Digitalization of Performance Measurement Systems and Employee Performance: The Mediating Role of Trust in Supervisors

Abstract : This study examines the role of digitalized performance measurement systems in influencing employee performance, with trust in supervisors as a mediating mechanism. The increasing adoption of digital technologies in management control systems has transformed traditional performance evaluation processes, enabling organizations to generate more transparent, timely, and data-driven performance information. However, prior research has reported mixed findings regarding the behavioral consequences of performance measurement systems, highlighting the need to explore underlying psychological mechanisms such as trust. Using a quantitative survey approach, data were collected from 146 managers working in the banking sector in Indonesia. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that performance measurement technology has a significant positive effect on trust in supervisors, and trust significantly improves employee performance. However, performance measurement technology does not have a significant direct effect on employee performance. Further analysis reveals that trust fully mediates the relationship between performance measurement technology and employee performance. These findings suggest that digitalized performance measurement systems influence performance primarily through psychological and relational mechanisms rather than through direct effects. This study contributes to the management accounting literature by integrating digitalization and behavioral perspectives, demonstrating that the effectiveness of performance measurement systems depends not only on technological capabilities but also on their ability to foster trust within organizations.