The Judgmental Effects of Strategy Maps in Balanced Scorecard Performance Evaluations
Rajiv D. Banker
Temple University - Fox School of Business and Management; Temple University
Naval Postgraduate School
AAA 2010 Management Accounting Section (MAS) Meeting Paper
We investigate the impact of supplemental information displays on the quality of 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, Larcker, and Meyer 2003). 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 one-page visual frameworks that depict cause-and-effect relations between scorecard performance measures and overriding strategic objectives. Consistent with our hypotheses, we find that the quality of performance evaluation decisions is higher when participants are provided with strategy maps.
Number of Pages in PDF File: 43
Keywords: judgment, balanced scorecard, strategic performance measurement system, performance evaluation
JEL Classification: D81working papers series
Date posted: August 17, 2009 ; Last revised: December 19, 2009
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