Curvilinear Relationships between Budget-Goal Difficulty and Managerial Performance: The Moderating Effect of an Enabling Performance Measurement System

ABSTRACT This study investigates how an enabling performance measurement system (PMS) shapes the curvilinear relationship between budget-goal difficulty and managerial performance. We distinguish between two core design principles of enabling PMSs—adaptability (an integrated concept combining repair and flexibility) and transparency (internal and global transparency)—and theorize that they play distinct roles. Based on survey data from 495 Japanese middle managers, we find a curvilinear relationship between budget-goal difficulty and managerial performance. More importantly, we uncover the contingent nature of enabling PMSs. Adaptability moderates this curve in a complex manner: under high adaptability, performance peaks with moderately difficult goals but declines sharply when goals become excessive. Additionally, transparency was found to have a direct effect on managerial performance. Our findings contribute to the literature by demonstrating that the design elements of enabling PMSs are not universally beneficial; their effectiveness, particularly that of adaptability, is contingent on the level of goal difficulty.