sales manager explained as follows:
To produce a Priority Specs, lot change and reassignment of molding machines and operators
entails sacrifice. Other products may be not able to be manufactured in this time. To deal with
Priority Specs for 3 months, other products cannot be produced for 3 months. So, a stock forthe 3 months is needed. This gives rise to the increase of stock turnover rates (Sales Manager).

The same sales manager further described the necessity of rapid cooperation withproduction managers to manage stock levels. Then, he stated that the sensitivity tothe production side beyond the functional border is a part of sales managers’ role.
There doesn’t seem to be a clear division of roles. Hearing from other companies in the same
industry, they actually have clearly specified division of roles. But in our company, unless weact with good tact, things don’t go well. (Sales Manager)

Sales managers’ sensitivity is also observed in the way they engage in directcommunication with managers of Manufacturing Unit at a factory of a production
department (manufacturing manager hereafter, see Figure 1) when sales managers
encounter sudden market demand that is not incorporated in the monthly production
plan.

Planning Unit at the factory is in charge of daily coordination between sales
22and production departments. The planning manager receives order information fromsales managers daily and makes production schedules.
When sales managers need to accept orders that is likely to adversely affectproduction performance, sales managers, without waiting for the planning manager’s initiative to coordinate two departments, communicate directly with the manufacturing manager at the factory shop floor. Sales managers seek what options they
have to alleviate adverse effects on the side of production department. This is because the manufacturing manager and his subordinates actually accept negative effects on their performance.
In the communication, sales managers understand that a part of their role expected by the manufacturing manager is to alleviate the adverse effects on the performance of Manufacturing Unit. In an interview, a sales manager mentioned that heinforms the manufacturing manager about changes in client demands directly to the
manufacturing manager as soon as he gets the information. He understand that earlier the information, easier it should for the manufacturing manager to rearrange
production schedules without damaging production efficiency.
Our clients have a monthly production planning meeting around this day every month. […] We
get into their planning process and then obtain the information. We bring the information backto our office and in turn inform our production planning meeting. (Sales manager)

If sales managers offer something helpful to prevent deteriorating production
efficiency, the manufacturing manager might as well accept sales managers’ requests,
even though they involve changes of production schedules. The manufacturing
manager told us as follows:
I know salespeople have to think about customer delivery, but there is an excessively wide variety of products. So, if they allow us to produce only a certain set of products continuously inthe same lot size and thereby a number of lot changes decreases, we ensure the (required) production output volume. I want them to make such arrangements. (Manufacturing Manager)

As this quote shows, the manufacturing manager hope sales managers to rearrange customer deliveries in exchange for the acceptance of sales managers’ requests. The rearrangement allows for serial production without changes in the number of production lots, which helps the manufacturing manager to improve capacity
utilization rates and avoid labor cost overruns.
23

The rearrangement can disturb sales managers’ efforts to seek higher customer
responsiveness. However, sales managers know that the manufacturing manager isprepared to risk production efficiency to meet urgent orders. Therefore, sales managers also take risk to deteriorate responsiveness performance.
This compensation offered by the sales manager is usually not large enough tooffset the damage borne by the production managers’ side. This is not regarded as aneven exchange when measured by their disaggregated performance measures. Somesales managers show expressions of gratitude toward production managers. Besides
regular meetings between sales and production managers held at the headquarters,
sales managers often visit the factory for direct contact with production managers,
particularly when a sales manager’s request is hard on production scheduling. In aninterview, one sales manager explained his visits as follows:
We are salespeople in a manufacturing company. So we can’t do our job if we don’t understandmanufacturing. As a salesperson, we try and stand in the manufacturer’s shoes; we go and ask
them what they’re thinking, and go on our own into factories to see what is going on. (SalesManager)

In a reciprocal manner, one production manager mentioned his appreciation ofsales managers’ visits as a sign of an “attentive person” (Oyabu, 2009):
An attentive salesperson asks us to have a preparatory meeting. Fortunately, this factory is nearto the main sales place. Because it’s near and salespeople have good mobility, they often callon us to have a meeting (Production Manager).

