International Journal of Management Reviews Volume 9 Issue 3 pp. 171–189 171

© Blackwell Publishing Ltd 2007, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

International Journal of Management Reviews (2007)doi: 10.1111/j.1468-2370.2007.00204.x

Blackwell Publishing LtdOxford, UKIJMRInternational Journal of Management Reviews1460-8545© Blackwell Publishing Ltd 200792ORIGINAL ARTICLEWhat have we learned? Themes from the literature on best-practice benchmarkingxxx 2007

What have we learned? Themes from the literature on best-practice benchmarkingGraham Francis and Jacky Holloway1

The aim of this paper is to review the important themes in the literature on benchmarking,and to assess the contribution to knowledge provided thus far. Four themes from theliterature are highlighted: studies of the nature of benchmarking practice; criticisms ofbenchmarking; evaluating the effectiveness of benchmarking; and the notion of bestpractice. The authors argue that, while the literature does include a few critical analyses ofthe practice and impacts of benchmarking, it is dominated by relatively descriptive, and evenprescriptive, accounts of the ‘realities’ of benchmarking. The longer-term (qualitative andquantitative) effects and perspectives of diverse stakeholders on benchmarking are largelyneglected. This selective focus has implications for the contribution of benchmarking researchto practice, for example, in terms of the role of internal organizational capabilities in analysingthe performance of processes and managing communications and change. The authorsadvocate areas of future research to improve theoretical understanding of benchmarkingand thoroughly evaluate its impact within the context of performance management.

Introduction

Twenty years of widespread use have seenbenchmarking become an accepted manage-ment practice rather than just another manage-ment fad. While its practice has occupied thetime and energy of many managers, bench-marking has also been the subject of a bur-geoning body of literature ranging across theacademic to practitioner-oriented spectrum.This literature has evolved from initial ‘howto and why’ offerings, gradually incorporatinggreater evaluation and critique.

Given the magnitude, diversity and continualadditions to the literature, it is neither practic-able nor desirable to offer ‘comprehensive’coverage. Instead, the references cited hereare a mixture of substantive studies, detaileddescriptive pieces and other review papers,selected to illustrate the evolution of the liter-ature, and its limitations.

Reviews by Cox and Thompson (1998),Dorsch and Yasin (1998) and Zairi and Youssef(1995, 1996) traced this growth in benchmark-ing literature after its first decade and a half.Indeed, new literature reviews have continued

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to emerge (e.g. Anderson and McAdam 2004;Dattakumar and Jagadeesh 2003; Yasin 2002)along with new journals and books on thesubject, perhaps reflecting a transition frommanagement fad to significant managementpractice. These reviews provide valuableresources for the reader seeking familiaritywith the nature of benchmarking and itscontribution to performance improvement inpublic and private sector organizations.

This paper has a more specific aim: to takestock, in terms of contribution to academicknowledge and evidence-informed practice, offour major themes from the literature:

• Theme 1: Studies of the nature of bench-marking practice

• Theme 2: Criticisms of benchmarking• Theme 3: Evaluating the effectiveness of

benchmarking• Theme 4: The notion of best practice

Some underlying theoretical assumptions maybe detected in the benchmarking literature.For example, earlier works treated its impactas universal, suggesting the isomorphic assump-tions of institutional theory (DiMaggio andPowell 1991; Frederickson 2002). Laterliterature is more relativistic, implicitly ifnot explicitly informed by contingency theory(Donaldson 2001; Elnathan et al. 1996;Hill et al. 1996; Sitkin et al. 1994). Perhapssurprisingly, there is a dearth of critical or post-modern analysis (although Longbottom (2000)tantalizes the reader by referring to both butdelivering neither). For example, while manyof the employee involvement, organizationalchange and managerial work aspects of qualitymanagement addressed in Wilkinson andWillmott’s (1995) edited collection are rel-evant to benchmarking, there is yet to be asimilar scrutiny from the labour processperspective.

Therefore, a literature review organized interms of explicit theoretical positions onbenchmarking would be very brief. Instead, theauthors offer a framework of thematic strands.These indicate the strengths and limitations

of, and gaps in, the academic literature and, byimplication, the research evidence available topractitioners and their advisers. The themesform a spectrum from ‘practical and prescrip-tive’ to ‘theoretical and critical’. However,the authors argue that the middle ground ofevidence-informed and theoretically under-pinned practice, associated with ‘Mode 2’research (Gibbons et al. 1994; Tranfield andStarkey 1998) and favoured by managementresearch policy-makers, is underpopulated. Animportant aim of this paper is to examinesome reasons for this gap in the literaturethrough an exploration of four themes identi-fied in the literature, each theme ending withsuggested areas for future research.

This review is not ‘systematic’ in the termsof Tranfield et al. (2003), for reasons thathave much in common with the stance takenby Buchanan et al. (2005). That is, the wealthand diversity of literature on this subject andits ‘ambiguous, multidimensional and contin-gent’ nature (Buchanan et al. 2005, 192), makesit impracticable (and probably undesirable)to attempt to draw quantitative conclusionsabout either the practice of benchmarking orthe contribution of academic analyses of it.However, the paper does include a review ofefforts to date to develop an understanding ofthe value of benchmarking to various partici-pants and stakeholders, and points to scopefor further work in this area which could havewider relevance in the field of performancemanagement across all sectors of the econ-omy. Following a context-setting section, thebody of this paper is therefore structuredaround the contribution to knowledge reflectedby each of the four key themes in the literature.

Best-Practice Benchmarking: Roots and Definitions

From its inception, benchmarking has been amethod for identifying aspects of an organiza-tion’s activity that could be more efficientand/or effective by comparison with otherrelevant organizations’ performance. Data aboutsuch ‘partner’ organizations and their key

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processes are used (often by multidisciplinaryteams) to identify and implement changes,usually to important operational processes.

There are many definitions of best-practicebenchmarking that capture most of its essentialcharacteristics. The critical characteristic isthe examination of practices (processes). Thepublication of new management ‘text-books’on ‘how to do benchmarking’ appears to havepeaked by the late 1990s (e.g. Camp 1995;Spendolini, 1992; Watson 1993; Zairi 1998; andfor the non-profit sector, Letts et al. 1999), butsuch books did establish a broad consensusin terms of what they believed best-practicebenchmarking should involve in practice.

