Contingency Theory in Management: Conceptual Phases and Strategic Link with Performance Measurement Systems

Abstract

This literature review delves into the dynamic evolution of contingency theory in management, with a specific focus on the relationship between organizational strategy and Performance Measurement Systems (PMS). Employing a systematic literature review methodology, the conceptual phases of contingency theory are examined, spanning from the technological approach to the configurational approach. The analysis underscores the crucial importance of aligning PMS with the overall organizational strategy, as advocated by Kaplan and Norton. Empirical studies by Chenhall, Kaplan and Norton, and Hoque lend support to this correlation, emphasizing its impact on organizational performance. Thus, this review underscores the need for a strategic approach in designing PMS, providing practical implications for managers and prompting avenues for future research.