Managers’ interpersonal skills required to show an empathetic attitude(Kitayama & Karasawa, 1995) are observed in this interaction between managers
who understand others’ position and act as an attentive person. Managers with ahigh level of interpersonal skills try to understand what role is expected from othermanagers’ position and to actively fulfill the role. Sales managers do not simply visit the factory but step onto the manufacturing floors, where they take on a seemingly
a role of production managers, such as motivating machine operators. Attentive
sales managers take on a cross-functional role.
In an interview, one sales manager explained that he randomly visited the
manufacturing floors to communicate with managers and operators to tell reasons
why they need increased production volume and how customers appreciate their re24

sponsiveness. He explained this direct communication as a part of his role as a sales
manager at Pack.
We sell products, get revenues, and make customers happy. But they [factory people] don’tknow anything about that. Telling them these facts is part of our job as sales, too. (Sales Manager)

Not only do sales managers show empathetic understanding. People with an interdependent view could care about others’ positions only if they could reasonably
expect that the others could attend to their position (Markus & Kitayama, 1991). As
described in the previous subsection, production managers have empathetic understanding that, unless they act in a sensitive way, sales managers should struggle tofend off the pressure of achieving stretched sales targets. Based on this understanding, production managers sometimes assume wider roles than those necessary to
improve production efficiency. The roles expected in the relationship with sales
managers go beyond what is represented in the disaggregated performance measures.
For example, one production manager explained his ability to arrange detailed production schedules based on his own anticipation of customers’ situation before receiving information from sales managers.
We all know our customers well. For example, if we’re told a customer needs something today,
and that the customer is a yogurt manufacturer, we know they don’t fill containers until tomorrow morning, and that piece of knowledge alone buys us 24 hours. (Production manager)

Their understanding of cross-functional roles is reflected in ways that they interpret their own performance measures. For example, capacity utilization rates anddefect rates are assigned to production assistant managers on the manufacturing
floor. The assistant managers recognize that these measures are related to production
efficiency. While Priority Specs operations have a positive effect on capacity utilization rates, they have little effect on defect rates if not adversely. Since sales managers frequently visit the manufacturing floor to check the progress of Priority
Specs operations, production assistant managers are explicitly and implicitly informed about customers’ situation. One assistant manager told us about capacity utilization rates in the Priority Specs operations as follows:
I feel that the purpose of improving capacity utilization rates is to produce an adequate amountof outputs in a way that doesn’t cause trouble for the customer. As for defect rates, if we waste25something, it will affect costs. That’s why the decrease of waste will generate factory profits.
(Production assistant manager)

This quotation suggests that the assistant manager understands that the improvement of capacity utilization rates, unlike defect rates, is all the more reason for
helping customers who are struggling to deal with market demand. This understanding shows that the manager recognizes that he plays a wider role than that desired from capacity utilization rates as an efficiency indicator.
Performance measures assigned to functional managers encourage them tomeet role expectation represented by those measures, such as fixed-cost reduction
for production managers with fixed-cost accountability (Collins, 1982). In the interactions between the sales and production managers at Pack, managers sought togo beyond the role represented by the measures that they are accountable for. To besensitive to others’ performance, they develop wider role understandings in theirinterdependent relationship.
In summary, interdependent relations among functional managers at Pack involve the process of internalizing cross-functional roles through informal interactions as well as roles suggested by formal functional boundaries and disaggregatedperformance measures. As suggested by Preston (1986), this process tends to be
subject to social order, such as reciprocity. Based on reciprocal order, in exchange
for receiving beneficial information for performance improvement from others, one
has to return information of equivalent value to the others. Interactions for obtaining
information to express performance better is relevant to people with the independentview. Our case suggests the existence of interactions premised on the interdependentview. In the interactions, managers put themselves in others’ position, show empathetic attitude, have oime owing to uneven performance results, and play roles expected in the relationship with other managers. Managers with the interdependentview actively take on wider roles desired by others in their relationship than those
represented by performance measures. We refer to this process as relational role development.
4.4 Role-driven capability development
People with interdependent self-construal not merely accept but also gain roles26

