Functional Fixation

Journal of Accounting & Organizational Change
Functional fixation and the balanced scorecard: Adaption of BSC users’ judgment
processes
Joachim Schauß Bernhard Hirsch Matthias Sohn
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Journal of Accounting & Organizational Change, Vol. 10 Iss 4 pp. 540 - 566
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JAOC
10,4
Functional fixation and the
balanced scorecard
Adaption of BSC users’ judgment processes
540 Joachim Schauß, Bernhard Hirsch and Matthias Sohn
Chair of Management Accounting, Bundeswehr University Munich,
Received 29 November 2012 Munich, Germany
Revised 16 July 2013
29 August 2013
Accepted 4 September 2013 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
Paper type Research paper
1. Introduction
Ijiri et al. (1966) introduced the psychological concept of functional fixation[1] to the
accounting domain. Their basic research question was to examine whether accountants
adapt their decision model adequately to changes in the meaning of accounting data.
The authors found:
The authors would like to thank attendants at the Empirical Research in Management Accounting
Journal of Accounting & and Control Conference 2012 at Vienna University of Economics and Business and at the
Organizational Change
Vol. 10 No. 4, 2014 European Accounting Association Conference 2013 at Paris-Dauphine University for helpful
pp. 540-566 suggestions on our paper. The authors also thank seminar participants at ESCP Europe Berlin
© Emerald Group Publishing Limited
1832-5912
and Bundeswehr University Munich for comments on an earlier draft. The editor and two
DOI 10.1108/JAOC-11-2012-0114 anonymous reviewers were most helpful in improving the paper.
[…] that functional fixation exists in most human behaviour in which a person attaches a Functional
meaning to a title or an object and is unable to recognise the alternative meaning or uses.
People intuitively associate a value with an item through past experience, and often do not fixation and the
recognise that the value of an item depends upon the particular moment in time and may be balanced
significantly different from what it was in the past (Ijiri et al., 1966, p. 186). scorecard
While a large portion of the empirical research in accounting focussed on changes in the
methodology of accounting, e.g. alternative inventory valuation methods (Dopuch and 541
Ronen, 1973) or changes in depreciation method (Arunachalam and Beck, 2002), a
detailed consideration of the relevant psychological processes is missing. These
processes may be responsible for the large numbers of decision-makers who fail to adapt
their decision-making processes (Hirst and Hopkins, 1998; Maines and McDaniel, 2000;
Luft and Shields, 2001; Hodge et al., 2004). While Beresford (1994) suggested a focus on
specific changes in accounting, Maines (1994) recommended an examination of general

(psychological or sociological) issues and noted that:
[p]sychological and sociological research may be most productively used to guide behavioural
accounting research on general issues that underlie many different accounting standards,
rather than focussing on issues relevant to only one standard.
Our study follows Maines’ suggestion and tests functional fixation in a more general
setting within an easily understandable balanced scorecard (BSC) setting.
In line with an increasing body of accounting research on individual decision-making
(Lipe and Salterio, 2000, 2002; Knechel et al., 2010; Cardinaels and van Veen-Dirks, 2010),
we focus on the individual BSC user and the potential cognitive constraints and
judgemental biases in BSC usage. Using an experimental laboratory study allows us to
isolate the cognitive constraints as drivers of decision-making in a
performance-evaluation context.
Laboratory studies in managerial accounting have often relied on students as
subjects to understand the impact of individuals’ cognitive constraints on behaviour
(Shields, 1980; Kachelmeier et al., 2008). This procedure was typically used in research
on the decision-making of BSC users (Lipe and Salterio, 2000; Libby et al., 2004; van
Veen-Dirks, 2010; see Salterio, 2012 for an overview). In our study, we also use students
as subjects.
To test functional fixation within a BSC, we compare the use of internal versus
external benchmarking of performance measures (Libby et al., 2004; Knechel et al.,
2010). Our participants evaluated 25 different business units with internal
benchmarking only and then received information that one measure would be externally
benchmarked. We compare the use and weighting of the performance measures before
and after that manipulation. Our results show that functional fixation is present in BSC
users’ judgements. Additionally, we find that BSC users rely heavily on financial
measures of the BSC. To understand the processes that influence the decision-makers’
probability to behave in a fixated manner, we apply a process tracing method called
MouselabWEB, which is a methodological approach that is well-known in judgement
and decision-making research (for an overview, see Schulte-Mecklenbeck et al., 2011a).
