The judgmental effects of management communications and a fifth balanced scorecard category on performance evaluation

Steven Kaplan, Priscilla S. Wisner

Research output: Contribution to journalArticle

41 Scopus citations

Abstract

This study extends prior balanced scorecard (BSC) research by examining management's choice of whether to include four or five BSC categories when a specific nontraditional strategic objective is present. The results of the study show that when management communications about a specific nontraditional strategic objective are limited and a set of specific strategic performance measures indicate superior performance by one manager over another, evaluators discount their reliance on these measures in their performance-related judgments when these measures are clustered into a fifth BSC category relative to when these measures are integrated among the four traditional BSC categories. That is, adding a fifth BSC category resulted in a deemphasis of the relevant information about the specific nontraditional strategic objective. But, when a fifth BSC category is present, enhancing management communications about a specific strategic objective resulted in greater emphasis on the relevant information about the specific nontraditional strategic objective. When a traditional, four-category BSC is used, enhancing management communications about a specific strategic objective did not result in greater emphasis on the relevant information about the specific nontraditional strategic objective. Our results showing that under certain conditions information presented in a fifth BSC category is discounted by evaluators runs counter to professional literature and has practical implications for companies considering the use of additional BSC categories to communicate strategic objectives.

Original languageEnglish (US)
Pages (from-to)37-56
Number of pages20
JournalBehavioral Research in Accounting
Volume21
Issue number2
DOIs
StatePublished - Jul 2009

Keywords

  • Balanced scorecard
  • Nontraditional strategic objective
  • Performance evaluations

ASJC Scopus subject areas

  • Accounting
  • Organizational Behavior and Human Resource Management

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