in the relationship. Role expectation is changeable. The process of seeking to minimizing deviation from the role expectation in a self-improving way can continue
endlessly. To fulfill roles expected in the relationship, learning through experience isneeded. Whether managers have adequate experience or not can lead to differences
in capability to fulfill the role expectation (Oyabu 2009).
Experienced managers daily engage in direct negotiations, in which they seek
to resolve oime derived from disaggregated performance measures. For example,
when experienced sales managers have an increase only in their own performanceand at the same time, there is a drop in their counterparts’ performance, they leverage informal communication to provide helpful information for production scheduling which allows for efficient machine utilization and operators’ shifts. To do so, acertain amount of experience is needed. One sales manager explained the differencein managers’ capability as follows:
It varies from salesperson to salesperson. Attentive ones are aware of [what effects orderchanges would have on inventory and production], and then start negotiating, saying “Stop” or“Keep going.” Others often say “There are finished goods. But they’re no use. What should I
do?” Quite honestly, it’s not standardized. (Sales Manager)

The manufacturing manager, one of the negotiating partners in the relationship,
rarely tell sales managers the details of what kind of order information is needed at
the factory shop floor and how delivery dates should be rearranged to make theproduction smooth. From the viewpoint of interdependent self-construal, roles expected by others have to be found by themselves, not told by the others. The norm is
to wait until others find by themselves what is expected in the relationship. People
with interdependent self-construal rarely express their individual wants and interests.
In the same vein, the manufacturing manager does not tell the sales managers about
the details of what they want. In the negotiation, he only asked “Okay, we do ourbest to increase production outputs. How much effort will you make?” He suggested
that sales managers should be able to read between the lines and thereby consider
what production managers want. One sales manager used the metaphor of backdoor
internal marketing to describe this kind of negotiation as follows:
To remove factory people’s discomfort, what we can do is to provide information. Their efforts
should be fruitful, we told them. We say, this is internal marketing, not external marketing. […]This kind of backdoor task is included as a part of our job. (Sales Manager)27

In an interview, another sales manager said that it would be difficult to sharesuch experience among young salespeople.
In our section, there are relatively large number of young salespeople. They have little experience. So, for example, if they are asked [by customers] to produce this kind of product, they
are very puzzled. They have no idea. (Sales Manager)

This quotation suggests that the sales manager is concerned that, in the face of
production managers’ hesitation, inexperienced sales staffs are not able to take initiatives to engage in the negotiation and then miss market opportunities. To deal withthis lack of experience, this sales manager host a new monthly meeting with young
salespeople. Young salespeople from branches in Tokyo and other regions participated in the meeting. Those located away from Tokyo joined the meeting via teleconference system. Typical agenda of the meetings in the beginning is how to develop new products and to obtain orders of such new products. These agenda seems
foreign to young participants. In the beginning of the meetings, they do not talkmuch and remained silent unless they are asked to answer questions. Eventually, thehosting sales manager changed the style of the meeting. Young salespeople makes ashort speech about their immediate challenges, and then discussions follow. The
host sale manager explains the outcome of the meeting as follows:
At first, few voiced their opinions. But I changed the arrangements in which everyone could
give some advice about what truly troubled someone. Try this, or try that. It looks like things
have changed a lot. (Sales Manager)