Benchmarking originated in the manufactur-ing sector, but soon found applications in, first,private and then public parts of the servicesector. It has its roots in earlier managementtechniques such as inter-firm comparisons,which have long been available in the formof management information on sets of keyparameters pooled by local groups of employers.PIMS (Profit Impact of Marketing Strategies)has been offering ‘benchmark’ data for mem-ber organizations within their own industriessince the early 1990s (Merrifield 1994). Thefirst actual labelling of a performance-enhancingactivity as ‘benchmarking’ in Western industryis usually attributed to Xerox in 1983 (Jacobsonand Hillkirk 1986). Their portrayal of Xeroxas an ‘American Samurai’ reflects the escalationof interest in Japanese management techniquesin the 1980s such as Kaizen (continuous per-formance improvement) (Imai 1987; Yoshikawaet al. 1993).

Benchmarking tended to be adopted mostreadily in what one might term ‘blue collar’service organizations, such as engineeringmaintenance and transport, and high-volumelaboratory-based activities such as pathologyare quite likely to adopt benchmarking onthe back of existing quality assurance or costanalysis systems (see, for example, France et al.2002; Gordon et al. 1999; Mathaisel et al.2004). It was slower to take root in the rapidlygrowing ‘white collar’ parts of the service sector(financial services, retail, etc.), although other

improvement approaches originating in manu-facturing appear from the literature to havebeen even less readily considered (and/or morerapidly dropped) than benchmarking. Thereare signs of ‘benchmarking by stealth’ accom-panying high levels of adoption by large servicebusinesses of the Balanced Scorecard (Kaplanand Norton 1996; Neely et al. 2004).

The following four sections review theliterature organized by theme. The first theme,‘Studies of the nature of benchmarking prac-tice’, is relatively well populated and, as such,perhaps provides the greatest potential fortheory development and, in turn, for moreuseful contributions to practice.

Theme 1: Studies of the Nature of Benchmarking Practice

The academic literature in this area is largelyempirical, encompassing relatively neutraldescriptive studies of benchmarking applica-tions, surveys of its prevalence, attempts tocategorize benchmarking by inventing newtypologies, and the occasional critique parti-cularly in terms of the ‘misuse’ of benchmarkingas a political tool.

A ‘Taxonomy of Typologies’?

Many writers on benchmarking attempt toproduce a classification framework that ade-quately describes the array of activities carriedout in the name of benchmarking (e.g. Dattakumarand Jagadeesh 2003; Kyrö 2003; Yasin 2002).This may be illustrative of the diverse rangeof activities taking place in the name ofbenchmarking and the purposes that bench-marking has been seen to serve. Table 1 showssome of the main typologies which have beendeveloped to describe or classify the charac-teristics of benchmarking.

Perhaps the most commonly cited typologyis Camp’s (1995) distinction between internal,competitive, functional and generic bench-marking (see Table 1). These four categorieshave subsequently been expanded upon by otherwriters: for example, ‘best in class benchmarking’

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Table 1. Benchmarking typologies

Study Typology Definitions

Camp (1995) Internal, competitive, functional and generic benchmarking

Internal: comparison among similar operations within one’s own organization; Competitive: comparison to the best of the direct competitors; Functional: comparison of methods to companies with similar processes in the same function outside one’s industry; Generic process: comparison of work processes to others who have innovative, exemplar work processes. (Adapted from Camp 1995, 16.) Gilson et al. (2001) and Peters and Waterman (1982) offer examples of generic benchmarking.

Trosa and Williams (1996) ‘Results benchmarking’ and ‘process benchmarking’

‘Results benchmarking’ is concerned (merely) with the comparative data generated by benchmarking. ‘Process benchmarking’ considers how results were achieved, so that the performance gaps identified in the ‘results’ can be closed by investigating and learning from others’ practices.

Bowerman et al. (2002) Voluntary or compulsory Considers the differences between public and private sector benchmarking and classifies public sector benchmarking in terms of whether it was voluntary or compulsory.

Elnathan et al. (1996) ‘Unilateral’ and ‘co-operative’ Elnathan et al. (1996) distinguish in particular between ‘unilateral’ (often covert and independent) and ‘co-operative’ approaches (where information is voluntarily shared between participants). The latter includes ‘group’, ‘indirect/third party’ and ‘database’ forms.

Schofield (1998) ‘Implicit benchmarking’ and ‘explicit benchmarking’

Schofield (1998) distinguishes between ‘implicit benchmarking’ (a by-product of information-gathering exercises such as a survey undertaken by a national agency) and ‘explicit benchmarking’ (a deliberate and structured process to facilitate comparison and identify directions for change that will lead to improvement).

Jackson and Lund (2000) ‘Implicit benchmarking’ and ‘explicit benchmarking’

Jackson and Lund (2000) also use this typology in their discussion of the emergence of benchmarking in higher education. Focusing on the information-gathering roles of participants.

Murdoch (1997) Lateral benchmarking Another term used to describe generic benchmarking.

CIPFA (1996), Watson (1993)

International or global benchmarking

The comparison with exemplary performance by organizations overseas; can be competitive, functional or generic.

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is used by Spendolini (1992) to emphasizethe organization-independent nature of genericbenchmarking. ‘Industry benchmarking’ indi-cates a wider comparative field than competi-tive benchmarking (since not all organizationswithin an industry are a firm’s competitors).But Coopers & Lybrand (1994) and Mayleet al. (2001), among others, have reportedthat organizations often start by benchmarkinginternally, probably at least in part because ofthe complexities of establishing partnerships,particularly with competitors. An alternative tograppling with some of the more problematicaspects of competitive benchmarking is to adoptgeneric benchmarking with unlike partners;indeed, Camp (1995) and others point out thattruly innovative ideas are more likely to befound by looking at key processes outsideone’s own industry.

