Common-measures bias in the Balanced Scorecard: Cognitive effort and general problem-solving ability

Lipe and Salterio (2000) found that decision-makers role-playing as superiors in a performance evaluation setting used information on the Balanced Scorecard (BSC) common to subordinates in making their judgment, giving virtually no weight to items unique to the subordinates. Because theory underlying the BSC (Kaplan and Norton 1996, 2001) indicates that all measures included on the scorecard are relevant for achieving organizational objectives, several studies attempting to understand or alleviate this common-measures bias have followed (e.g., Banker, Chang, and Pizzini 2004, Libby, Salterio, and Webb 2004, Roberts, Albright, and Hibbets 2004, Dilla and Steinbart 2005, Krumwiede, Swain, and Eggett 2002). In accordance with an effort-based explanation of the common-measures bias, this study is the first to directly test whether decision-makers expending the effort to analyze each BSC item before making a global performance judgment incorporate unique information to a greater extent than evaluators who do not. Additionally, this research investigates the role of participants' problem-solving ability on mitigating the common-measures bias. An interaction effect between effort and ability is also hypothesized. Results show strong support for the effect of problem-solving ability, but not for effort or for an interaction effect. Hypotheses were tested using a classroom case similar to Lipe and Salterio (2000).