Influences of Timeline and Perceived Strategy Effectiveness on Balanced Scorecard Performance Evaluation Judgments

Abstract

This study examines evaluator ratings of subordinate performance in implementing a new corporate strategy in a Balanced Scorecard environment. We focus on two factors predicted to influence strategic performance judgments: 1) the presence or absence of an explicit timeline for strategy implementation and 2) the evaluator’s perceptions of the effectiveness of the new strategy. One hundred and eleven MBA students averaging over 8 years of work experience participated in the study.

Consistent with predictions, we find that 1) absence of an implementation timeline was associated with fixation on lagging financial performance measures outside of the subordinate’s time span of control; and 2) evaluator perceptions of the strategy’s effectiveness were positively associated with evaluations of strategy-congruent performance.

These results extend prior research by highlighting the importance of the time dimension and perceptions of strategy effectiveness in performance judgments. Implications for future research in strategic performance evaluation are discussed.

Note: This version incorporates post-publication editorial changes to address the issue of textual overlap with an earlier paper by the same author team which was published in 2014 in European Accounting Review. The methods, analysis, results, and conclusions of this paper are not affected by these changes.

Keywords: balanced scorecard, strategy implementation, timeline, performance evaluation

JEL Classification: M41