In this meeting, young salespeople share their struggles with others and experienced as well as young offer advice to each other. Attending of this kind of meeting provides an opportunity for young salespeople to develop capabilities necessary
to respond to what is expected in the relationship.
4.5 Vertical role development
From the perspective of interdependent self-construal, another opportunity todevelop capability by assuming wider roles is observed in the case of the relationship between production managers and his subordinates, assistant managers. In theprevious subsection, our findings show how role expectation is developed in thehorizontal relationship. In this case, it is suggested that disaggregated performance28

measures would have an effect on developing role expectations in the vertical relationship between superiors and subordinates.
As mentioned in the section 4.1, production efficiency performance are disaggregated into several measures such as defect rates, capacity utilization rates, andvariable and fixed costs. Production assistant managers are accountable only for
non-financial measures, particularly capacity utilization rates. They perceive that thetarget of capacity utilization rates is set at a high level and it is not easy to achievethat. When we ask an assistant manager in an interview about the recent performance of capacity utilization rates, he mention that he achieve capacity utilization
rates well above the monthly target level. He quiet modestly explains about his performance. He comments: “I don’t think this [good performance] was on our own
merits.” According to his explanation, the reason why he commented like this is that
he had a relatively large number of Priority Specs in the previous month and thus itshould be natural that Priority Specs accompanied by break-time operation raise
capacity utilization rates. This is physically right but difficult in practice. To undertake break-time operation, assistant managers are not allowed to increase the number of operators and then have to carefully arrange operators’ shifts and motivate
operators to pay more attention to capacity utilization than usual. Actually, under thesame conditions, other assistant managers fail to achieve the targets. Nevertheless,the abovementioned assistant manager does not express his competence in aself-enhancing way but seeks to find his shortcomings in a self-criticizing way.
Thinking about what happens in two or three years, the improvement of subordinates’ ability isneeded. At the moment, it is not enough. I’m happy if each of them gets a challenging task andthen the rates increase as a result. When I was a chief operator, I was unaware of numbers.
That’s why now I tell my chief operators to be aware of numbers. (Production assistant manager)

This quote suggests that what role this assistant manager understands is expected of him is not just to achieve the target numbers by himself but also to encourage his subordinates by showing understanding of their situation with an empathetic attitude. This kind of relationship between a superior and subordinates can beoften seen at Pack.
The superior of this assistant manager, a manufacturing manager, also shares
his experiences with his subordinates. The manufacturing manager is reaching his
29retirement age in a few years’ time. He expects his subordinates, especially, his assistant managers, to take over his position. In an interview, he explains the reason as
follows:
I’m telling [assistant managers] to look at what I do. I’ll reach retirement age in a few years.
[…] In [this] factory, someone should be internally promoted to take the manufacturing manager position. If a new manager comes from another factory, probably he would have a lot of
trouble. I worked here long before I transferred to this factory as a manager. Nevertheless, I
had a lot of trouble. […] I’m openly teaching everything I know. (Manufacturing manager)

The manufacturing manager understands with empathetic attitude that an incoming
manager who will promote from current assistant managers should be in trouble if
he do not tell them of his experiences. His empathetic attitude bring his subordinates
a sense of obligation to show similar empathy to their subordinates. If people withinterdependence self-construal fail to fulfill obligations, they have oime. As shownin the quote above the previous one, to avoid having oime, the assistant manager
perceives that his role is to encourage chief operators not to experience troubles
which they had.
In the production department, labor costs are relevant to overall factory performance, and as such, are assigned to a manufacturing manager. A manufacturing
manager teach assistant managers skills of managing labour costs beyond his responsibility of non-financial measures so that assistant managers will not have troubles when they become a manager. He holds the workshops about labour cost budget–making skills. He also developed budgeting manuals by himself and told assistant managers to actually make labor cost budgets based on the manuals.
I made a manual of how to make [labour cost] budgets and gave it to all of assistant managers.
First, do this. Next, do this. I have a kind of workshop. They may not understand if they don’t
do it by themselves. Unless they learn the skills until my retirement so that everything goes
well without me, an incoming manager will have trouble. (Manufacturing manager)

As this quote suggests, the manufacturing manager teach labour cost budget–making
skills to assistant managers so that they would not be in trouble in the future. Bylearning through the manual and workshop, assistant managers understand that theirsuperior is most concerned about labour costs.
I think Manufacturing Manager most seriously considers labour costs. I was given some materials when I was taught budget making. They mentioned details about how to estimate over-30

time work and reduce workforce. (Production assistant manager)

