How Balanced Scorecard Format and Reputation Related to Environmental Objectives Influence Performance Evaluations
Advances in Management Accounting
ISBN: 978-1-78560-972-5, eISBN: 978-1-78560-971-8
Publication date: 23 November 2016
Abstract
Purpose
This study explores how balanced scorecard format and reputation from environmental performances interact to influence performance evaluations.
Methodology/approach
Two general options exist for inserting environmental measures into a scorecard: embedded among the four traditional perspectives or grouped in a fifth perspective. Prior balanced scorecard research also assumes negative past environmental performances. In such settings, and when low management communication levels exist on the importance of environmental strategic objectives (a common practitioner scenario), environmental measures receive less decision weight when they are grouped in a fifth scorecard perspective. However, a positive environmental reputation would generate loss aversion concerns with reputation, leading to more decision weight given to environmental measures. Participants (N=138) evaluated performances with scorecards in an experimental design that manipulates scorecard format (four, five-perspectives) and past environmental performance operationalizing reputation (positive, negative).
Findings
The environmental reputation valence’s impact is more (less) pronounced when environmental measures are grouped (embedded) in a fifth perspective (among the four traditional perspectives), when the environmental feature of the measures is more (less) salient.
Research limitations/implications
Findings provide the literature with original empirical results that support the popular, but often anecdotal, position of advocating a fifth perspective for environmental measures to help emphasize and promote environmental stewardship within an entity when common low management communication levels exist. Specifically, when positive past environmental performances exist, entities may choose to group environmental performance measures together in a fifth scorecard perspective without risking those measures receiving the discounted decision weight indicated in prior studies.
Keywords
Acknowledgements
Acknowledgments
For financial support, we thank the Institute of Management Accountants Research Foundation, the University of Alabama in Huntsville, and Xavier University. For comments on previous drafts, we thank two anonymous reviewers, Alisa Brink, Kelsey Dworkis, Lan Gao, Dan Stone, Yu Tian, participants and reviewers at the 2012 Ohio Regional Conference, the 2013 Management Accounting Section conference, the 2013 AAA annual meeting, and the 2014 Accounting, Behavior and Organizations conference, as well as workshop participants at Kent State University and the University of Alabama in Huntsville.
Citation
Alewine, H.C. and Miller, T.C. (2016), "How Balanced Scorecard Format and Reputation Related to Environmental Objectives Influence Performance Evaluations", Advances in Management Accounting (Advances in Management Accounting, Vol. 27), Emerald Group Publishing Limited, Leeds, pp. 123-165. https://doi.org/10.1108/S1474-787120160000027004
Publisher
:Emerald Group Publishing Limited
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