Research has closely examined the processes that underlie judgement and
decision-making. Two major paradigms, structural modelling and process tracing, exist
in this stream of literature (Payne et al., 1993; Schulte-Mecklenbeck et al., 2011a). While
structural modelling focussed on the input and output of decision-making, process
JAOC tracing focussed on the pre-decisional phase (information acquisition and use).
Generally speaking, process tracing methods monitor the processes that take place
10,4 between the stimulus presentation and the final decision (Reisen et al., 2008, p. 641).
Payne et al. (1978) stated that “input– output analyses that have been used in most
decision research are not fully adequate to develop and test process models of decision
behaviour”. We follow the approach of Payne et al. (1978), showing that it is important
542 to examine the decision-making process of BSC users as a whole. Using a process tracing
method helps us to understand why BSC users fail to adapt their judgement processes
and to compare the process data with the structural modelling findings. Furthermore,
we are able to observe the overreliance on financial information already within the
information acquisition process.
We also investigate the effect of stable individual differences in terms of intuitive
versus deliberate preferences on the probability of behaving in a functionally fixated

manner. The literature describes two different processes as key determinants of human
decision-making and behaviour. These processes are automatic/impulsive/associative
processes in behaviour execution and deliberative/reflective/propositional processes
(Strack and Deutsch, 2004; Gawronski and Bodenhausen, 2006). Richetin et al. (2007)
argued, “besides some differences in the specific mechanism, all these dual-process
models underline the importance of both processes as basic determinants of
decision-making” (Richetin et al., 2007, p. 530). Our study is the first to examine the
influence of general individual differences in terms of intuitive versus deliberative
preferences in decision-making on the probability of demonstrating fixated behaviour.
We find that BSC users who prefer deliberation demonstrate less fixation than BSC
users who prefer intuition.
Our contribution to the BSC literature is fivefold: first, our study shows the presence
and persistence of functional fixation in judgements based on the BSC. We align our
results to the functional fixation literature, which, to date, has focussed on financial
accounting and auditing. Second, our results indicate that BSC users weight the
categories within a BSC differently, both from an input– output perspective and a
process tracing perspective. BSC users rely more on financial measures, independent of
their positioning and despite being told that every BSC measure was in line with
strategic goals. Thus, we replicate the previous results from Knechel et al. (2010) and
Cardinaels and van Veen-Dirks (2010), but we provide a more process-oriented
viewpoint of the “financial biases” of BSC users. Using a process tracing method, we find
that the different weights of performance measures can already be observed in the
pre-decisional phase of the judgements. Third, we demonstrate that a more familiar
positioning of the performance measures within the BSCs (financial measure on top)
increases the probability of behaving in a functionally fixated manner. This finding
could imply that BSC users who are more familiar with their individual reporting
system and the organisation of the information within a report could have difficulties
overcoming fixation. Fourth, the results also indicate that changes in different
categories of the BSC have different effects on the probability of being fixated. A change
in the benchmarking of the financial measure increases the probability of functional
fixation, whereas a change in the benchmarking of the customer decreases this
probability. Fifth, our findings indicate that a preference for deliberation helps BSC
users overcome functional fixation.
This research is informative on both a theoretical and an applied level. Whereas the Functional
literature has already shown the potential consequences of functional fixation, little
research has been undertaken to better understand how cognitive determinants affect
fixation and the
functional fixation. We believe that developing an understanding of the factors that balanced
affect the probability of demonstrating fixated or non-fixated behaviour is crucial. The scorecard
present study takes the first step towards a deeper understanding of the cognitive
processes (using a process tracing method) and the personality factors that determine 543
functional fixation in a management accounting context.
The remainder of the paper proceeds as follows: first, we present a literature review
on functional fixation and deduce hypotheses for our BSC setting. Then, we describe our
methodological approach and the experimental results. Finally, we discuss our results,
derive implications for practitioners and describe future directions for behavioural
research in management accounting.
