Assessing empirical research on value-based management: Guidelines for improved hypothesis testing

Abstract

The claims that value-based management (VBM) increases corporate performance have attracted considerable interest among researchers and organizations over the last three decades. Even though many studies have been conducted, the evidence on whether users outperform non-users is inconsistent. This paper attempts to place these diverse findings into perspective, and provide venues for future research. For that purpose, we drafted a framework to analyze 120 empirical studies on VBM. We concluded that meaningful hypothesis tests have been impaired by the narrow scope of data sets as well as methodological misspecifications. Based on this analysis, we categorized studies into four streams of research, employing factor analysis and cluster analysis. We then suggested that the most sophisticated studies identified positive performance effects of VBM. Lastly, we derived guidelines to improve the hypothesis testing of future studies on VBM.Keywords Literature review · Shareholder value · Strategic performance measurement · Value-based management · Value-driver JEL classifications D2 · J3 · L2 · M4

Considering the shareholder perspective: value-based management systems and stock market performance

“…And in fact, as Ittner and Larcker (2001) and Lueg and Schäffer (2010) point out the question whether actually implemented VBM systems can keep the conceptual promise of increasing firm performance is one of the most fundamental issues in VBM research. However, in spite of the rising number of firms adopting VBM systems and the increasing attention of researchers and the financial press solid empirical evidence on implications for firm performance and stock market returns is still very limited.…”

“…Thus, many authors ask for more research on that issue (e.g. Davies, 2000;Ittner and Larcker, 2001;Lueg and Schäffer, 2010).…”

Multi-criteria decision methods for CSR management – literature review

“…Institutions (particularly, the intra-organizational process by which the institutionalization of management accounting systems shapes organizational change) play a significant role as contingency factors for VBM's impact on a firm's performance (Firk et al, 2016). External institutions constituting part of the business environment affect VBM adoption and its effects (Lueg and Schäffer, 2010). The cognitive styles of CFOs (educational background in business) have a substantial impact on VBM-sophistication (Burkert and Lueg, 2013).…”

Value-based management as a tailor-made management practice? A literature review

“…Knight 1998;Martin and Petty 2000). However, in practice, value-based management systems have only diffused to a fraction of firms (Knight 1998), that show on average a higher performance than comparable firms (Ryan and Trahan 2007;Lueg and Schäffer 2010;Rapp et al 2011).…”

“…Yet, value-based management as such is not a (formal) management accounting theory, but rather a theory of firm performance (Malmi and Granlund 2009). Therefore, to explain performance outcomes by value-based management, conceptual value-based management research can be extended by contingency-based research (Chenhall 2003(Chenhall , 2007Lueg and Schäffer 2010;Elgharbawy and Abdel-Kader 2013).…”