Functional fixation and the balanced scorecard

Joachim Schauß, Bernhard Hirsch and Matthias Sohn

Journal of Accounting & Organizational Change, 2014, vol. 10, issue 4, 540-566

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.

Keywords: Benchmarking; Balanced scorecard; Functional fixation; Management reporting; Process tracing (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaocpp:jaoc-11-2012-0114

DOI: 10.1108/JAOC-11-2012-0114

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