Balanced Scorecard Design Preferences According to Subjects' Expertise and Purpose of Use

Abstract

The study of judgmental bias in the use of the balanced scorecard (BSC) for performance evaluation purposes has been frequently published in the last years. The objective of this study is to evaluate if differences in the frequency of use of each measure in each perspective of the BSC is affected by subjects' level of knowledge about the BSC and its overall environment in terms of accounting expertise (Dilla and Steinbart, 2005) and by the BSC purpose of use (Malina and Selto, 2001). This study asks four groups of subject, two accounting experts and the other two non experts in accounting, to design a BSC aimed at either measure performance as a pure evaluation mechanism or to help in implementing the strategy as a pure communication device. Although the results reported do not belong to a pure laboratory experiment, they provide a clear positive answer to Dilla and Steinbart (2005) alternative explanation. The results show that accounting experts exhibit a different understanding and use of the BSC, this finding holds even controlling for different case scenarios, whether the BSC is used as an evaluation mechanism or as a communication device. Also interesting to notice is that the internal process and learning perspectives are the ones where the different uses intended for the BSC are reflected, leading us to support the claim of previous studies that the measures more frequently used are normally found in the financial and customer perspectives (Lipe and Salterio, 2000).