The Balanced Scorecard as a Strategy-Evaluation Tool: the Effects of Responsibility and Causal-Chain Focus Essay

12561 WordsApr 21, 201351 Pages
The Balanced Scorecard as a Strategy-Evaluation Tool: The Effects of Responsibility and Causal-Chain Focus William B. Tayler wbt5@cornell.edu January 31, 2007 *S.C. Johnson Graduate School of Management, Cornell University, Ithaca, NY 14853-6201, 607-255-7139. I thank the members of my dissertation committee: Rob Bloomfield (chair), Tom Gilovich, Bob Libby, and Mark Nelson, as well as workshop participants at Cornell University and the 2006 Brigham Young University Accounting Research Symposium for comments. I gratefully acknowledge the financial support from the Institute of Management Accountants Doctoral Student Grant Program and from Cornell University’s Johnson Graduate School of Management. The Balanced Scorecard as a Strategy-Evaluation Tool: The Effects of Responsibility and Causal-Chain Focus Abstract This paper uses an experiment to examine whether involvement in scorecard implementation can mitigate the effects of motivated reasoning when the scorecard is framed as a strategic tool, rather than merely as a balanced set of measures. Psychological research on motivated reasoning suggests that managers will evaluate and interpret data in ways consistent with their preferences, increasing the tendency for managers to arrive at conclusions that are consistent with their preferences (Kunda 1990). Accordingly, results show that managers who are involved in selecting strategic initiatives perceive those initiatives as having been more successful than managers who are not involved in the strategy-selection process (holding constant actual scorecard performance). The effects of motivated reasoning are mitigated by giving managers responsibility for the selection of scorecard measures; but this mitigation only occurs if the balanced scorecard is framed as a hypothesized causal chain of performance, rather than as the classic four separate

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