Testing Strategy with Multiple Performance MeasuresEvidence from a Balanced Scorecard at Store24
Dennis CampbellSrikant Datar Harvard Business SchoolSusan L. KulpGeorge Washington UniversityV.G. NarayananHarvard Business SchoolCurrent Draft: February 2008
We analyze balanced scorecard data from a convenience store chain, Store24, during theimplementation of an innovative, but ultimately unsuccessful strategy. Quarterly strategic reviews, basedin part on the firm's balanced scorecard, led executives at Store24 to identify problems with, andeventually abandon, this strategy over a two year period. We find that formal statistical tests of thehypotheses underlying the firm's balanced scorecard and strategy map reveal problems with the strategyon a timelier basis. We also test alternative hypotheses to those underlying the firm's formal strategy mapand scorecard that are consistent with concerns expressed by some of Store24's top executives during theinitial stages of implementing the new strategy. Our analysis demonstrates that this firm's balancedscorecard contained useful and timely information for distinguishing between these alternatives. Theseresults provide some of the first field-based evidence on the potential for a firm's balanced scorecard to provide useful information for detecting problems in its strategy.
This study investigates the role of the balanced scorecard in generating useful information for testing and validating an organization's strategy. Numerous case studies of balanced scorecardimplementations document their use in translating organizational strategies to objectives and measures,communicating strategic objectives to employees, evaluating the performance of business units, andaligning the incentives of employees across business units and functions.
Field-based and experimentalresearch in the accounting literature has also focused on these uses of balanced scorecards (Malina and
The authors thank Store24 for use of its data. We thank Chris Ittner, Robert Kaplan, Ken Koga, Joan Luft, MichaelMaher, Ella Mae Matsumura Tatiana Sandino, Philip Stocken, Dan Weiss, two anonymous referees, and seminar participants at the AAA Annual Meeting in Orlando, Boston University, the EIASM conference, HarvardUniversity, Management Accounting Section Mid-year Meeting in San Diego, Michigan State University, OhioState University, University of Arizona, UCLA, University of Michigan, University of Southern California, and theUniversity of Wisconsin for their helpful comments and suggestions.
See Kaplan (1998), Campbell and Lane (2006), or many of the organizations documented in Kaplan and Norton(2006) for examples.