This assistant manager also states that he would like to learn more about cost budgets, and the relationship with assigning tasks to operators and coordinating theirshifts, even though he is not in a position to be accountable for.
The budgets of the production area are determined at first. Then, the budgets are cascaded
down to the factory, and operators’ arrangements. We did these now. […] I need more details.
What items are there in the budgets? I was taught how to make the budgets. But I’ve nevermade them by myself. It is difficult because there is something like a format. I don’t know until I try. (Production assistant manager)

The production assistant manager also shows his empathetic attitude toward his
subordinates, that is, chief operators, who are not responsible for capacity utilization
rates and defect rates. The production assistant manager himself had been promoted
from chief operator a few years before our interview. In an interview, he explainsthat he told chief operators to account for the performance results of capacity utilization rates and to defect rates in the monthly shop floor meeting.
I’ve never been taught performance numbers like [capacity utilization rates]. I recommend
making some materials for accounting for these performances (to chief operators). I’ve neverdone this (before becoming an assistant manager), so I had a lot of difficulties when I became
an assistant manager. Actually, I want them (chief operators) to prepare such materials bythemselves but it’s a bit difficult. Rather, they should utilize such materials. They should keep
it in mind. (Production assistant manager)

He was worried that, without teaching his subordinates how to handle performance
numbers, they would have trouble when they became assistant managers. The production assistant manager, who was taught budget-making by his superior, also
showed an empathetic attitude toward his subordinates. These episodes tell us thatroles are being developed in vertical interactions among managers and staff withinterdependent self-construal at pack.
Prior literature argues that making managers take wider accountability thantheir controllability can direct their attention to their superior’s performancemeasures (Frow et al., 2005). We find in this subsection that, although assistantmanagers do not take wide accountability, they become aware of their superior’s
measures. Their superior, a manufacturing manager, teaches with an empathetic attitude his/her measures to assistant managers so that they would not be in trouble
31when they take over the managerial position. Assistant managers in turn seek tomeet what is expected from their superior but they cannot return a favor to their superior on equal footing. Assistant managers fulfill their roles by teaching theirmeasures to chief operators with an attitude similar to their superior’s one.

5. Discussion
This study illustrates how disaggregated performance measures affect the way
in which functional managers with interdependent self-construal develop their role
understandings. Functional managers at our case site does recognize the roles represented by the disaggregated performance measures that are specific to functions
and organizational levels. With the disaggregated performance measures, responding
to changing clients’ demands often bring to the fore the tensions between different
functions and levels (Lillis, 2002). Nevertheless, functional managers at our casesite develop their own role understandings beyond what is represented by the disaggregated measures.
Drawing on the cross-cultural psychology literature, this study mobilizes theconcept of the interdependent construal of the self to analyze the way in which disaggregated performance measures are associated with two types of manager’s behavioral pattern: role orientation and empathetic attitude. Based on this framework,
we find that, since managers understand other managers’ position and show sensitivity to them, the role orientation of managers lets them seek what is expected ofthem in their relationship. In our case, good performance results do not equate withmanager’s expression of their internal attributes in a self-enhancing way, as is usually the case with those with independent self-construal. Our case illustrates the way
in which managers with interdependent self-construal have oime, the feeling of being psychologically indebted to others (Markus & Kitayama, 1991), when they findthat they enjoy good results because the same causes that benefits them actually adversely affects the performance results of other managers. With oime, they feel thatthey are not sensitive enough to others and are not fulfilling their roles expected in
the relationship. Even though role expectation is often not clearly expressed by others, oime drives managers to seek and develop their roles in the relationship.
Disaggregated performance measures made it visible that one party enjoys
32good results because other party suffer bad results, thus activating the processes for
those managers with good results to seek roles expected by others in a way that they
could alleviate other managers’ low performance. This process activated by Oime,
which could be felt because of the disaggregated performance measures, bring
managers to develop wider role understandings than those represented by disaggregated measures. We refer to this as relational role development.
Assuming that the roles expected in the relationship are likely to give rise to
the decrease in managers’ performance. However, when managers have empathetic
understanding for other managers, they can accept the decrease in their performance,
which might arise from their understanding that the performance drops should be
temporary and that they should receive long-term benefits from their acceptance. In
other words, managers might recognize that the performance measures formally assigned to them should be seen as lagging measures and that, if the measures temporally show negative results, potential leading factors would lead to performance improvement of the measures in the long run. Actually, in our field study, one manager
told us that he had experienced such lagging improvement of his performance.
According to Hall (2008), comprehensive PMSs, including the linkages between leading and lagging measures, can improve managers’ understanding of departmental interdependencies and clarify managers’ role expectations. However, in
our case, the causal relationships among measures are not exhibited in Pack’s PMSs.
Instead of formal information systems, managers might be informed about suchcausal linkages through informal channels (Preston, 1986; Hall, 2010). In effect,
some functional managers mentioned the importance of their informal visits to thefactory and direct negotiations with managers concerned. However, we did not findthat any managers tried to approach other managers for the assurance of thelong-term benefit in exchange for the short-term performance drops. Since managers
took the long-term benefit for granted, it seems unnecessary for them to negotiate
for it. Managers can accept a certain level of negative performance not simply because they want to express their efforts toward long-term performance improvement
in a self-enhancing way, but also because they try to show an attentive attitude toward others, that is, think of others who would be in trouble without their attentive33

