ABSTRACT This study examines the effect that two key balanced scorecard (BSC) framework elements—causal linkages between strategic objectives in the strategy map and performance measures categorized by scorecard perspective—have on managers' ability to interpret the strategic relevance of external information and use this information to evaluate the appropriateness of an organization's strategy. We conduct two experiments, finding that presenting a set of strategic objectives as a strategy map enhances both managers' information relevance and strategy appropriateness judgments. We attribute this improvement to the explication of causal linkages between objectives in a strategy map. In contrast, presenting performance measures categorized by scorecard perspective only improves managers' strategy appropriateness judgments when the managers are provided with a set of strategic objectives that are not presented in a strategy map structure. Our study contributes to the literature by demonstrating that these two elements of the BSC framework have differential decision-facilitating impacts on managers' strategic judgments. Data Availability: Data are available from the authors upon request.

Abstract Trust is often posited to substitute for management control in interfirm transactions. However, this raises questions of how trust arises in new relationships, and whether trust that is not based on prior experience transacting together is sufficient to persuade managers to forgo investments in management controls. We use an experiment to test whether two features of the early stage of an interfirm relationship influence a buyer's initial trust in a supplier and have consequences for subsequent investments in management controls and in the collaboration. These two features are the autonomy of the buyer's manager to choose a supplier (i.e., delegation of decision‐making authority) and the supplier's willingness to share information with the buyer. We find that the buyer manager's initial trust in the supplier is associated positively with both the autonomy to choose the supplier and the supplier's willingness to share information. Information content and supplier characteristics are held constant, so these results are novel and distinct from prior studies of the antecedents of trust. We find that higher initial trust is associated with reduced expenditures for management controls and increased investments in the collaboration. Thus, we conclude that delegation of decision‐making authority and supplier information‐sharing behavior in the early stages of a relationship influence the formation of initial trust, which has real consequences for investments in management control and in the collaboration.

ABSTRACT Despite the potential of algorithms to improve judgment quality, recent research suggests that individuals may be averse to algorithmic use. We experimentally examine whether and how managers’ use of an algorithm-advised performance rating is influenced by rating valence and the decision rights managers have to adjust the algorithm. We find that managers are less willing to use an algorithm to evaluate subordinate performance when it advises a low, rather than high, rating. We further show that when the algorithm-advised rating is low, allowing managers to adjust how the algorithm computes the rating, compared with adjusting the rating itself or not allowing any adjustment, increases algorithmic use. Further analyses show this effect to be consistent with managers’ increased understanding of an algorithm when involved in its computation. Our findings inform organizations’ implementation of performance evaluation algorithms by showing how rating valence and decision rights jointly influence managers’ use of the algorithms.

ABSTRACT Prior research shows that individuals exhibit a propensity to surrogate performance measures for their underlying strategy, resulting in suboptimal strategic decisions. We investigate whether the incorporation of flexibility in contemporary performance measurement systems (PMSs) reduces surrogation propensity in the context of product innovation and whether this effect varies depending on environmental dynamism. We conduct a 2 × 2 experiment and find that PMS flexibility significantly lowers managers' surrogation propensity when the business environment is more dynamic and when the investment decisions have opportunity costs. Our study contributes to the literature by identifying a viable way to reduce managers' surrogation propensity.

ABSTRACT We investigate whether prior collaboration experience affects a focal partner's response to the precision of monitoring controls adopted by a new partner, with consequences for their goodwill trust in, and subsequent cooperation with, the new partner. We expect the partner to interpret their new partner's adoption of precise monitoring controls as either an effort to limit their autonomy or to reduce information asymmetry. The partner's experience with past partners is posited to determine which interpretation is salient, with negative (positive) experiences favoring the former (latter). We find that partners with an uncooperative (cooperative) experience exhibit lower (higher) goodwill trust in the new partner when controls are more precise. Further, prior experience moderates the indirect relation between the precision of monitoring controls and partner cooperation acting through goodwill trust. The results demonstrate the importance of prior experiences in the design of interfirm controls for current partner relationships. Data Availability: Contact the authors. JEL Classifications: M41.