Professional accountancy bodies have beenadvancing the potential contribution of theirmembers to benchmarking activity for someyears. CIPFA (1996, 18) have used Camp’sdistinctions, while CIMA (1996, 6) includethe additional category of customer benchmarks,where the customer or market is responsible fordetermining what is required. However, this isin essence an output measure rather than a pro-cess benchmark. Other authors make a similardistinction between process benchmarkingand results benchmarking (Trosa and Williams1996). Another distinction made, in terms of thenature of benchmarking, is that of strategic,operational and functional or managementbenchmarking. Pryor (1989), Shetty (1993) andSociety of Management Accountants of Canada(1995) prefer these categories. Camp’s typo-logy is not necessarily incompatible with othertypologies, as each could, for example, be car-ried out at the strategic or operational level.

Wolfram Cox et al. (1997) explore in depththe significance of the metaphors impliedwhen the emphasis is placed by organizationson benchmarking (as competition) and bench-marking (as collaboration), seeking to predictthe nature of the relationships between bench-marking parties. The variations in commit-ment to invest time in benchmarking and act

on its findings, in part at least, will reflectorganizational and contextual characteristics,rather than variability originating in bench-marking itself. For example, Wolfram Cox’sand several other typologies provide eitherimplicit or explicit contingency explanationsfor the differences experienced by organizations,particularly where (inter- or intra-organization)structural variables are involved.

Benchmarking: Public and Private

Empirical academic research into the natureand prevalence of best-practice benchmarkingactivities lagged somewhat behind its advocacyin the practitioner literature and adoption byorganizations. For some organizations, bench-marking has become routine and is seen as anintegral part of ‘the way we do things here’.However, Holloway et al. (1999) reported thatmany organizations were still actively con-sidering introducing benchmarking or hadonly recently commenced its introduction. Thiswas supported by surveys in the UK andEurope (Cook and Macauley 1996; Coopers& Lybrand 1994; Coopers & Lybrand Europe1994; Hinton et al., 2000; Partnership Sourc-ing 1997). More recently, in an internationalsurvey Jarrar and Zairi (2000, 2001) reportthat benchmarking was still being adopted bya growing number of companies with no signof a downturn: ‘The ever-growing literatureon benchmarking indicates a wide spread ofbenchmarking applications across geographicaland sectoral borders. It is forecasted that suchmomentum will grow in the future as bench-marking becomes a “way organizations dobusiness”’ (2001, 912).

The concept (if not the actual label) ofbenchmarking has been familiar to publicservices for some years. In the UK, for exam-ple, independent reports on ‘best practice’have long been produced by the Audit Com-mission and National Audit Office. The actualpractice of benchmarking in UK local govern-ment has increased with the requirement touse it to demonstrate ‘Best Value’ (the replace-ment for compulsory competitive tendering

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implemented in the 1990s; see Bassam 1997;Bowerman et al. 2001; Kite and Davidson 1997;Solovy 1997). Stephens and Bowerman (1997)identify several problems of compulsory bench-marking in relation to local authorities and theimplementation of Best Value.

Knowing an organizations’s position in aleague table does little to enable that organi-zation to understand how better performersachieved their status and hence how to moveup the table, perhaps overcoming externalobstacles or unequal inputs along the way.(See, for example, the work on school leaguetables by Goldstein and Spiegelhalter (1996);and the extensive critique of the design, analysisand reporting of performance indicators fromthe Royal Statistical Society (2003)). Substan-tial analyses of the uses of benchmarking inthe UK National Health Service (e.g. Llewellynand Northcott 2005; Northcott and Llewellyn2005), the health sector more widely (Wait2004), local government (e.g. Bowerman et al.2001) and the wider UK public sector (e.g.Bowerman et al. 2002; Magd and Curry 2003)make strong links to the influences of the policycontext that may distort the potential for actingon the lessons learned from benchmarking.

The influence of behavioural and contin-gency theories can be seen in such critiquesof ‘compulsory’ public sector benchmarkingpolicies. However, the underlying logic ofbenchmarking sometimes seems to have beenoverlooked by designers of schemes to fosterbest practice in the commercial sector, too.For example, an underlying premise of best-practice benchmarking is that only by under-standing how exemplary performers achievedesirable outcomes can one make significantimprovements. And by investigating howdissimilar organizations perform similarprocesses, ‘learning from contexts outsidean organization’s usual frame of reference’(Wolfram Cox et al. 1997, 286), those improve-ments can outstrip incremental change foundwithin a single organization or industry. Yet,both public sector league tables and privatesector incentive schemes (Fitzgerald and Moon1996) have continued to encourage intra-sector

comparisons and the pursuit of relatively static‘best current practice’ targets.

Networking and knowledge sharing comerelatively naturally to social enterprises suchas charities. For example, Paton (2003) reportedon how the voluntary sector has activelyembraced many practices that would be termed‘benchmarking’ in other sectors, as the desir-ability of seeking ideas and making comparisonswith external organizations has gained legit-imacy. However, ‘fully fledged’ benchmarkingfollowing the prescriptions of the likes of Campis found relatively rarely, although with somegood results (Paton 2003; Paton and Payne 1997).

The ‘benchmarking club’ has been reinventedusing web-based technologies (see, for example,Business Performance Improvement Resource2005; Mann and Grigg 2004; Welch and Mann2001). Benchmarking activity and researchin ICT-based organizations was the focus fora special issue of Benchmarking: an Inter-national Journal (Alshawi et al. 2003), illustratingits relevance alongside the growth of knowledgemanagement. A further example of the mod-ernization of benchmarking is found in itsapplication to tourism destinations (Kozak 2002).

Thus there is a body of research-basedliterature about the uptake of benchmarking,albeit lagging behind the more instructional/proselytizing literature in practitioner maga-zines, professional newsletters, etc. However,much of the literature comprises individualcase studies rather than surveys. From hissurvey Longbottom (2000) commented that ‘thevolume of benchmarking projects is less thanexpected given the vast amount of literatureon the subject over the past few years’ (p. 113).Some indications of the reasons why such‘promising practices’ are not adopted as readilyas one might expect can be found in Leseureet al. (2004) but, as their review suggests,many aspects remain under-researched.

