Perceived Environmental Uncertainty, Performance Measurement Systems, and Competitive Advantage.

We investigate the effect of diagnostic and interactive performance measurement systems (PMS) on competitive advantage with perceived environmental uncertainty (PEU) as antecedent variable. This study is motivated by the implementation of the ASEAN Economic Community (AEC) and the continuous performance declining most of large-scale manufacturing firms in Indonesia, which has a huge impact on the managers' inability in predicting a competitive business environment. Manager needs critical resources that enable to process information uncertainty and contribute it to its competitive advantage. Unique resources that is discussed in this study is the use of PMS (diagnostically and interactively) as a structural capital based on resource-based view (RBV). We study large-scale manufacturing firms in East Java Indonesia using surveys and interviews as data collection methods with structural equation modeling (SEM) technique. We find that the use of PMS (both diagnostically and interactively) contributes to competitive advantage when managers perceive the uncertainty of the business environment as accordance with RBT. Furthermore, this study suggests that interactive use of PMS drives the diagnostic use of PMS in case of manager perceive the environmental uncertainty in order to survive and achieve the competitive advantage.