The Use of Balanced Scorecard Measures in Executive Incentives and Firm Performance
44 Pages Posted: 7 Jan 2011
Date Written: January 6, 2011
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
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