Matching goal-based incentive systems with cross-functional integration to improve operation and innovation performance

PurposeCross-functional integration has been an important factor for manufacturing firms' performance outcomes. The study aims to expand previous research by investigating the moderating role of goal-based incentive systems in the relationship between cross-functional integration and competitive performance.Design/methodology/approachBased on multi-source data from 269 manufacturing firms around the world, regression analysis is used to test the proposed research model.FindingsThe authors' findings suggest that cross-functional integration enhances manufacturers' innovation and operational performance. Moreover, cross-functional integration has a stronger impact on operational performance when firms implement a well-designed goal-based incentive system. However, the authors find that the goal-based incentive system does not moderate the relationship between cross-functional integration and innovation performance.Originality/valueThe study, by investigating the fit between goal-based incentive systems and cross-functional integration, provides practical insights into the ways that firms apply cross-functional integration and goal-based incentive systems to enhance competitive performance.