2. Literature review and hypotheses

2.1 Functional fixation in accounting
The phenomenon of functional fixation and its accounting implications have received
widespread interest in the financial accounting literature, especially within the past
decade (Ghani et al., 2011; Morssinkhof et al., 2009; Viger et al., 2008; Nichols and
Buerger, 2006; Hodge et al., 2004; Arunachalam and Beck, 2002).
In an accounting context, the concern about functional fixation relates to the availability of
alternative accounting policies and methods and the possible inability of decision-makers to
adjust their decision-making process to reflect the accounting policies and methods used
(Ghani et al., 2011, p. 187; similarly Libby et al., 2002).
Research has replicated the existence of functional fixation for accounting changes in
depreciation method (straight line versus accelerated) (Arunachalam and Beck, 2002)
and for accounting changes in inventory method (LIFO versus FIFO) (Dopuch and
Ronen, 1973). Ashton (1976) showed how an increase or decrease in the importance of the
manipulated accounting information and the amount of information provided to
participants affects the participants’ ability to adjust their decision-making processes.
While participants in an increase condition showed more reaction to an accounting
change compared with participants in a decrease condition, the amount of information
did not seem to have any effect (Ashton, 1976). According to the functional fixation
hypothesis, the accounting choice of reporting information through income statement
recognition or disclosure in a footnote is likely to lead to different judgements.
Information disclosed in a footnote is disregarded because financial statement users
continue to interpret reported net income in the same manner as before (Viger et al., 2008,
p. 97). The results of Hirst and Hopkins (1998) and Maines and McDaniel (2000) showed
that information placed in the income statement relating to comprehensive income is
treated as more relevant than equivalent information placed in the statement of
stockholders’ equity. One further consequence of functional fixation is that companies in
comparable economic circumstances might be judged differently by financial analysts
because the companies use different accounting methods (Libby et al., 2002). Hodge et al.
(2004) noted that functional fixation could be overcome by applying digital technologies
because such technologies provide more transparent information irrespective of the
placement (Hodge and Pronk, 2006). Ghani et al. (2011) could not verify that digital
presentation formats assist professionals in overcoming functional fixation. Other
JAOC authors have suggested that functional fixation arises from a lack of experience or a lack
of relevant data (Gupta and King, 1997).
10,4 However, empirical results on the impact of experience on the ability to overcome
functional fixation are inconsistent. Dearman and Shields (2005) found that accounting
knowledge or experience decreases the likelihood of being fixated. Additionally,
experiments focussing on the role of feedback in overcoming functional fixation have
544 not led to consistent results (Briers et al., 1997, 1999; Arunachalam and Beck, 2002;
Buchheit, 2004). Dearman and Shields (2005) argued that “these studies provide limited,
inconsistent evidence on determinants of cognitive adaption, but indicate that
accounting knowledge (operationalised as experience), incentives, and cognitive
feedback individually do not avoid accounting fixation” (Dearman and Shields, 2005,
p. 357).
In our study, we examine how the introduction of external benchmarks influences the
weighting and use of the information provided in a BSC. We know from related
disciplines that external benchmarks can improve the quality of decision-making
(Briers et al., 1999). Audit standards emphasise that evidence from sources independent
of the client are of higher quality and are relatively more persuasive (relevant) than
evidence obtained from the client (Libby et al., 2004; Knechel et al., 2010, p. 319). For
example, Hirst (1994) and Joyce and Biddle (1981) demonstrated that auditors respond
more positively to evidence that is judged as independent from the client. Because of
these findings, BSC users in our experiment should weigh measures that are externally
benchmarked more heavily than measures that are internally benchmarked.
Furthermore, we explicitly explain in the case instruction that external benchmarks are
included in the BSC to increase information quality. If BSC users first use internally
benchmarked measures to evaluate BSC users’ performance and then receive
information that a subset of measures was externally benchmarked, the BSC users
should put more weight on the respective subset of measures. If the BSC users do not
behave in this way, they either do not understand that externally benchmarked data are
of higher quality than internally benchmarked data (which we controlled for in the
manipulation check) or their behaviour is functionally fixated. Our first hypothesis can
be stated as follows:
H1. BSC users are fixated in their judgements; they do not adapt their judgement
processes because of substantial changes within the BSC.
