System dynamics applications in performance measurement research: progress and challenges

Purpose: A systematic literature review (SLR) was used to identify and analyze literature related to use of system dynamics (SD) applications in organizational performance measurement (PM) research. The purpose of this article is to present the results of a thematic analysis (TA) conducted to synthesize existing empirical evidence, investigate trends and evaluate developments in the research area. Design/methodology/approach: A SLR was conducted resulting in a dataset of 97 articles in this research area. Using TA, major themes/subthemes were inductively synthesized to explore the current development and emerging trends and provide guidance for future research. Findings: The TA resulted in seven themes in the research area – Enhancing knowledge, Approaches to operationalizing PM systems, Utilizing simulation models, Improving organizational outcomes, Achieving strategic alignment, Applying systems thinking and Identifying critical variables. The analysis suggests that although SD has the potential to improve PM systems, there are many limitations and challenges that must be addressed to improve implementation and practical applications. In addition, the results showed that much of the work is exploratory and many fail to fully validate their models suggesting that this research is still in an relatively early phase of development. Research limitations/implications: The results of this study are limited to the 97 articles identified using the SLR protocol. Although the search was designed to be comprehensive, there may be other relevant literature that was excluded. Further, the TA was limited to addressing the research questions. Practical implications: A key insight for managers is that these tools would support decision-makers in understanding performance behaviors and identifying performance drivers for improvement. This suggests that stakeholders can adopt the approach to improve understanding and effectiveness of PM, and to enhance strategic decision-making. Originality/value: This study provides a distinct and thorough analysis of this research area by conducting an inductive synthesis of developments and challenges and guidance for future research and practice. The resulting thematic model, identified code definitions and proposed framework of strategies to overcome challenges, provide a general overview and resource to support future studies in the research area and facilitate practical use of SD capabilities to support PM.