ness.
Why do functional managers engage in such informal negotiations? In informalinteractions, managers have to follow the taken-for-granted rules under which managers have to give others valuable information if they need valuable informationfrom the others (Preston, 1986). These interactions to obtain information are premised on those with independent self-construal, who would use the interactions as ameans to better express their internal attributes as good performance results (Markus& Kitayama, 1991). In our case, sales managers actually offer helpful information to
improve production managers’ performance. However, in exchange for their offerings, sales managers do not seek to obtain useful information to increase their own
performance. Managers engage in interactions because they have oime arising fromuneven performance results. Oime can stem from their perception that they fail tofulfill roles expected in the relationship and adopt an attentive attitude toward others(Markus & Kitayama, 1991). Sales managers recognize inaccurate sales forecast as
their failure, not because they did not fulfill roles desired by their measures but rather, because sales managers put themselves in production managers’ position andunderstood it as their role to provide helpful information for production efficiency.
Since the sales managers did not fulfill the roles expected in the relationship, they
perceived their efforts as failure.
The taken-for-granted rule of equivalent exchange between parties is enforcedin the informal interactions. However, in our case, managers recognized that sales
managers’ offerings were not an adequate offset against the decline in production
performance. Managers do not leverage meetings and negotiations to better express
their attributes as a good performance result, as is the case with those who have independent self-construal. Rather, managers with the interdependent self-construal
seek to show an attentive attitude toward other managers and thereby to maintain therelationship. To convey their attentiveness, interpersonal skills, rather than equivalent offerings, are needed (Kitayama & Karasawa, 1995). For example, having
meeting at other managers’ workplaces is perceived as one of the interpersonal skills
to express, if only marginally, the feeling of thanks and to launch smooth negotiations.