2.2 Weighting of financial versus non-financial measures in the BSC

Many proposals supplement conventional accounting with the use of non-financial
measures (Luft, 2009, p. 307). For example, non-financial measures could improve
business risks or strategic systems audits (Peecher et al., 2007). Such measures could
also be used to forecast earnings and stock prices (Ghosh and Lusch, 2000); even the
Financial Accounting Standards Board has considered mandating the reporting of
non-financial measures in combination with traditional financial statements (Maines
et al., 2002). Recently, the International Integrated Reporting Committee (IIRC, 2012) has
aimed to improve the reliability of reports by integrating nonfinancial and financial
information (Verschoor, 2011). The initial intent of the development of the BSC was to
reduce the managerial bias towards financial measures in performance evaluation
(Kaplan and Norton, 1992, 1993, 1996a, 1996b, 2001a, 2001b); however, research on the
BSC has shown evidence that BSC users fail to prevent this bias (Cardinaels and van Functional
Veen-Dirks, 2010; DeBusk et al., 2003; Ittner et al., 2003; Ittner and Larcker, 1998).
Ittner et al. (2003) examined how different types of performance measures are
fixation and the
weighted in a subjective BSC bonus plan adopted by a major financial services firm. balanced
They found that the subjectivity in the scorecard plan allows superiors to reduce the scorecard
balance in bonus awards by placing most of the weight on financial measures. The
superiors have also preceded a step further by incorporating factors other than 545
the scorecard measures in their performance evaluations. Managers changed the
evaluation criteria from quarter to quarter, ignoring future predictive measures while
taking into account measures that were not predictive of the desired results (Fahrmeir
et al., 2009). Cardinaels and van Veen-Dirks (2010) cited three main reasons why
managers tend to weigh financial measures more heavily than non-financial measures.
First, the outcome effect is responsible for managers’ tendency to rely heavily on
outcomes in their evaluations (DeBusk et al., 2003). Financial measures are more
closely related to outcomes than non-financial measures, which could be interpreted
as drivers of these outcomes (Cardinaels and van Veen-Dirks, 2010, p. 567).
Therefore, managers give financial measures more weight than non-financial
measures. Second, managers are confronted with outside pressure to focus on
financial measures; vocal shareholders are familiar with financial measures, and boards
frequently apply pressure on behalf of the shareholders whom they represent
(Cardinaels and van Veen-Dirks, 2010, p. 567). Third, managers have a tendency to rely
on financial measures because they are the most familiar with such measures (DeBusk
et al., 2003).
The literature shows that BSC users typically tend to focus on the financial
perspective of the scorecard. In line with a growing body of research, our next
hypothesis can be stated as follows:
H2a. BSC users weigh the financial measures of a BSC more heavily than the
non-financial measures.
2.3 Cognitive effort in evaluating performance measures

One purpose of our study is to examine differences in the weighting of performance
measures from a structural and a process tracing perspective, enabling us to deepen the
understanding of BSC users’ cognitive processes. Research in judgement and
decision-making has used two different paradigms to examine cognitive effort in
judgement processes – structural modelling and process tracing. The aim of structural
modelling is to identify psychological theories by testing relationships between the
input (stimuli) and the output (outcome/choice) of decision-making. Multiple regression
models are often used, and regression weights are interpreted as indicators of
individuals’ usage of cues in their judgements. Structural modelling usually does not
aim to analyse processes; instead, this method focusses on explanations for input–
output relations between cues and judgements only (Reisen et al., 2008; Glöckner, 2009,
p. 186). However, a growing body of research has found that input– output models alone
are not adequate for examining the underlying processes of judgements (Johnson et al.,
2008; Schulte-Mecklenbeck et al., 2011b). Process tracing methods were developed to
overcome the limitations of structural modelling (Svenson, 1996). The aim of process
tracing is to describe the processes that occur immediately before a final decision is
made. These processes include the following:
JAOC • information acquisition;
10,4 • information evaluation; and
• weighting of the information (Maines and McDaniel, 2000).
