Causal Inference in Judgment Using the Balanced Scorecard

Abstract

One of the potential threats to the effectiveness of the Balanced Scorecard (BSC) is that managers over- or underuse particular perspectives of the BSC. Specifically, we investigate the effects of (1) the presentation of strategic objectives (generic strategy map versus strategic objective list), and (2) the performance outcome patterns (positive versus negative outer perspective) across the performance measurement perspectives of the BSC and find support that is consistent with the violation of the causal independence assumption (VCIA) in the psychology literature (Rehder 2014). Our findings show that the presentation of the strategic objectives and the performance outcome patterns interact significantly affecting performance evaluation outcomes. Two follow-up experiments provide further support for the VCIA observed in the main experiment by ruling out an alternative explanation that managers simply place a greater emphasis on financial performance measures. Data Availability: Data are available from the authors upon request.