Pointers for Future Research on the Nature of Benchmarking Practice

This theme illustrated the diversity of practicesthat characterizes benchmarking and how the

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literature attempts to depict it. Unfortunately, theproliferation of typologies is of limited valuein helping us to understand the purposes heldfor benchmarking, partly because it tends tolag behind practice (which in turn has becomemore diverse, rather than convergent). Indeed,sometimes it is possible to gain the impressionthat writers are competing to provide the ulti-mate definition or approaching the field fromcompletely separate viewpoints that are in-capable of integration. There is certainly not asingle accepted classification system or taxonomy.

As best-practice benchmarking is an estab-lished management tool as well as an intellec-tual concept, and has seen widespread adoptionover a number of years, there is the potentialin this research theme to examine how thenature of benchmarking develops longitudinally.It may be possible to study how organizationshave learned how to learn. For example, takingCamp’s (1995) typology, is there a tendencyfor benchmarking activity to develop withexperience and ambition along a ‘maturitycurve’ from internal or functional to competi-tive and then generic benchmarking? If so,does this increase the benefits gained? Or is amore important long-term effect to be foundamong organizations that move from ‘results’to ‘process’ benchmarking, gaining and embed-ding capabilities in change management alongthe way? In-depth longitudinal qualitative casestudies may be an appropriate method.

Theme 2: Criticisms of Benchmarking

Initially, the vast majority of benchmarkingliterature focused merely on ‘what is’ and ‘howto’. Subsequently, an increasing number ofauthors have begun to question aspects of thefundamental logic of best-practice benchmark-ing. The literature in this theme incorporatesstrands relating to design, distinctiveness anddeployment of management effort in the broadercontext of performance management. It linksbenchmarking to the literature on managementfads and fashions, and the adoption of innovativeor promising management practices (Leseureet al. 2004).

Notes of Caution from the Literature

While much of the practitioner-oriented liter-ature eulogizes about the benefits of bench-marking, cautionary notes have been soundedby such authors as Anderson and McAdam(2004), Cox and Thompson (1998) andElnathan et al. (1996). For example, Cox andThompson (1998) claim that there are circum-stances when benchmarking is inappropriate,as it carries serious strategic risks, such as theinability to control effectively against loss ofsensitive data to competitors or the costlyfailure to implement someone else’s ‘bestpractice’ effectively. Elnathan et al. (1996)suggest that benchmarking suffers from hid-den costs such as: (i) the costs of the time andeffort needed to co-ordinate the process andthe inputs of participants in order to obtain acomparable set of data; and (ii) the quantifica-tion of costs which, while significant, may behard to trace or measure, including costs relat-ing to the cultural change required and costsarising from resistance to change by thoseinvolved and affected. Indeed, benchmarkingis no more immune to the GIGO (garbage in,garbage out) principle than any other per-formance management system; statistics can beabused or used incorrectly, as either a cause oreffect of gaming and other political behaviours(Maleyeff 2003; Royal Statistical Society2003). These criticisms may be particularlypertinent to the public sector context.

Although it is often difficult to obtainempirical data about unsuccessful businesspractices, informants in the authors’ ownresearch quite often expressed concerns aboutproblems that had in some cases led to bench-marking being abandoned or not started, inspite of initial plans (Holloway et al. 1999),and similar findings were reported by Ansellet al. (2003). Doubts were greatest in smallerfirms, expressed in terms of perceived costand time constraints; and some respondentsdid not know how to find out enough aboutwhat benchmarking involves (in spite of themany publications and advisory servicesavailable). Benchmarking efforts that were

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considered to have been reasonably successfulwere characterized by basic organizationalprocesses such as having someone with previousbenchmarking experience on the team, goodinterdisciplinary working, and top managementcommitment and realistic resources, rather thanslavish adherence to the ‘instructions’ such asSpendolini’s ‘five steps’ (Spendolini 1992).

The type of benchmarking undertaken maybe constrained by perceptions of risks orcosts. Choosing similar organizations meansthey are more likely to be your competitors.Under such circumstances, the exchange ofperformance indicators may be a straightfor-ward reciprocal arrangement. The exchangeof ideas, however, is much more likely to beinhibited by considerations of commercialadvantage (and this applies increasingly in thepublic sector too). So, returning to Camp’s(1995) internal, competitive, functional andgeneric typology, a combination of similarcomparator organizations and metrics or per-formance indicator data may tend to squeezeout the possibility of generic benchmarkingand thus preclude many organizations fromsome of the greatest potential performancegains that could be made.

Wolfram Cox et al. (1997) discuss the ten-sions between competition and collaborationin the context of various forms of benchmark-ing. They describe benchmarking as a mixedmetaphor, in which ‘theory is insufficientlydeveloped to explain the differences betweeneffective and ineffective efforts’ (WolframCox et al. 1997, 286). There is an apparentlack of enthusiasm for bringing descriptionand prescription together in search of theoret-ical explanations, combined with a reluctanceto undertake empirical testing as noted byElnathan et al. (1996, 53): ‘Nowhere in theliterature is there a comprehensive, compara-tive study of which information sharingmethod is most effective under a specific setof conditions.’ Systematic evaluations ofbenchmarking programmes using theoreticalmodels and concepts are few and far betweenin the literature. This is a gap which it wouldbe more appropriate to expect to see filled by

academic research than by consultants orprofessional or trade bodies.

The accusation that best-practice benchmark-ing is atheoretical, or at least under-theorized,can be extended to many management fads orfashions (see, for example, Holloway 2002;Walgenbach and Hegele 2001). However, thisdoes not render them unworthy of academicstudy, as considered below.

Benchmarking: Fad or Fiction?

The sustained popularity of benchmarking(in terms of its uptake) may well be due tothe fact that it subsumes such a broad range ofactivities, many of which have been commonmanagement practice in a number of guisesfor many years. However, the slowing of thetide in the ‘airport bookstand’ genre of bench-marking books could signal a loss of massappeal, at least as perceived by publishers. Tohard-pressed managers, is the introduction ofbenchmarking just another management ‘fad’or ‘fashion’, with little to indicate why theyshould go out of their way to adopt it? Assuch, it may be rejected before being fullyconsidered, particularly if the next fashion isalready being heavily promoted. Longbottom(2000), for example, catalogues the assault onbenchmarking made by proponents of busi-ness process re-engineering in the early 1990s.