To examine the cognitive processes, we measure the time and the amount of cell
openings on a computer screen with MouselabWEB, a computer-implemented
546 information board that is commonly used to gather process data in cognitive and social
psychology (Jasper and Shapiro, 2002; Johnson et al., 2008). In these disciplines, a
combination of structural modelling and process tracing has also been used (Reisen
et al., 2008). Monitoring BSC users’ cognitive processes helps us to determine how
cognitive judgement processes are related to BSC users’ judgement biases.
As previously noted, BSC users tend to weight financial measures more heavily than
non-financial measures. Similarly, BSC users give heavier weight to measures that are
common across different business units, in contrast to measures that are unique to the
different business units. In the BSC context, Lipe and Salterio (2000) found evidence that
in their evaluations, BSC users only use measures that are common among multiple
units, ignoring measures that are unique to one business unit. Several authors have
qualified and enhanced these findings (Lipe and Salterio, 2002; Libby et al., 2004; Banker
et al., 2004; Dilla and Steinbart, 2005; Hibbets et al., 2006).
The basic questions remain as to why BSC users rely so heavily on common
measures and on financial measures. One possible explanation, which was not
empirically tested by Slovic and MacPhillamy (1974), is that subjects actively discount
more unique measures because they lack confidence in their ability to use these
measures appropriately. On the one hand, the ease of comparison of the commonly used
measures could induce greater confidence in subjects’ ability to use that information. On
the other hand, this confidence could negatively affect the weight given to the unique
information (Slovic and MacPhillamy, 1974, p. 192). Another possible explanation is the
concept of cognitive difficulty or constraint (Bruner et al., 1986). “In (an) attempt to
reduce the strain on memory, attention, and other components of reasoning” (Slovic and
MacPhillamy, 1974, p. 173), subjects might weigh the common measures more heavily
than the unique measures because the common measures are easier to process and
incorporate into judgement. The explanation of Slovic and MacPhillamy (1974) is
consistent with a cognitive/attentional resource allocation perspective (Kanfer and
Ackerman, 1989; Kanfer et al., 1994). According to this perspective, task performance is
affected by an individual’s attentional resource capacity. The attentional resource
demands of the task and the individual’s allocation of attentional resources affect both
on-task and off-task activities. Kanfer and Ackerman (1989) separate distal and
proximal processes, which evaluators use in allocating cognitive resources. Before
engaging in a task, distal processes occur; these processes are responsible for deciding
how many (if any) resources should be used in reaching a goal. The proximal processes
determine the distribution of effort across on-task and off-task activities during task
engagement, e.g. information acquisition, reading etc. (Kanfer and Ackerman, 1989,
p. 662; Hibbets et al., 2006). Following this reasoning, we expect that BSC users already
show a “financial bias” in the pre-decisional phase of their judgement; therefore, they use
more cognitive effort to evaluate financial than non-financial measures.
According to Section 2.2 (structural modelling perspective) but focussing on a
process perspective, our next hypothesis can be stated as follows:
H2b. BSC users use more cognitive effort to evaluate financial measures of a BSC Functional
than non-financial measures.
fixation and the
2.4 Preference for intuition or deliberation balanced
We also examine how stable individual differences affect the probability to be fixated in scorecard
a BSC task. Research on functional fixation has identified several personal
characteristics that influence the tendency to be fixated (Dearman and Shields, 2005). 547
Furthermore, BSC research has focused more and more on personal characteristics to
understand the drivers of managers’ performance evaluation judgements (Liedtka et al.,
2008; Upton and Arrington, 2012). We extend both research streams by using a measure
of individual differences in decision-making style that focusses on preferences for
intuitive or deliberative decision-making. The behavioural literature distinguishes
between preferences for deliberation or intuition as the main cognitive styles. Intuitive
decision-making processes are described as unconscious, automatic, fast, parallel,

effortless and utilising high cognitive capacity. Deliberate decision-making processes,
in contrast, are described as slow, sequential, effortful, rule-governed and utilising
limited cognitive capacity (Sloman, 1996; Horstmann et al., 2009, p. 336; Witteman et al.,
2009). In our study, we are interested in how BSC users’ preference for intuition or
deliberation (PID) affects their judgement processes. Therefore, we use the PID
inventory (denoted as “PID” in the logistic regression model, see Section 4.2) to describe
and measure the subjects’ cognitive style (Betsch, 2004). The PID has already been
tested and validated as “a psychometrically sound measure of individual differences in
decision-making style” by Richetin et al. (2007, p. 542).
