one measure was believed to give reliable information for comparing operations in
multiple countries: profitability as indicated by the ratio of selling, general, and ad-
ministrative expenses to sales.^20 Where other measures are used, either by necessity
or choice, they must be adjusted to render them comparable, which is likely to be a
fairly complex process. This is reflected in the experience of Thomas Schoewe, sen-
ior vice president and CFO of Black & Decker Corporation, who offered the follow-
ing characterization of the process: “If somebody thinks there’s a cookie-cutter recipe
for this, I’d like to see the results.”^21
As this brief discussion makes clear, management accountants have had mixed
success in creating comparable financial controls for the multiple operations of multi-
national enterprises. From the perspective of many financial managers, traditional
concerns, such as translation of financial information into the home currency, politi-
cal risk, and the uncertainty of financial markets abroad, have not yet been resolved
in a satisfactory manner. At the same time, a new set of challenges for management
accountants has arisen in connection with the need to develop dynamic performance
measurement and financial controls. Though more recent than globalization, these
challenges loom large in a contemporary vision of the role of financial management
and control. They can be dated to two articles that appeared in The Harvard Business
Reviewat the beginning of this decade that called for a broadening of the traditional
conceptualization of the role of financial and management control. The first, by
Robert Eccles, forcefully made the point that new strategies and competitive realities
demand new measurement systems.^22 The second, by Robert Kaplan and David Nor-
ton, summarized some practical steps for dealing with these new strategies and com-
petitive realities in terms of the notion of the balanced scorecard.^23
Despite the fact that many of the firms that have struggled with constructing new
performance measures are also struggling with globalization, there has been very lit-
tle recognition of the additional complexity that dynamic performance measures can
introduce into the global financial management conundrum. Our plan in this chapter
is to begin this process of recognition by reporting on some data from various loca-
tions of an American multinational. These data result from an attempt by this multi-
national to create dynamic performance measurement systems for one of its divisions
in locations throughout the world. In doing this, our hope is to begin to scratch the
surface of the complexity that is to come in global management accounting.
We will proceed as follows. First, as a model of dynamic performance measure-
ment systems, we focus on adaptive aspiration levels as first introduced in A Behav-
ioral Theory of the Firm.^24 Second, having introduced the notion of adaptive aspira-
tions, we examine data from several sites to assess the parameters of this model.
Finally, we close with a discussion of some implications of the different findings
from these various sites for the complexity of performance measurement and man-
agement accounting.
26.2 ADAPTIVE ASPIRATIONS. The assumption that organizations set goals, or as-
piration levels, and compare their actual performance to their goals, is common in be-
26 • 4 DYNAMIC PERFORMANCE MEASUREMENT SYSTEMS FOR A GLOBAL WORLD(^20) Wallace and Walsh, 1995.
(^21) Meyers, 1998.
(^22) Eccles, 1991.
(^23) Kaplan and Norton, 1992.
(^24) Cyert and March, 1963.