Communicating and Controlling Strategy: An Empirical Study of the Effectiveness of the Balanced Scorecard

54 Pages Posted: 9 Aug 2001  

Mary A. Malina

University of Colorado at Denver - Business School

Frank H. Selto

University of Colorado, Boulder

Multiple version iconThere are 2 versions of this paper

Date Written: April 2001

Abstract

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.

Keywords: Balanced scorecard; Management control; Communication; Qualitative analysis

JEL Classification: L20, M40, M46

Suggested Citation

Malina, Mary A. and Selto, Frank H., Communicating and Controlling Strategy: An Empirical Study of the Effectiveness of the Balanced Scorecard (April 2001). Available at SSRN: https://ssrn.com/abstract=278939 or http://dx.doi.org/10.2139/ssrn.278939

Mary A. Malina

University of Colorado at Denver - Business School ( email )

1250 14th St.
Denver, CO 80204
United States

Frank H. Selto (Contact Author)

University of Colorado, Boulder ( email )

419 UCB
Boulder, CO 80309-0419
United States

Paper statistics

Downloads
7,594
Rank
526
Abstract Views
21,667