34

Prior literature on the effects of incomplete performance measures argues that
incompleteness causes various efforts to make do with limited resources available to
make the measures work (Andon et al., 2007; Dambrin & Robson, 2011; Jordan &Messner, 2012). Feeling oime and assuming wider roles, which we refer to as relational role development, show another example of making do from the perspectiveof interdependent self-construal. Chenhall et al. (2013) argue that the imperfect nature of performance measures can provide a forum for continuous interactions between individuals and groups with different values, as well as the effort to make dowith limited resources. Their case illustrates that imperfect measures create a formof organized dissonance in the interaction. The dissonance seems to stem from distinctive values of self-contained individuals and is premised on independent
self-construal. However, in this study, we find that empathetic understanding andoime, the feeling of indebtedness to others, form continuous interactions between
managers.
Dambrin and Robson (2011) illustrate that imperfect performance measures are
related to ambiguous understanding of roles. This illustration seems to relate to relational role development. In their study, performance measures, which represent only
a part of the roles, provide “a loose coupling” (p. 446), in which a role desired by
performance measures can coexist with another role that comes from educational
background. Their study demonstrates that sales performance measures are assigned
to sales representatives who have a role as medical professionals, and that the sales
representatives see “their role as ambiguous” (p. 439). Similarly, in our study, sales
managers recognized their role as not only to obtain as many customer orders as
possible but also to provide helpful information for production managers to improve
production efficiency. However, this extension of their role is influenced not by theperformance measures assigned to sales managers but rather by other managers’
measures. These disaggregated measures bring uneven performance results, which
generate the process of relational role development in which managers have oime
and attentiveness to others and assume wider roles. People with interdependent
self-construal understand that the loss of roles in the relationship means the elimination from the relationship, namely, a situation of nightmare (Plath, 1980). To maintain the relationship, people are motivated to find some expected roles. In the con35

text of interdependent self-construal, others’ performance measures as well as those
assigned to an individual relate to the conditions that create oime.
Although prior management accounting literature argues that disaggregatedperformance measures can foster managers’ myopic and suboptimal behavior (Lillis,
2002; Hansen, 2010), this study illustrates that, for those with interdependent
self-construal, disaggregated measures can form interactions involving empathetic
understanding of others’ measures. In this regard, however, it should be noted that
not everyone who has an interdependent view of the self can attend to others’ performance measures. In this study, we mainly focus on managers who have been
members of the same organization for a few decades and have long experienced theinternalization of roles expected in the relationship (since they were ordinary employees). A long and continuous relationship is needed for the foundation ofrole-driven capability development, that is, seeking to fulfill the role expected in therelationship and thereby fosters capability development. As mentioned in our case,some managers expressed concern that young and inexperienced managers might
not take action in consideration of the effects on other departments. While one ofthese managers they started some initiatives to share experiences with young managers, the efforts do not seem adequate.
Our findings suggest that the relationship could be maintained only if somedegree of reciprocity could be reasonably expected. Therefore, attentive managers
might keep relationships only with managers who are expected to be attentive. This
relationship tends to have a strong bond but be closed (c.f., Chenhall, Hall, & Smith,2010). In organizations that need a number of managers recruited from the outside,cross-functional negotiations and educational consideration between superiors andsubordinates seems to be inefficient (Preston, 1986; Dent, 1987; Lillis, 2002).

6. Conclusion
Prior literature on the design of PMSs argues that disaggregated performancemeasures can foster managers’ myopic and suboptimal behavior without consideration of the implications for other managers and the whole organization (Lillis, 2002;
Hansen, 2010). However, recent studies on the imperfection of performance36

measures do not make an issue of the representational quality of the measures but
instead illustrate how organizational members make do with limited available resources and try to make the measures work (Andon et al., 2007; Dambrin &Roboson, 2011; Jordan & Messner, 2012). We consider our findings as having parallels with these studies on the effects of imperfect performance measures. The mainfeature of our study is its focus on micro processes in the unique field of
non-Western organizations and use of interdependent self-construal (c.f., Adler &Chen, 2011) as a framework to analyze field data. Our findings indicate that disaggregated performance measures can lead to a situation in which managers haveoime, the feeling of indebtedness, to other managers. Oime can trigger the process ofmanagers’ relational role development and role-driven capability development. Relational role development is associated with the fact that managers take on roles totry to improve not only their own performance measures but also other managers’
ones. Role-driven capability development represents the process of building managers’ capabilities to play wider roles beyond formal accountability by seeking to fulfill what is socially expected.
The findings are subject to several limitations. Our use of the interdependentview as an analytical framework rests on the premise that functional managers homogeneously have the interdependent view. In reality, there should be some managers with a more independent view and others with a more interdependent view, evenin Japanese companies like Pack. This may be sometimes the case also in Westerncompanies. However, this framework cannot be applicable to more complicated organizations in which there are various people, from those with a purely independentview to those with a purely interdependent view. We are aware that our use of thisframework is prone to falling into a simple stereotyped perspective. However,drawing on this simple framework, we can provide a new insight on the effects ofimperfect performance measures in a non-Western organization, which prior studies
cannot adequately appreciate. This suggests there is potential for future research on
the effect of PMSs on managers’ behavior in the context of comparing different
self-construal and transformation from one form of self-construal to another.

