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Functional fixation and the balanced scorecard

Functional fixation and the balanced scorecard Purpose – This paper aims to examine how balanced scorecard (BSC) users change their judgement processes according to qualitative changes in the BSC. Prior experimental studies have found that decision-makers do not fully adapt their judgements according to changes in financial reports, known as functional fixation. Although previous research has examined functional fixation in several management accounting-related disciplines, the research has not been completely successful in developing a deeper understanding of the cognitive processes that are responsible for the occurrence of this judgemental bias. Design/methodology/approach – To fill this gap, a combination of structural modelling and a process tracing method that monitors participants’ information acquisition to better understand the underlying cognitive processes that affect BSC users’ judgements is used. Findings – Overall, the results indicate that functional fixation is present both from an input–output (structural modelling) and a process tracing perspective. Stable general individual differences, particularly in terms of intuitive versus deliberative preferences in decision-making, influence the probability of functionally fixated behaviour. Additionally, previous findings concerning the over-reliance on financial information in the BSC setting is replicated. Using process data, it was found that BSC users rely more on financial measures than on non-financial measures in the pre-decisional phase of exercising their judgement. Originality/value – This paper contribute to management accounting research on the BSC by investigating two cognitive biases (functional fixation and overreliance on financial measures) from an input–output and a process tracing perspective. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

Functional fixation and the balanced scorecard

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References (103)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1832-5912
DOI
10.1108/JAOC-11-2012-0114
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to examine how balanced scorecard (BSC) users change their judgement processes according to qualitative changes in the BSC. Prior experimental studies have found that decision-makers do not fully adapt their judgements according to changes in financial reports, known as functional fixation. Although previous research has examined functional fixation in several management accounting-related disciplines, the research has not been completely successful in developing a deeper understanding of the cognitive processes that are responsible for the occurrence of this judgemental bias. Design/methodology/approach – To fill this gap, a combination of structural modelling and a process tracing method that monitors participants’ information acquisition to better understand the underlying cognitive processes that affect BSC users’ judgements is used. Findings – Overall, the results indicate that functional fixation is present both from an input–output (structural modelling) and a process tracing perspective. Stable general individual differences, particularly in terms of intuitive versus deliberative preferences in decision-making, influence the probability of functionally fixated behaviour. Additionally, previous findings concerning the over-reliance on financial information in the BSC setting is replicated. Using process data, it was found that BSC users rely more on financial measures than on non-financial measures in the pre-decisional phase of exercising their judgement. Originality/value – This paper contribute to management accounting research on the BSC by investigating two cognitive biases (functional fixation and overreliance on financial measures) from an input–output and a process tracing perspective.

Journal

Journal of Accounting & Organizational ChangeEmerald Publishing

Published: Oct 28, 2014

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