However, ‘management fads’ or fashionsare not necessarily as insubstantial as fads inhome decoration or fashions in clothing. Theycan have a serious part to play in changingorganizational performance. They reflect the‘emergent collective preferences’ of managersfor new techniques which will help them to‘respond to organizational performance gapsopened up by real technical and economicenvironmental changes’, serving as a technicallearning process for managers – providedthat they appear both rational and progressive(Abrahamson 1996, 255; and see Huczynski1992). Whether such fashions have intrinsicvalue and validity when they emerge from theiroriginators is less important than the charac-teristics they develop as they are interpreted

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by trainers or consultants and then by managersthemselves.

Abrahamson (1996) pointed out that theconsumption of management fashions can beinfluenced by the demands of their ‘consum-ers’, who may be insufficiently demanding ofthe suppliers of management fashion rhetorics(i.e. management academics) in terms ofrequiring causal explanation or theoreticalunderpinnings. There are very few systematicevaluations of benchmarking interventions –or indeed other performance improvementsystems – to be found in the literature. Apattern of management fashions being promul-gated, adopted and discarded without dueattention being paid (either by practitioners oracademics) to how far their potential impactwas realized is a missed opportunity forboth groups. The complex range of influenceson the adoption of ‘promising practices’designed to improve organizational perform-ance illustrated in Leseure et al.’s (2004)systematic review provides considerable foodfor thought.

Benchmarking as a Performance Management Tool

Benchmarking is often only one of severalperformance management tools used bymanagers (especially in larger organizations)either in series or in parallel (Berry et al. 2005;Holloway et al. 1999). It is perhaps unfairto accuse managers of merely jumping onthe latest bandwagon, however, as bench-marking is readily integrated within an overallsystem for performance management, playingto its strengths and recognizing its limitations.This is supported by the findings of the BestPractice Club’s survey of member organiza-tions (Chase 1997), where benchmarking wasbeing used to improve the value of productsand services to the customer, being mosteffective where total quality management (TQM)and self-assessment using the EuropeanFoundation for Quality Management’s BusinessExcellence Model (EFQM 1993) were alreadyestablished.

Pointers for Future Critical Research on Benchmarking

Benchmarking may have lost some of itsattractiveness as a research topic as newerapproaches to performance management andimprovement have become established but, solong as benchmarking is still in commonpractice, there is scope for synergy within thewider field of performance management research.For example, conceptual and empirical studiesof the use (and misuse) of the BalancedScorecard (Kaplan and Norton 1996) are begin-ning to emerge (Bourguignon et al. 2004;Neely et al. 2004; Nørreklit 2000; Nørreklitet al. forthcoming). The simultaneous presenceacross a wide range of sectors and countries,of several widely used and well-documentedapproaches to cross-functional performancemanagement should still give multidisciplinaryresearch groups much to investigate.

The relative shortage of academic studiesof benchmarking from a ‘radical critical’perspective has already been noted; indeed,theoretical examinations from more mainstreamperspectives also remain scarce. Most of the‘criticism’ of benchmarking has come fromconsultants or practitioners and has been interms of its technical limitations or assumedimpact on the financial bottom line. Ultimately,benchmarking is a tool for performance man-agement primarily serving the interests ofemployers and shareholders, which directlyaffects peoples’ working practices and couldconceivably lead to reductions in jobs. Itshould therefore logically attract attentionacross the spectrum from neo-institutionalists,agency theorists and adherents of transactioncost economics and resource-based strategies,through relativist contingency theorists andFoucauldians, to critical realists, Habermasiansand Marxists. Yet, standard texts on criticalmanagement thinking (Alvesson and Willmott1996; Barry et al. 2000; Clegg and Hardy1999) have little to say about performancemanagement in general, and even less onbenchmarking. So there is a major opportunityfor theoretical analysis waiting.

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As interest in corporate governance andstakeholder perspectives grows, benchmarkingmay provide a rich territory for process-focused studies. For example, how is bench-marking affected by legislation and corporatepolicies on information management anddisclosure? The critique that benchmarking isjust another management fashion has gener-ally been indistinguishable from critiques ofother performance management systems. Theliterature tends not to include in-depth studiesof the processes by which interpersonal rela-tionships, power structures, etc. are affectedby benchmarking. Nor do writers tend to takea broader look at how organizations managetheir performance more generally, particularlywhether those that are ‘good’ at benchmark-ing also ‘good’ at other approaches to perform-ance management. If this is the case, does thisreflect consistent technical competence, or asound choice of approach taking into accountthe organization’s culture, history, leadershipstyle, key personalities and so on? If the lattercontingency explanation holds, there are impli-cations for the extent to which ‘best practice’ oreven ‘good practice’ can be generalized about.

Benchmarking seems to be a field in whichthe academic community has not by and largeprovided students or practitioners with ‘schol-arly rhetorics’ (Abrahamson 1996) which aresufficiently informed by empirical research toprovide a sound basis for action. Nor have theyapplied theories to this area of managementpractice so as to gain a better understanding ofits dynamics, or to improve on those theories.The authors advocate research in all these areas.

Theme 3: Evaluating the Effectiveness of Benchmarking

As a sub-set of the literature on evaluation ofthe impact of management interventions (whichis in any event somewhat patchy), publishedstudies of the impact of benchmarking activityon organizational outcomes are particularlyscarce. Furthermore, evaluation is rarelytheir main focus, and (in common with otherperformance management approaches) where

impact is explored, it is more likely to be interms of the dimension of efficiency ratherthan effectiveness or long-term impact. Theliterature can be classified in terms of intendedaudience: academic or practitioner.

