Communicating and Controlling Strategy: An Empirical Study of the Effectiveness of the Balanced Scorecard
Mary A. Malina
University of Colorado at Denver - Business School
Frank H. Selto
University of Colorado at Boulder - Department of Accounting
This paper reports evidence on the effectiveness of the Balanced Scorecard (BSC) as a management-control and strategy communication device. This study first reviews management control and communication literatures that identify attributes of effective control and communication of strategy. Second, the study offers a model of control and communication applicable to the BSC. The study then analyzes empirical interview and archival data to model the use and assess the control and communication effectiveness of the BSC. The study includes data from multiple divisions of a large, international manufacturing company. Data are from BSC designers, administrators, and North American managers whose divisions are objects of the BSC. The study accumulates evidence regarding the challenges of designing and implementing the BSC faced by even a large, well-funded company. These findings may be generalizable to other companies adopting or considering adopting the BSC as a strategic and management control device.
Data indicate that this specific BSC, as designed and implemented, is an effective device for controlling corporate strategy. Results also indicate disagreement and tension between top and middle management regarding the appropriateness of specific aspects of the BSC as a communication, control and evaluation mechanism. Specific results include evidence of causal relations between effective management control, motivation, strategic alignment and beneficial effects of the BSC. These beneficial effects include changes in processes and improvements in both the BSC and customer-oriented services. In contrast, ineffective communication and management control cause poor motivation and conflict over the use of the BSC as an evaluation device.
Number of Pages in PDF File: 54
Keywords: Balanced scorecard; Management control; Communication; Qualitative analysis
JEL Classification: L20, M40, M46working papers series
Date posted: August 9, 2001
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