The Use of Balanced Scorecard Measures in Executive Incentives and Firm Performance

44 Pages Posted: 7 Jan 2011

See all articles by Raili Pollanen

Raili Pollanen

affiliation not provided to SSRN

Kenneth Kangwu Xi

affiliation not provided to SSRN

Date Written: January 6, 2011

Abstract

This study investigates the use of balanced scorecard (BSC) measures in executive compensation plans, particularly its performance consequences, and the fit between the use of BSC and firm characteristics. Using a matched-pair design of 330 firms, data from multiple public sources, and multiple measures for key variables, it reveals a strong association between BSC use and firm performance. Evidence also supports the role of strategy, industry, size, quality, structure, culture, and ownership as contingent variables affecting firm performance. Furthermore, firm performance is a function of increased fit between BSC use and firm characteristics. The findings underscore the importance of firm characteristics in the design and use of performance measurement and reward systems.

Keywords: balanced scorecard, performance measures, executive incentives, contingent factors, firm performance

Suggested Citation

Pollanen, Raili and Xi, Kenneth Kangwu, The Use of Balanced Scorecard Measures in Executive Incentives and Firm Performance (January 6, 2011). CAAA Annual Conference 2011. Available at SSRN: https://ssrn.com/abstract=1736265 or http://dx.doi.org/10.2139/ssrn.1736265

Raili Pollanen (Contact Author)

affiliation not provided to SSRN ( email )

Kenneth Kangwu Xi

affiliation not provided to SSRN ( email )

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