Strategic measurement system's breadth and performance of medium sized service firms in Kenya

Strategic measurement systems are essential management tools for generating information that stimulate learning and drives desired organizational adaptations. However, the effectiveness of any measurement system is partly dependent on its design, organizational structure, environment, technology and firm strategy. The study adopted a descriptive research design to investigate the effects of the breadth of strategic measurement system on performance of medium sized service firms in Kenya. The target population of this study was 2, 039 medium sized service firms registered by Nairobi City County, Kenya and the sample size was 323 firms selected by stratified random sampling design. Standardized questionnaire was used to collect primary data from the chief executive officers of the sampled firms. The study established thatthe breadth of strategic measurement system is a statistically significant positive predictor of performance of medium sized service firms in Kenya. The study also showed that even though both financial and non-financial measures were used, financial measures were the most frequently used indicators. Nearly half (45%) of the firms were not measuring learning and growth perspectives and one-third (31%) of the firms do not measure customer perspective indicators. Hence, strategic measurement systems mostly used by medium sized service firms in Kenya do not have adequate breadth and are not comprehensive enough to elicit strategic outcomes. The firms focus more on measuring short-term objectives (profitability and internal efficiency) with little attention on strategic goals (such as customer relations, learning and growth). The study recommends expansion of the systems to include more non-financial measures such as customer relations and learning and growth indicators.