Academic Evaluations of the Outcomes of Benchmarking

Where it does exist, evaluative benchmarkingliterature has tended to concentrate on iden-tifying factors associated with ‘successful’benchmarking (as indeed does much of con-tingency theory). Unfortunately, factor modelsdo not explain how outcomes occur; ratherthey associate a level of outcome (or output)with a level of predictor (input), inferring thecausal linkages between the two. By contrast,process models aim to identify conditions thatare seen as necessary but insufficient to causean outcome. Fundamental to process modelsis an understanding of how these necessaryconditions are combined, as a sequence ofevents, which provide an insight as to how adiscrete outcome occurs, whenever it does occur.This would allow research to focus on thedynamics of social change explaining how andwhy benchmarking may have beneficial results.

Benchmarking has at its core a concern tocontrol processes so that they produce optimalbenefits and, in this respect, cybernetic controlmodels may have a part to play (see, forexample, Dent and Ezzamel 1987), but it alsoneeds to operate within a context in which‘optimal’ performance is under constant change.Thus, both double-loop control, and double-looplearning will have a part to play in the effec-tive use of this approach (see, for example,Argyris and Schön 1996; Sitkin et al. 1994).

Insights into benchmarking as a process canbe found within the literature of managementdisciplines such as accounting and humanresource management, and domains such asstrategy and organizational behaviour. (Leseureet al.’s (2004) literature review of the adoptionof promising practices draws on these andother disciplines.) Elnathan et al. (1996) findthat benchmarking can aid managers both to

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benchmark results and to drive improvementthrough such techniques as Activity BasedCosting (ABC). Zairi and Leonard (1994)examine how an organization can learn theprocess of ABC through benchmarking anotherorganization, while Fifer (1989) shows howone could benchmark the value chain. Bench-marking can also be used as an input to a targetcosting approach, and in changing manufac-turing practices (Young and Selto 1991).

Elnathan et al. (1996) emphasize the desir-ability of applying a contingency approach inthe assessment of the success of benchmarkingactivities. They propose a research frameworkfor incorporating antecedent, contextual andoutcome variables. One antecedent variable intheir framework is senior management sup-port, which is also an important factor in thework of Hill et al. (1996), particularly wheremanagers are embarking on benchmarking forthe first time and are strongly influenced bytheir own perceptions of senior management’scommitment. Elnathan et al.’s (1996) contex-tual variables include several characteristics ofpartnerships such as number of partners anddegree of trust; and Mannering (1996) identifiesthe desirability of partner organizations hav-ing shared values. Elnathan and Kim (1995)model the relationship between the formationof partnerships and potential benefits and costsof benchmarking (with consequent implica-tions for the use of third-party benchmarkingorganizations as well as the formation ofdirect partnerships). Elnathan and Kim (1995,362) call for a greater understanding of‘benchmarking practices and organizations inorder to produce a clearer picture of whatfactors determine firms’ benchmarking benefitsand costs and in turn affect their benchmark-ing decisions’. Their conclusions add weightto the growing case for systemic researchincorporating multiple stakeholder interests.

So How Can Managers Evaluate Benchmarking?

What is the value of benchmarking, both as apractical management tool (in essence ‘Does

it work?’) and as a designed system for con-trolling organizational outputs (‘How does itwork?’)? Undertaking benchmarking activities,and acting on the findings, involves not-inconsiderable resource commitments, so theseremain key questions for managers. However,the balance of benefits relative to the associ-ated costs appears to have been weighed upcomparatively rarely, and judgments are basedmainly on anecdotal evidence. Benchmarkingis recommended as ‘a good thing’ by manage-ment trainers and educators, practitioner journals,consultants, statutory and professional bodies;indeed, it is an explicit requirement for manyorganizations. Yet where it has been under-taken, systematic evaluation provides evidencethat, in some circumstances, both financial andother costs may outweigh the benefits (Lincolnand Price 1996; Sheridan 1993). Assessing itsoverall impact requires careful attention toboth sides of the equation, in which thebenefits may be less tangible than the costs.

A large-scale survey by Coopers & Lybrand(1994) found that 75% of large organizationsviewed benchmarking projects as successfulbecause they: set meaningful and realistic targets;improve productivity; provide new insights; givean early warning of competitive disadvantage;and motivate staff by showing what is possi-ble. Identifying the benefits perceived bybenchmarking practitioners was also a key aimof the empirical research carried out by thepresent authors (Holloway et al. 1999; Mayleet al. 2001), while acknowledging the diffi-culty of separating those ‘outcome variables’that are attributable to benchmarking from thosethat might have happened anyway. In evaluat-ing the cost-effectiveness of benchmarking, thequestion also arises of whether such benefitscould be achieved more cost-effectively by otherapproaches (although the same issue of a lackof good data on cost-effectiveness applies tomany performance improvement activities).

Is the external comparison element, claimedto be one of benchmarking’s distinctive features,necessary other than as a stimuli to consider theinternal processes of one’s own organization?Is there an element of ‘old wine in new bottles’,

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with little really to commend benchmarkingover well-designed comparative performancemeasurement? Evaluation studies of otherperformance management systems that useexternal standards or comparators, such asISO9000, Investor in People and the EFQMExcellence Model, have concluded that theirimpact is at best uneven. However, controlledevaluations are rarely possible and organiza-tions in some sectors may have no option butto adopt prescribed approaches.

Pointers for Future Research on the Effectiveness of Benchmarking

The methodological difficulties of measuringthe impact of benchmarking interventionsfrom a research point of view are as great asthey are for managers. However, opportunitiesdo sometimes arise for action research or‘before and after’ studies that can reveal bothintended and unintended (but not necessarilyundesirable) effects of benchmarking pro-grammes. (See also, for example, the quasi-experimental approach reported by Neely et al.2004.) It may also be possible to identifyimpact indicators (both qualitative and quanti-tative), and to use techniques such as ABC tocapture in detail some of the financial andmoney-equivalent costs of undertaking activi-ties in the name of benchmarking. Particularlyuseful would be research to identify whichelements of the benchmarking process actu-ally yield the benefits (Elnathan et al. 1996;Holloway et al. 1999). The possibility of a‘Hawthorne effect’ is strong, especially if theimportance to the organization of relativelyhumble processes is recognized, and shop-floorworkers are empowered to implement improve-ments based on their own experiences. But,particularly where records exist of the impactsof previous performance improvement activities,it may be possible to suggest the presence ofa distinctive benchmarking effect.

