This study is about public sector performance measurement in the context of developing economies; more specifically, the study focuses on local government performance measurement systems as applied in Indonesia. Although there have been numerous research studies examining performance measurement, most empirical work has been undertaken in the context of developed economies. Performance measurement research in the milieu of developing economies is still very much underdeveloped and the progress is considerably much slower than those in developed economies. This study adopts an interpretive approach and applied case study research method in order, to develop an understanding of a) what drives the new performance measurement b) how it is designed and c) how it is used? The findings show that performance measurement in the context of developing economies tends to be driven by different reasons than compared to those developed economies. The findings also indicated developing economies encounter various challenges in designing and implementing performance measurement which eventually affected the use and usefulness of performance measurement. This study thus contributes to improve our understanding of the design, implementation and use of performance measurement in the context of developing economies. More specifically, it improves our understanding regarding (i) internal and external driving forces for performance measurement initiatives in the developing economies, (ii) the effectiveness of design, implementation and use, (iii) technical, organisational and institutional factors influencing design, implementation and use and the complex interactive effects of these three categories of factors, (iv) the interdependence between design, implementation and use, and (v) the complex conflicts of interest among different stakeholders in this context.