37

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APPENDIX A
Date

Time

Interviewees

270

Senior Manager, Manager, Assistant Manager of Corporate Planning Office (CPCPO)Part 112 July 2010

Manager of Paper Products Production Department
3 Aug 2010180

Senior Manager, Manager, Assistant Manager of CPO

30 Sep 2010

90

Manager, Assistant Manager of CPO

29 Dec 2010

270

Manager, Assistant Manager of CPO

300

Executive Director

Part 28 Feb 2012

Senior Manager, Manager, Assistant Manager of CPO
14 May 201290

Executive Director, Manager of CPO

6 Sep 2012120

Executive Director, Manager, Assistant Manager of CPO

10 Sep 2012120

Executive Director, Manager, Assistant Manager of CPO

180

Factory A Factory Manager

Part 317 Jan 2011
19 May 2011

Factory B
40

Factory Manager

50

Factory Manufacturing manager

50

Assistant Manager A

50

Assistant Manager B

50

Assistant Manager C

22 Jun 201220 Jul 2012

Factory C
50

Factory Manager

40

Factory Operating Manager

40

Factory Manufacturing Manager

40

Assistant Manager A

60

Assistant Manager B

30

Assistant Manager C

40

Senior Sales Manager

50

Sales Manager A

40

Sales Manager B

30

Sales Manager C

90Manager of CPO

28 Jun 2013

Factory C
60

Factory Operating Manager

50

Factory Manufacturing Manager

70

Assistant Manager A

Discussion Part
27 Dec 2010

270

Senior Manager, Manager, Assistant Manager of CPO

42

4 Feb 2011

280

Senior Manager, Manager, Assistant Manager of CPO

18 Apr 2011180

Senior Manager, Manager, Assistant Manager of CPO

28 Apr 2011

270

Senior Manager, Manager, Assistant Manager of CPO

30 Jun 201175

Manager, Assistant Manager of CPO

30 Sep 2011240

Manager, Assistant Manager of CPO

7 Oct 2011120

Senior Manager, Manager, Assistant Manager of CPO

15 Nov 2011

150

Manager, Assistant Manager of CPO

23 Jan 2012

120

Manager, Assistant Manager of CPO

8 Mar 2012210

Senior Manager, Manager, Assistant Manager of CPO

26 Apr 2012

120

Manager, Assistant Manager of CPO

30 Aug 2012

210

Manager of CPO

16 Nov 2012240

Manager, Assistant Manager of CPO

6 Dec 2012

120

Manager, Assistant Manager of CPO

21 Jan 2013

120

Manager of CPO

24 May 2013

360

Manager of CPO

43

APPENDIX B
Contents
Internal documentation

Organizational charts
Factory organizational charts
Strategic analysis of sales department
Strategic analysis
Consultant’s reports
Business analysis
Balanced scorecard 2012
Brief strategic analysis (2012)

Internal archival documents

2006–2008 Middle range plans
Administration department plans
Sales department plans
Sales expense reduction initiatives
Production department plans
Actual sales results (2006, 2007, 2008)
2009–2011 Middle range plans
Body text (including strategic goals of each functional departments)
Planned income statements
Production plans
Actual results2010 (first half) Operating reports
2010 (first half) Cost reports
2010 (first half) Sales ranking
2010 (first half) Marginal profit rankings
2011 Annual sales reports
2012 CEO New Year greetings
Factory
2012 Annual goals
May 2012 Performance reports
May 2013 Performance reports

44