What is it about?
We examine how causal inference biases affect performance evaluation judgments based on a Balanced Scorecard (BSC) structured performance measurement system. We find support for the violation of causal independence assumption, which manifests itself in greater weighting attributed to measures associated with the outer perspectives of the BSC than the inner perspectives. We further show that the use of a generic strategy map to represent and thus emphasize the causal relationships between the measures further exacerbates this bias resulting in increased weighting attributed to the outer perspectives of the BSC. This is of particular importance as the use of the strategy map has been found to be an effective remedy for other cognitive biases associated with the BSC. Results from our follow up experiments allow us to rule out a possible alternative explanation based on the importance individuals may place (implicitly or explicitly) on the financial versus other BSC perspectives.
Featured Image
Photo by Kaleidico on Unsplash
Why is it important?
Balanced Scorecards are very useful to organisations to achieve their strategic objectives. Thus, it is highly important to understand them in their entirety and to prevent design shortcomings.
Perspectives
What I find unique in the study is the perspective that there can be judgement bias when using a Balanced Scorecards (BSCs), because of the way BSCs are usually represented. And, even more so, strategy maps, an addition to BSCs, that have been largely described to have positive effects, can contribute to the severity of such bias.
Dennis Fehrenbacher
Monash University
Read the Original
This page is a summary of: Causal Inference in Judgment Using the Balanced Scorecard, Journal of Management Accounting Research, September 2019, American Accounting Association,
DOI: 10.2308/jmar-52574.
You can read the full text:
Contributors
The following have contributed to this page
