Balanced Scorecards, Mental Models, and Organizational Performance

Past-cast Series — Seeing relevance in earlier publications

Ritchie-Dunham, James. 2002. Balanced Scorecards, Mental Models, and Organizational Performance. Unpublished PhD Dissertation, Management Science and Information Systems, University of Texas at Austin, Austin, Texas.

Organizations are heavily investing in enterprise-wide information systems and performance scorecards intended to improve strategic decision making. However, there is a need for better evidence that using these technologies systematically improves organizational performance. To overcome the lack of experimental control when studying real firms, the current study investigates decision behavior within a realistic simulation of a wireless telephone company. A controlled experiment involving 118 MBA students found significant differences between two types of scorecards (financial vs. balanced) and two types of enterprise systems (fragmented vs. integrated) regarding the simulated firm’s long-term financial performance. The balanced scorecard positively affected decision makers’ mental models of how elements of the simulated firm dynamically interrelate, which led to improved performance. The integrated enterprise system had a positive effect on performance.  Unexpectedly, the number of stakeholders taken into consideration was positively associated with firm performance and was unaffected by the type of scorecard. These findings yield new insights into the effectiveness of scorecards and enterprise systems, and shed light on the underlying mechanisms responsible for these gains.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s