Performance measurement in a theory of constraints environment

There is an increasing recognition of the critical role played by an organization's performance measurement system in achieving competitive success. The success of an organization may well depend upon the compatibility between the performance measurement system in operation at subordinate organizational levels and the organization's global goals. An increasing amount of research in operations management addresses the relationship between the operation's performance measurement system and its apparent incompatibility with global organizational goals. The performance measurement system associated with the theory of constraints (TOC) has been advocated by some researchers as a mechanism for linking operational objectives to the global goals of an organization. However, empirical research is lacking to determine and test the relevance of the proposed performance measurement system presented in TOC. This study examines the application of a TOC-based performance measurement system in an operating environment and reports on the results. A set of propositions are also provided to further future research.