The Judgmental Effects of Strategy Maps in Balanced Scorecard Performance Evaluations

43 Pages Posted: 17 Aug 2009 Last revised: 19 Apr 2014

See all articles by Rajiv D. Banker

Rajiv D. Banker

Temple University - Department of Accounting

Hsihui Chang

Drexel University

Mina Pizzini

Texas State University, San Marcos - College of Business Administration; Naval Postgraduate School

Date Written: October 2009

Abstract

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.

Keywords: judgment, balanced scorecard, strategic performance measurement system, performance evaluation

JEL Classification: D81

Suggested Citation

Banker, Rajiv D. and Chang, Hsihui and Pizzini, Mina, The Judgmental Effects of Strategy Maps in Balanced Scorecard Performance Evaluations (October 2009). AAA 2010 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1456489 or http://dx.doi.org/10.2139/ssrn.1456489

Rajiv D. Banker

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Hsihui Chang

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Mina Pizzini (Contact Author)

Texas State University, San Marcos - College of Business Administration ( email )

San Marcos, TX 78666
United States

Naval Postgraduate School ( email )

555 Dyer Road
Monterey, CA 93943
United States

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