A wide variety of factors may be critical toenhancing the success of benchmarking (see,for example, Cox and Thompson 1998; Elnathanet al. 1996; Holloway et al. 1999), each of

which is perhaps necessary for successfulbenchmarking but not sufficient in itself.Antecedent conditions do not necessarily leadto the desired outcomes without an under-standing of the context in which benchmark-ing takes place, from the tacit knowledgebrought to it by participants to the widerorganizational and environmental setting (seeElnathan et al. 1996). In accepting the im-portance of the process, it is possible to movebeyond the notion of cause and effect impliedby much of the current literature.

Another diverse and expanding body ofliterature that could usefully be linked tobenchmarking research addresses networks asorganizational forms from a range of theoret-ical perspectives and social science disciplines(see, for example, Borgatti and Foster 2003;Hoang and Antoncic 2003; Kilduff and Tsai2003; Uzzi 1996; Zaheer and Bell 2005). Par-ticularly relevant strands concern partnershipsand risks surrounding partner selection, infor-mation flows and asymmetries, the role ofnetworks in fostering innovation, and thepractical and intellectual challenges of evalu-ating the performance of networks. Althoughthe novelty of the network form, and its statusas supplanter of market and hierarchical forms,may have been overstated, evidence about theprocesses involved in network building andmaintenance and the role of trust, boundary-spanners and communications could offer newinsights into benchmarking effectiveness.

Theme 4: The Notion of Best Practice

There is a tendency for ‘best-practice bench-marking’ and ‘benchmarking’ to be used inter-changeably. But by identifying this as a distincttheme in the literature, we recognized that thenotion of ‘best practice’ is being questioned sep-arately from the activity of benchmarking itself.

Is ‘Best Practice’ the Enemy of ‘Good Practice’?

There is an implicit assumption in much ofthe benchmarking literature that organizations

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want to be ‘the best’, in terms of ‘best inclass’, highest return to shareholders, leadingbrand in the market and so on. Such rhetoricis not necessarily consistent with practice and,in any event, we know from the world ofstrategy that ‘best’ is context-dependent, parti-cularly in the global economy. Many managersare more pragmatic in terms of what can beachieved.

The quest for ultimate performance is evenmore contested in the public sector, wheredelivering appropriate local services consist-ent with national policy is the main driverrather than being ‘better’ than other providers(see Bowerman et al. 2002; Llewellyn andNorthcott 2005; Northcott and Llewellyn2005). Llewellyn and Northcott (2005) dem-onstrate that an unintended consequence ofUK government attempts to raise standardsthrough hospital cost benchmarking has beento reinforce a tendency for hospital perform-ance to cluster around the mean rather thanbecome more like the ‘best’.

Indeed, the concept of continuous improve-ment that has driven the quality movementsince the 1980s runs counter to the possibilityof arriving at an absolute standard of ‘the best’performance. The sharing of good practice,based on evidence of cause-and-effect, for thebenefit of stakeholders (be they public serviceusers, consumers of goods, shareholders oremployees) is becoming the order of the day.

If the notion at the corporate level that to be‘the best’ is no longer the only strategy, this haslong been the reality at the managerial level.Competing demands and changing policies leadmanagers to make frequent trade-offs, result-ing in sub-optimization of individual processes,even though overall performance may be com-paratively strong. Indeed, as March and Simonpointed out in 1958, managers may not be ableto optimize even if they were willing to try,given the complexity and volume of informationthey are generally confronted with; thus, sat-isficing is the norm at all organizational levels.

So where does this leave ‘best practice’benchmarking? Have the first two words beensubtly abandoned, in the literature as well as

in practice? In terms of how the benefits areperceived by the organization and individualparticipants in benchmarking teams, it is im-portant to consider their initial expectations andmotivations to benchmark (see, for example,Hill et al. 1996). Holloway et al. (1999)found stakeholder differences in expectationsand perceptions of how successful bench-marking has been. This concern is reflected inYarrow et al. (2004), who report on the impactof the first 10 years of the PROBE Partnership– an international group with members inacademia, manufacturing industry, employers’organizations and consultancy dedicated topromoting and evaluating the use of a suite ofbenchmarking tools. They conclude:

Above all, benchmarking is not all about thetechnicalities of advanced ‘best practices’ andstatistical comparisons. It is also (and mostly) aboutpeople, learning and improvement … The next 10years may be less about the state of the art of bestpractices as such, and more about applying the socialsciences to stimulate and support diffusion andadoption of those practices. (Yarrow et al. 2004, 838)

Several theoretically informed critiques doexist of the notion of ‘best practice’ asopposed to ‘good’ or ‘better’ practice (see, forexample, Huxham and Beech 2000). From aninstitutional theory perspective (DiMaggioand Powell 1991; Frederickson 2002; Meyerand Rowan 1991), the pursuit of ‘best prac-tice’ can be seen as evidence of the tendencyfor organizations to become more similar(isomorphism); and to legitimize behavioursthrough ‘myth and ceremony’, that were onceregarded as innovative but eventually becomedysfunctional or constraining.

Best-practice studies may well pay no atten-tion to generalizability, ignoring the organiza-tional contexts, resources deployed and internalinfluences such as the impact of individuals’personalities on team effectiveness. Indeed, thecriteria by which exemplary practice has beenjudged often remain unreported, so organiza-tions looking for benchmarking partners mayfind it difficult to judge the true relevance ofthe achievements claimed by some organizations,

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including ones on the ‘industrial tourism’ cir-cuits promoted by advisory services. (Thesame criticism can less readily be levelled atwinners of formal competitions such as theEFQM Excellence or US Malcolm Baldrigeawards, which are based on detailed criteriaand use trained independent assessors.)

