The Role of Performance Measurement in Managing Political‐Economic Tensions: A Case Study of Economic Value Added Adoption in a State‐Owned Enterprise

Abstract

ABSTRACT This study examines how performance measurement systems (PMSs) mediate political‐economic tensions in Chinese state‐owned enterprises (SOEs), where state directives and market mechanisms coexist. Drawing on a longitudinal case study of a Chinese central SOE following the introduction of Economic Value Added (EVA), we find that its PMS enabled managers to negotiate competing growth and profitability objectives through recurring cycles of target‐setting, monitoring, and review across organizational levels, with feedback supporting continual adjustment. We contribute to political economy research on SOE governance by showing how the PMS rendered state‐market tensions visible and structured the negotiation and recursive adjustment of competing demands.