Dynamic Decision Making Using the Balanced Scorecard Framework

Abstract

This study examines the effects that two balanced scorecard framework (BSF) elements, causal linkages between strategic objectives (“causal linkages”) and time delay information (“delays”) in a strategy map, have on long-term profit performance in a dynamic decision-making environment. Using a computer-based simulation task, we conduct a 3 × (4) experiment (control group; causal linkages without delays; causal linkages with delays; four simulation rounds) and find that managers presented with causal linkages without delays generate greater long-term profit compared to a control group. For managers presented with causal linkages with delays, long-term profit generation is higher than the control group, but is not significantly different from the causal linkages without delays treatment. Those managers presented with causal linkages with delays, however, demonstrate learning across the four simulation rounds. In contrast, learning is found to plateau for the causal linkages without delays treatment and is not present for the control group. We also examine the cognitive mechanism through which these two BSF elements impact performance, by measuring the accuracy of two components of managers' mental models. Data Availability: Experimental materials are available upon request from the authors.

Unpacking mental models through laboratory experiments

“…This article summarizes the findings from three experimental studies that were part of our research program. The three studies have already been published separately (Gary et al , ; Gary and Wood, ; Humphreys et al , ), and therefore this paper synthesizes what we have learned from this research program on mental models and discusses some promising research opportunities to address important questions that remain unanswered.…”

“…In Study 2, reported in Humphreys et al (), we examined the effects of providing decision makers with a balanced scorecard strategy map on mental models and performance. Kaplan and Norton () designed the Balanced Scorecard to support managerial decision making over time, and recommend development of a strategy map as the first stage of any Balanced Scorecard implementation.…”

Is There a Confidence Interval for That? A Critical Examination of Null Outcome Reporting in Accounting Research

“…Interestingly,Humphreys, Gary, and Trotman (2016) does report confidence intervals for several of its null rejection outcomes (p. 1457), but not for either of its two null outcomes.…”

Bibliometric Analysis of Performance Evaluation Studies

“…The author believed that providing feedback immediately after the implementation of decision could effectively promote learning and future performance [46]. Humphreys et al (2016) studied the performance of two balanced scorecard framework (BSF) elements, the effect of strategic goal ("causal link") and time delay information ("delay") on long-term profit performance in dynamic decision-making environment [47]. The accuracy of the two components of the manager's mental model has also been used to test the cognitive mechanism of the impact of the two balanced scorecard frameworks on performance.…”