In short, ‘best practice’ implies the existenceof a ‘single best way’ rather than the ‘mostappropriate way contingent on the circum-stances at the current time’, an implicationthat is hard to support from most theoreticalperspectives (see Leseure et al. (2004) Box 6:‘The myth of universally applicable bestpractices’, 68). Even organizations with verysimilar structures and objectives will havetheir own unique cultures and histories,priorities and needs, all of which will affectthe impact of performance improvement appro-aches such as benchmarking (see Hope andMühlemann 2001; Mayle et al. 2001). Cox andThompson (1998) argue that benchmarkingonly allows organizations to catch up with theleader, not to ‘leap-frog’ them, and as such‘market leadership and sustainable competi-tive advantage cannot be gained from bench-marking; it can only ever offer second best’(Cox and Thompson, 1998, 11).

Just as doubts can reasonably be cast on thenotion that the ‘best’ operational processeswhich are the subject of benchmarking exer-cises can be replicated in other contexts, thereis also no proven single ‘best way’ to dobenchmarking. This is not to deny the realpotential for valuable lessons to be learned bysharing effective practices between and withinorganizations, but rather to call for a seriousexamination of benchmarking’s success fac-tors and a willingness to challenge the notionof ‘best’ practice. As the saying goes, ‘the bestmay be the enemy of the good’.

Pointers for Future Research on the Notion of ‘Best Practice’

In terms of the validity of the broad conceptof ‘best practice’, beneficial future researchis likely to be more theoretical, philosophical

and ontological than empirical. It may be aforum in which relativism confronts realism,postmodernism claims victory over modern-ism, and the concept of paradigms in socialscience is revisited.

More useful here and now is to consider theissue of whether it is appropriate to establish‘good’, ‘better’ or ‘best’ ways to undertake bench-marking itself. If methodologically soundapproaches to such evaluation are established,they may well be transferable to other areasof performance management. At its mostbasic, benchmarking can be conceived asa means of sharing good practice, whichhas been validated in certain organizationalcontexts and which logic suggests may bringbenefits elsewhere. However, while thereare certain factors which are necessary forbenchmarking to contribute to any sort of‘results’, there are also many process andcontextual features which are associated witheffective outcomes, not least in terms ofpartner selection. Thus, it has been possibleso far to identify associations (rather thancausal relationships), but not to identify specificorganizational characteristics or elements inbenchmarking itself which are in themselvessufficient to ensure that the desired results aredelivered and ‘best practice’ in benchmarkingis attained. Whether the search for this kind ofdeterministic model is desirable is a matter ofopinion rather than fact.

Some Concluding Remarks

In terms of studies into the nature of bench-marking practices (Theme 1), the tendency forwriters to develop new typologies to describebenchmarking practices leads us to concludethat, while such efforts indicate diversity ofactivity in the name of benchmarking, theyhave not perhaps told us enough about its var-ious outcomes particularly in the longer term.

Criticisms of benchmarking (Theme 2) fallinto two main camps: those that are relativelypractical, related to the details of benchmarkingpractice; and those verging on the theoretical,linked to performance management more

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generally. Writers have raised notes of cautionabout the assumptions held by some academicsand practitioners. Those critiques have comemainly from writers who broadly supportthe existence of management-led performanceimprovement objectives, rather than the more‘radical critical’ traditions that focused on, forexample, BPR and TQM in the 1990s. Initialreflections on why this may be so prompt theconclusion that the benchmarking literaturelacks theoretical claims that might attract theattention of ‘radical critical’ writers. In termsof longevity, again compared to BPR andTQM where applications outside manufacturingcontinually attracted scepticism or hostilityuntil they seem to have gradually faded away,it is almost as if benchmarking has got in‘under the radar’ into new sectors and indus-tries, in the process of which its methods areslowly evolving.

It is hard for benchmarking to escape fromthe ‘management fad’ label, but our assertionis that this is an unhelpful characterization.Full-blown ‘best-practice benchmarking’ doesseem to have faded from the limelight, but theprinciple of comparing data in the pursuit ofperformance improvement has become anincreasingly normal management activity.

Literature linked to Theme 3, evaluating theeffectiveness of benchmarking, encapsulatesmany generic issues about evaluation oforganizational and managerial interventions.There have been limited efforts to evaluate theapproach, both as an academic project andfrom a practical management perspective. Theauthors would encourage much more explicitand deliberate evaluation studies of bench-marking and other performance managementsystems. Even if benchmarking gradually fadesfrom view, there will be new systems comingalong to take its place, in spite of the relativelack of knowledge about their intended andunintended (positive and negative) consequencesfor organizational performance and learning.Such studies of benchmarking might havewider relevance, and a range of managementand social science disciplines have importantcontributions to make to this quest.

The final theme on the very notion of ‘bestpractice’ is particularly diffuse but likely togrow in importance alongside contemporaryacademic and practitioner interests such asmanaging competing stakeholder needs,evidence-based practice and establishing newmodes of corporate governance. Future litera-ture within this theme is likely to cross manydiscipline boundaries as well as theoretical ones.

This review paper has explored the litera-ture of best-practice benchmarking throughfour main themes and considered their impli-cations for future empirical and theoreticalresearch. We believe this thematic handling ofthe vast literature provides some ‘way-marks’for readers wanting directions while steeringa course through the ocean of literature thatcontains some hazardous prescriptions andpoorly charted explanations. While the referencescited include exemplars of substantive studies,detailed descriptive pieces and other reviewpapers, theory-building is still often shallow.

So what are the ramifications of such diver-sity and incompleteness for benchmarkingresearch? To attempt a synthesis of messageslinking the four themes, we would identify aneed to understand better the nature and influ-ences of group processes, organizationalculture and management style. This raises anumber of issues, most notably around organ-izational knowledge and learning, knowledgeelicitation, communication, team building anddynamics. Clearly, although a lot is now knownabout benchmarking, there is a lot more stillto be learned.

Acknowledgements

The authors wish to acknowledge the contri-butions of Jackie Fry, Matthew Hinton, DavidMayle and the late Mary Bowerman to thisresearch.

Note

1 Corresponding author: Dr Jacky Holloway, e-mail:j.a.holloway@open.ac.uk; Tel: +44 (0)1908655833; Fax: +44 (0)1908 655898.

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Graham Francis is from the Waikato ManagementSchool, University of Waikato, Hamilton, NewZealand. Jacky Holloway is from the OpenUniversity Business School, The Open University,Walton Hall, Milton Keynes MK7 6AA, UK.