Based on the existing literature, we assume that deliberation is positively correlated
with the need for structure, cognition, conscientiousness and perfectionism, whereas
intuition is positively correlated with extroversion, agreeableness, openness to
experience and faith in intuition (Richetin et al., 2007, p. 533). Because of the positive
effects of deliberation on decision-making, we assume that decision-makers who have a
preference for deliberation are more precise in conducting the BSC decision tasks and
are therefore better protected against functional fixation. Consequently, we hypothesise
the following:
H3. A decision-maker’s preference for deliberation will decrease the probability of
demonstrating fixated judgements in a BSC setting.
2.5 Determinants influencing the probability of fixated behaviour

In addition to our hypotheses, we test for additional potential determinants of functional
fixation in a more exploratory manner.
In our experimental setup, we are able to measure a BSC user’s evaluation model
before we introduce the manipulation. Thus, we are able to show whether BSC users
have a (strongly) distorted evaluation model (see Section 2.3), i.e. a more heavy
weighting of financial measures within the BSC (denoted as “weighting” in the logistic
regression model, see Section 4.2). Thus, provide an initial insight into whether BSC
users with a distorted evaluation model are more likely to be fixated.
We manipulated the change from internal to external benchmarking from either the
financial or consumer perspective. We expect that BSC users are likely to weigh
financial perspectives more heavily than non-financial perspectives. Following this
assumption, a change in the financial perspective should increase the probability of
JAOC fixated decision-making behaviour (denoted as “change” in the logistic regression
model, see Section 4.2). The BSC users could have ignored the change in the financial
10,4 perspective if they assumed that they had already made “correct” judgements in the first
25 cases.
Independent of the distribution of the BSC users’ cognitive effort or attention,
investing more cognitive effort in the decision-making process is expected to help
548 overcome functional fixation. If the BSC users take more time to search carefully for
information, they should be able to adapt their judgement process successfully (Arnold
et al., 2009; Morssinkhof et al., 2009). Because we do not use a time pressure condition,
the BSC users should not feel any pressure to make quick decisions. Thus, we expect
that the more cognitive effort the BSC users invest in their decision-making process, the
less likely they are to demonstrate fixated behaviour (denoted as “cognitive effort” in the
logistic regression model, see 4.2).
In line with Dearman and Shields (2005) and Morssinkhof et al. (2009), we expect that
experience helps BSC users to overcome functional fixation. In this study, experience
refers to general business experience rather than specific experience and knowledge in
management accounting tasks. We assume that experienced BSC users have a better
understanding of operations, technology and the usage of performance measures in
organisations, that is, the type of knowledge related to business experience (Nelson and
Libby, 1995; Chang and Ho, 1997; Shelton, 1999; Vera-Muñoz et al., 2001; Morssinkhof
et al., 2009, pp. 98-99). Therefore, we expect that the more experience the BSC users have,
the less likely they are to show fixated behaviour (denoted as “experience” in the logistic
regression model, see Section 4.2).
Similar to the argument on general business experience, we expect that the BSC users
who are more familiar (Dilla et al., 2013) with the BSC format are more likely to adapt
their judgement process to changes in the BSC (denoted as “familiarity” in the logistic
regression model, see Section 4.2).
BSC users who do not rely solely on financial measures and who evaluate all
performance measures equally are expected to show adaptability to changes in the BSC.
When BSC users distribute their limited cognitive resources more equally, they should
be in a position to react adequately to changes. A more biased judgement process is more
difficult to overcome. Therefore, we expect that the more equally BSC users distribute
their cognitive effort in the different perspectives of the balanced scorecard the less
likely they are to show fixated behaviour (denoted as “equality” in the logistic regression
model, see 4.2). Additionally, we include demographic data (age and sex) in the analysis;
however, we do not expect these data to specifically increase or decrease the possibility
of demonstrating fixated behaviour (see Section 3).
