Abstract A strategic performance measurement system (SPMS) is a set of causally linked nonfinancial and financial objectives, performance measures, and goals designed to align managers' actions with an organization's strategy. This study identifies and tests features unique to the cause‐effect structure of an SPMS likely to affect an important antecedent to managerial performance: goal commitment. Companies often set difficult goals for the multiple performance measures contained in an SPMS, but research shows difficult goals are significantly more likely to lead to performance gains if individuals are committed to achieving them. Two features central to the SPMS approach are predicted to affect goal commitment: (1) the strength of the cause‐effect links among the nonfinancial and financial performance measures contained in an SPMS and (2) managers' beliefs in their ability to achieve the SPMS nonfinancial goals. Results from an experiment conducted with experienced managers show both SPMS features have a positive effect on goal commitment.

ABSTRACT: The use of tangible rewards in the form of non-cash incentives with a monetary value has become increasingly common in many organizations (Peltier et al. 2005). Despite their use, the behavioral and performance effects of tangible rewards have received minimal research attention. Relative to cash rewards, we predict tangible rewards will have positive effects on goal commitment and performance but will lead employees to set easier goals, which will negatively affect performance. The overall performance impact of tangible rewards will depend on the relative strength of these competing effects. We conduct a quasi-experiment at five call centers of a financial services company. Employees at two locations earned cash rewards for goal attainment while employees at three locations earned points, with equivalent retail value to cash rewards, redeemable for merchandise. Results show that cash rewards lead to better performance through their effects on the difficulty of the goals employees selected. Implications for theory and practice are discussed. Data Availability: The data used in this study are available upon request.

ABSTRACT In an environment where individual productivity can be increased through efforts directed at a conventional task approach and more efficient task approaches that can be identified by thinking outside-the-box, we examine the effects of productivity-target difficulty and pay contingent on meeting and beating this target (i.e., target-based pay). We argue that while challenging targets and target-based pay can hinder the discovery of production efficiencies, they can motivate high productive effort whereby individuals work harder and more productively using either the conventional task approach or more efficient task approaches when discovered. Results of a laboratory experiment support our predictions. Individuals assigned an easy productivity target and paid a fixed wage identify a greater number of production efficiencies than those with either challenging targets or target-based pay. However, individuals with challenging targets and/or target-based pay have higher productivity per production efficiency discovered, suggesting these control tools better motivate productive effort. Collectively, our results suggest that the ultimate effectiveness of these control tools will likely hinge on the importance of promoting the discovery of production efficiencies relative to motivating productive effort. In doing so, our results provide a better understanding of conflicting prescriptions from the practitioner literature and business press.

ABSTRACT Firms often use causal models to align decision-making with strategic objectives. However, firms often operate in changing environments such that an accurate causal model can become inaccurate. Prior research has not examined the consequences that a change in the accuracy of causal models may have for managerial learning. Using an experiment, we predict and find that providing an accurate causal model positively affects managerial learning, and this positive effect is not reduced by encouraging a hypothesis-testing mindset (HTM). However, when the model subsequently becomes inaccurate, we predict and observe that providing a causal model alone negatively affects managerial learning, although this effect is partially mitigated by additionally encouraging a HTM. Our results can inform designers of control systems about the potential implications of providing a causal model when its accuracy changes over time and demonstrate how simple encouragement of a HTM moderates the effects of providing a causal model. Data Availability: Contact the authors. JEL Classifications: C91; M41.

The balanced scorecard is one of the major developments in management accounting in the past decade (Ittner and Larcker 2001). Lipe and Salterio (2000) find that managers ignore one of the key scorecard features, the inclusion of measures that are unique to the strategic objectives of a business unit, when making performance evaluation judgments. This study identifies and tests two approaches to reducing this “common measures bias.” We examine whether increasing effort via invoking process accountability (i.e., requiring managers to justify to their superior their performance evaluations) and/or improving the perceived quality of the balanced scorecard measures (i.e., via an independent third-party assurance report on the balanced scorecard) increases managers' usage of unique performance measures in their evaluations. Results suggest that either the requirement to justify an evaluation to a superior or the provision of an assurance report on the balanced scorecard increases the use of unique measures in managerial performance evaluation judgments. Implications for theory and practice are discussed.

ABSTRACT Toward the goal of reconciling conflicting arguments on whether performance-based incentives facilitate or impede divergent thinking, we identify a feature common to prior demonstrations of negative incentive effects: they generally involve tasks with only one correct solution. Our first experiment replicates a negative incentive effect when insight problems require “bottom-up” divergent thinking from an unexpected resource to the problem it is uniquely equipped to solve, whereas our second experiment finds a positive incentive effect in the more general case of problems that enable “top-down” divergent thinking from a problem to multiple potential solutions. We also observe a positive incentive effect in a third experiment that measures the time needed to generate a solution to problems that have multiple potential solutions and in a fourth experiment in which participants design insight problems. Overall, our findings suggest that any harmful effects of performance-based incentives are likely restricted to highly constrained settings. Data Availability: Data are available from the authors upon request. JEL Classifications: J33; M14; M41; M52.