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The judgmental effects of strategy maps in balanced scorecard performance evaluations
Journal article   Peer reviewed

The judgmental effects of strategy maps in balanced scorecard performance evaluations

Rajiv D. Banker, Hsihui Chang and Mina Pizzini
International journal of accounting information systems, v 12(4), pp 259-279
2011
DOI: https://doi.org/10.1016/j.accinf.2011.08.001

Abstract

Balanced scorecard Causal models Performance evaluation Strategy maps
We examine whether supplemental information displays affect decisions made using a common strategic performance measurement system, the balanced scorecard. A distinguishing feature of the balanced scorecard (BSC) is the number and diversity of its metrics. To effectively formulate a decision from such a complex information set, managers must view these measures within their strategic context ( Kaplan and Norton, 1993, 1996). However, academic studies indicate that problems in communication and comprehension of the strategic logic underlying the scorecard hinder its implementation and use ( Lipe and Salterio, 2000; Malina and Selto, 2001; Ittner et al., 2003a, 2003b). We investigate whether a supplemental information display, in the form of a strategy map, results in performance evaluation judgments consistent with the recognition of relations between performance metrics and strategy. Strategy maps are causal diagrams depicting temporally-separate and non-linear relations between scorecard performance measures and overriding strategic objectives. As predicted, we find that performance evaluation decisions are more consistent with the achievement of strategic objectives when participants are provided with strategy maps. ► The study examines the effect of strategy maps on balanced scorecard (BSC) use. ► In an experiment, participants evaluate performance using the BSC framework. ► Participants that receive strategy maps rely more on measures linked to strategy. ► Results suggest that strategy maps reduce the cognitive difficulty of BSC use.

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