Strategy Evaluation When Using A Strategic Performance Measurement System: An Examination Of Motivational And Cognitive Biases

Keywords

Balance scorecard; Judgment and decision-making; Motivationcognitive bias; Performance measurement; Strategic performance

Abstract

The multiple performance measures in strategic performance measurement systems should be selected to represent a set of causally linked strategic drivers and outcomes. The pattern of results thus can provide information concerning the proper execution of the strategy (i.e., the performance evaluation role) and the strength of the cause-and-effect linkages assumed by the strategy (i.e., the strategy evaluation role). Unfortunately, managers’ tendency to re-evaluate the strategy when performance falls short of target is low in practice. Possible explanations include motivational and cognitive biases. We experimentally examine two decision aids, an attribution aid, and a decomposition aid, designed to help managers ease these challenges. Study 1 shows the decision aids, individually and in combination, increase managers’ tendency to re-examine a problematic strategy. Study 2 demonstrates the effectiveness of the two decision aids, when used together, under a different pattern of results and among a sample of more experienced managers.

Publication Date

1-1-2018

Publication Title

Advances in Accounting Behavioral Research

Volume

21

Number of Pages

97-126

Document Type

Article; Book Chapter

Personal Identifier

scopus

DOI Link

https://doi.org/10.1108/S1475-148820180000021005

Socpus ID

85065464570 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/85065464570

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