The Role of Performance Measurement Systems in Enhancing Managerial Decision Making: A Management Accounting Perspective

Abstract

This study explores the critical role of Performance Measurement Systems (PMS) in improving the quality of managerial decision making from the lens of management accounting. Drawing on a qualitative methodology, this research utilizes a structured literature review to synthesize findings from prior studies on the integration of PMS within organizational decision processes. The review focuses on the conceptual linkages between PMS and strategic, tactical, and operational decision-making frameworks, emphasizing how management accounting tools contribute to performance monitoring, accountability, and informed managerial choices. The findings reveal that PMS, when aligned with management accounting practices, not only support internal control and efficiency evaluations but also facilitate adaptive and evidence-based decisions in dynamic business environments. PMS serve as essential instruments for translating strategic goals into measurable outcomes, enabling managers to assess progress, identify variances, and implement timely corrective actions. Additionally, the study identifies that the effectiveness of PMS in decision making is contingent upon their design, relevance, and integration with managerial cognition and organizational culture. This research contributes to the theoretical discourse by framing PMS as a dynamic component of the management accounting system, offering a holistic understanding of their role in organizational governance and performance improvement. The study concludes with suggestions for future research on contextual and behavioral dimensions influencing the utility of PMS in diverse organizational settings.