3. Experimental methods
3.1 Experimental design
Our study is based on a 2 ⫻ 2 ⫻ 2 experimental research design. The change from
internal to external benchmarks after the first 25 BSCs is a within-subject factor. We also
manipulate two between-subjects variables. The qualitative change in the benchmarks
(internal vs. external) takes place either in the financial or the customer perspective of
the BSCs (“change”). The second between-subjects variable is the positioning of the
different perspectives within the BSCs. The four perspectives are ordered into financial,
customer, internal processes and learning and growth or, alternately, the financial and
customer perspectives are changed (“positioning”). Thus, we obtain the following four Functional
experimental conditions: the qualitative change of the benchmark in the financial
perspective, with either positioning one or two, and the qualitative change of the
fixation and the
benchmark in the customer perspective, with either positioning one or two. Participants balanced
were randomly assigned to one of four experimental conditions. The subjects were scorecard
asked to evaluate the performance of subordinated branch BSC users. In the first period,
the subjects evaluated a range of 25 BSC users; in the second period, they evaluated 549
another range of 25 BSC users. Our experimental research design allows us to reduce the
design for some of the hypotheses tests (see 4.2).
3.2 Experimental materials and procedure

We use an experimental setting similar to Lipe and Salterio’s (2000) setting but with
some changes. That study presented participants with two separate, simultaneous
BSCs, each with 16 measures, where the two business units had some measures in
common and some unique measures. Instead, we present two ranges of 25 BSCs, one
after another, with only one measure for each category of the BSC (see Table I). These
BSCs represent 25 subordinated branches of ABC Company, a fictitious international
retailer of business clothing. The participants received a simple mission statement for
the ABC Company, and they were informed that they should act as the head of a
business unit (called “WW”) that consists of 25 branches. The participants received a
short description of the strategy for their business unit. The description consisted of four
very generic goals for every category of the BSC, and the participants were informed
that every measure in the BSC was aligned with the strategic goals[2]. In all four
categories, only one measure was presented to the participants, with a target value and
an actual performance value, both as percentages. To ensure a more realistic setting, the
participants were told that the BSC was shortened to only one measure in each of the
four categories because branch managers were able to influence only these four
measures directly, which is known as controllability (Bushman et al., 1995). After
reading the task description, the participants were asked to evaluate the performance of
each branch manager based on the information provided on the screen. The participants
opened the cells containing the information for their judgements by moving the cursor
over the respective cell. Only the “percentage better than target” information was hidden
in the boxes. Following the information acquisition process, the participants could
register their final judgement on a scale from 0 (very poor performance) to 100 (very
good performance) directly below the information matrix. Table I provides an example
of the BSCs that the participants were asked to evaluate.
After the participants had finished evaluating the first 25 cases, they received
information that the management of ABC had decided to improve the quality of the
performance measures in one category of the BSC by using external benchmarks as
measures. The participants then evaluated another range of 25 cases. The change
took place either in the financial perspective or in the customer perspective. The
second 25 cases were the same as in the first range, with the exception of the first
three cases. To ensure that the participants did not remember receiving the same
BSCs, three completely different BSCs followed the manipulation. To control for
order effects, the cases used twice were presented in a different order in the second
period and had different names for the subordinated branches. To allow the
participants the possibility to develop an appropriate mental model of the decision
JAOC
10,4
550
Table I.
Example of the balanced Notes: *The original study was in German; the example shows an open box in the financial
scorecard used in the perspective; the other three boxes are still covered; the boxes open when the participants move over a
experiment box with the mouse; when the participants move out of the box the box closes immediately
task, the first five evaluations in both periods were excluded from the later analyses.
Although we provided the participants with an introduction to MouselabWeb, we
excluded the first five evaluations to allow the participants to get used to the
specifics of the BSC environment. After the participants had evaluated all 50 branch
managers, they answered Betsch’s (2004) PID questionnaire. The participants were
asked for their highest academic degree (bachelor’s, MBA or none). The participants
were also asked about their familiarity with the BSC on a scale from zero (not at all)
to seven (very much), and they provided information on whether they had
participated in classes that explicitly discussed the BSC. Additionally, the
participants were asked about their number of completed university semesters and
their years of working experience. Finally, they provided demographic information
on sex and age.
