Performance agreement in Thai public sectors

Does PMS influence the strategy pillars: OPP relationship? Evidence from HEIs in Indonesia

Purpose

This study aims to investigate whether strategy pillars have a positive direct effect on organizational productivity performance (OPP) in the Indonesian HEI (Higher Education Institutions) research setting and, if so, whether the effect is mediated by a performance management system (PMS).

Design/methodology/approach

This study used quantitative research employing partial least square structural equation modeling (PLS-SEM) to test the hypotheses. A mediation model of the research framework was developed to investigate the mediating role of PMS.

Findings

Using a sample of 182 Indonesian HEI managers, the results indicate that strategy pillars have a positive effect on OPP. Further analysis shows that PMS partially mediates the strategy pillar–OPP relationship.

Research limitations/implications

This study has limitations. Firstly, the sample size used was relatively small and this may raise the issue of generalization. Secondly, it used a Likert scale and therefore may raise the issue of judgment bias. Lastly, this study is context-specific for Indonesia and caution should be used when generalizing it to other countries.

Practical implications

To enhance the HEIs productivity performance, the HEI managers should develop strong strategy pillars for the purpose of effective strategy formulation and execution.

Social implications

This study provides a model showing how to improve the HEIs productivity performance by employing strategy pillars and a PMS. The better the performance of the HEIs, the better the quality of life of society in the era of the knowledge economy.

Originality/value

Strategy pillars have rarely been researched. This study is therefore one of the few studies on strategy pillars. This study also provides new elements related to measuring strategy pillars, PMS and OPP in the context of HEIs in Indonesia as an emerging economy.