The choice of appropriate measures of divisional managerial performance has been widely debated in management accounting literature.
One area of debate is the extent to which the controllability principle should be applied. Should different performance measures be used to evaluate the performance of divisional managers and the economic performance of the divisions or should a single measure be used for both purposes?
Another area of debate relates to the choice of appropriate performance measures. The debate was concerned with which traditional financial measures should be used, especially as over the past decade new measures have emerged and non-financial measures have also been given more prominence.
This executive summary therefore provides useful insight into the distinction between managerial and economic divisional performance.
