An examination of the effect of positive and negative performance on the relative weighting of strategically and non-strategically linked balanced scorecard measures

Steven Kaplan, Michael J Petersen, Janet A Samuels

Research output: Contribution to journalArticleResearchpeer-review

15 Citations (Scopus)


Kaplan and Norton (1992, 1996) espouse that performance measures in a balanced scorecard (BSC) should be linked to strategy. However, the BSCs of many firms include both strategically linked and non-strategically linked measures. Banker et al. (2004) provide initial evidence on evaluators weightings of strategically linked (SL) and non-strategically linked (NSL) measures when evaluating performance in settings in which managers always performed better than the target level on every performance measure. They found that when evaluators have a sufficient understanding of the firm s strategy, they weight SL measures more than NSL measures when evaluating performance. The purpose of the current study is to examine performance evaluations when, relative to the target level of performance, managers exhibit favorable performance on some measures and unfavorable performance on other measures. We contend that evaluators will exhibit a negativity bias such that negative performance information is weighted more heavily than positive performance information for both SL and NSL measures. Consequently, we predict that the findings from Banker et al. (2004) will not hold in settings involving unfavorable performance. Specifically, when performance on NSL measures is unfavorable for one manager, we find that NSL measures are weighted more than SL measures. Implications of this finding for theory and practice are discussed.
Original languageEnglish
Pages (from-to)133 - 151
Number of pages19
JournalBehavioral Research in Accounting
Issue number2
Publication statusPublished - 2012
Externally publishedYes

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