How Performance Measurement Systems Enable or Constrain Organizational Ambidexterity

This study examines how different uses of performance measurement systems affect organizations’ capacity to become ambidextrous. Data were gathered through semi-structured interviews, observations, and reviews of documents at four departments of an automotive firm; an abductive approach was employed to analyze the data. Drawing on Simons’ levers of control framework, the combined diagnostic and interactive uses of performance measurement systems are found to facilitate organizational ambidexterity in four main ways: (1) performance information is used to identify areas that could benefit from exploitation or exploration, (2) through the collaborative development of objectives and targets, (3) via performance review sessions, and (4) by leveraging lessons learnt from previous projects. Also, the diagnostic use is found to have positive effects on exploration by stimulating creativity. However, measurement systems can be detrimental to organizational ambidexterity if they reinforce old practices and processes, and if they are strongly linked to individual rewards or sanctions.