Does Functional Experience Impair the 'Balance' in Balanced Scorecards?
42 Pages Posted: 17 Sep 2007
Date Written: August 9, 2007
Abstract
In this paper, we examine the effect that individual characteristics, specifically functional experience and level of work experience, have on how managers acquire and use balanced scorecard information. Using Hambrick and Mason's information processing theory, we predict that a manager's functional experience will be associated with his or her information-acquisition behavior and final choice in an investment decision. We test our hypotheses using a laboratory experiment in which participants make a capital investment decision from a menu of available opportunities. We do not detect an association between individual characteristics and information-acquisition behavior but we do detect an association between individual characteristics and investment choice. We discuss how our findings help resolve the discrepancies in previous studies and suggest implications for companies that use the balanced scorecard.
Keywords: Management Accounting, Balanced Scorecard, Information Processing, Functional Experience
JEL Classification: M40, M46, G31, M52
Suggested Citation: Suggested Citation
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