Nonfinancial Performance Measures in the Reward System in a Competitive Environment

ヒ　ザイム　シヒョウ　ヲ　モチイタ　ケイエイシャ　ホウシュウ　ケイヤク　キョウソウ　キギョウ　ガ　ソンザイ　スル　シジョウ　カンキョウ　オ　コウリョ　シテ

Oh, Joong-Hwa

The Economic Society of Osaka University

オオサカ　ダイガク　ケイザイ　ガッカイ

Performance Evaluation

Competitive Environment

In this paper, I assume that the owner of a firm rewards managerial efforts with financial measures that could increase the short-term value of the firm, and uses nonfinancial measures that could increase the satisfaction of customers and have impact on the long-term value of the firm. In a competitive environment, the strategies of the firm's owner as to whether or not to introduce nonfinancial measures in the reward system depend on strategies of owners of other firms. The results of this analysis illustrate the Prisoner's Dilemma as to whether the owner should introduce nonfinancial measures in the reward system, even though the value of the firm would be greater if only financial measures were used. The strategy to introduce nonfinancial measures should be a firm's strategy regardless of what other firms do.