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The purpose of this study is to examine the design, development and implementation of responsibility centre management at a mid-sized Canadian university, within the context of decentralized decision-making. More specifically our study focused on the design, development and implementation of a revenue and cost allocation process known as transparent activity–based budgeting system (TABBS).

The authors conducted this study using a qualitative case study methodology, rooted in grounded theory, as the primary approach to collect and analyse data, and report the findings. Primary data were collected from ten participants using semi-structured interviews.

The main takeaways from our research are that (1) such systems take time to design, develop and implement, (2) consultation, communication and information sharing and model adjustment and refinement are important enabling mechanisms, (3) internal and external events posed significant challenges, (4) although such systems are often designed keeping in mind several intended outcomes, there exists the possibility of experiencing some unintended consequences and (5) the juxtaposition of the above has the potential to negatively or positively impact organizational performance.

The research demonstrates that the design, development and implementation of a complex resource allocation model is an important element of a responsibility-centred approach to planning and decision-making. It highlights the importance and contribution of enabling mechanisms as well as the challenges that large, complex organizations may confront when introducing change.

Most, if not all, management control tools were formulated for firms employing an industrial value creation logic (i.e., Ford, McDonald’s, and Wal‐Mart). We argue that given the growth, both in number and importance, of firms employing a knowledge value creation logic (i.e., Accenture, Goldman Sachs, and Clifford Chance) and firms employing a network logic (i.e., Verizon, eBay, and Expedia) that these control tools should be revisited in light of this potentially critical contingency. This paper outlines the key characteristics of knowledge intensive firms and network service firms and then examines how these contingencies impact Simons’ (1995) Levers of Control and Kaplan and Norton’s (1996) Balanced Scorecard. We find that whilst each lever/perspective is still relevant for each value creation logic, the relative importance and thus intensity of use should vary between logics.

The Balanced Scorecard (BSC) is widely applied as a performance measurement and strategy implementation tool by organizations. Research has revealed that the term “balanced scorecard” may be understood differently by managers both within as well as across organizations implying that the performance measurement systems implemented in organizations may not be similar to the construct envisioned by Kaplan and Norton. Using Kaplan and Norton's Balanced Scorecard construct as a basis, the paper aims to develop and test a five‐level taxonomy to classify firms' performance measurement systems.

A Balanced Scorecard taxonomy is validated using a large sample of professional accountants working in Canadian organizations.

The five‐level taxonomy is used to categorize the performance measurement systems of 149 organizations. It is found that 111 organizations' (74.5 percent) performance measurement systems met the criteria to be classified as a Basic Level 1 BSC, while 61 (40.9 percent) organizations have structurally complete Level 3 BSCs, and 36 (24.2 percent) organizations have fully developed Level 5 BSCs. The paper also discusses differences between Level 1 and Level 5 BSC organizations.

While many researchers assume that organizations' performance measurement systems are similar in implementation level and use, the paper demonstrates that organizations are at different levels of BSC implementation and use, a factor that should be taken into consideration when designing empirical studies to test the efficacy of Kaplan and Norton's BSC.

The five‐level BSC taxonomy scheme provides managers working with Kaplan and Norton's BSC with a tool to plan their implementation steps and then benchmark their progress towards implementing a fully developed Level 5 BSC.

In developing and empirically validating a BSC taxonomy, the paper builds on and extends previous research on BSC implementation and its potential implications.