3.3 Participants Functional
The participants were 145 university students (bachelor’s or master’s of science/MBA
level) who had studied a minimum of five semesters of business administration or
fixation and the
economics. Twenty-three of these participants were eliminated because their judgement balanced
process-capturing model lacked consistency (that is, the regression models of their scorecard
decision-making processes showed insignificant adjusted R2), meaning that they most
likely were not completing the task properly. Two participants were eliminated because 551
of autocorrelated residuals, a condition that violates the assumptions of a linear
regression (Albright et al., 2010). Five participants were eliminated because they lacked
any familiarity with the BSC. Thus, 115 participants remained in the final analysis, with
a mean age of 26.96 years (SD ⫽ 3.98 years) and average work experience of 4.21 years
(SD ⫽ 4.56 years). The average working experience is in line with similar studies (Dilla
et al., 2013). All of the participants were either paid €7 or received credit points for their
participation.
4. Results
4.1 Manipulation checks
Two manipulation checks related to the BSC setting followed the participants’
judgements. The participants rated the usefulness of the internal and external
benchmarking possibilities. When the participants rated the external benchmarking
possibilities as better than the internal possibilities, the change in the participants’
judgements should have shown a higher weighting for the manipulated perspective. We
explicitly told the participants that external benchmarks would result in higher
information quality. If the participants did not rate external benchmarks as better than
internal benchmarks and did not adopt their decision-making behaviour, they could not
be identified as functionally fixated. We used a contrast analysis, allowing us to test the
statistical significance of the specific predicted difference in the participants’ rating of
internal versus external benchmarks. Therefore, we asked the participants to rate four
benchmarking possibilities, two internal and two external[3]. The result of the contrast
analysis was significant[F(1.114) ⫽ 47.693, p ⬍ 0.001], which means that the
participants rated the external benchmarks as superior to the internal benchmarks.
Additionally, we asked the participants in the post-test questionnaire in which
perspective the change took place. None of the participants answered the question
incorrectly.
4.2 Tests of hypotheses

4.2.1 Test of H1. H1 states that the participants are functionally fixated. In preparation
to test H1, we use a Chow test to compare the two linear regression models for each
participant for the judgements in Period 1 and the judgements after the manipulation in
Period 2[4]. Functional fixation is measured as a significant structural break (Dearman
and Shields, 2005; Arunachalam and Beck, 2002; Dyckman et al., 1982; Swieringa et al.,
1979; Chow, 1960)[5]. Table II contains the judgements’ capturing model used in the
task.
After comparing the two regression models, we observe that 69 participants changed
their judgements significantly and 46 participants did not. To test for deviations of
observed frequencies from expected frequencies, we perform a chi-square test. We
expect that all participants, with the exception of a 10 per cent error probability, changed
JAOC Performi ⫽ ␤0 ⫹ ␤1 ⴱ Financial ⫹ ␤2 ⴱ Customer ⫹ ␤3 ⴱ Process ⫹ ␤4 ⴱ L&G ⫹ ␧
10,4
Performi ⫽ Participants’evaluation
Financial ⫽ measure of the financial perspective
Customer ⫽ measure of the customer perspective

552
Process ⫽ measure of the internal process perspective
L&G ⫽ measure of the learning and growth perspective

Table II. ␧ ⫽ error term
The decision-making
process-capturing model i ⫽ participant i
their decision-making behaviour significantly. The results of the chi-square test

[␹2 (1) ⫽ 115; p ⬍ 0.001; ␻ ⬎ 0.99; 1-␤ ⬎ 0.99] support H1[6].
4.2.2 Tests of H2a and H2b. As we examine the influence of different kinds of
independent variables such as “perspective” and the “positioning” of information in a
BSC, we conduct two mixed between-within subjects ANOVA. To test H2a and H2b,
two mixed ANOVA, with perspective as a within-subjects factor (repeated measure) and
positioning as a between-subjects factor, are performed. Only the use of the different
dependent variables “weighting” for H2a and “cognitive effort” for H2b differentiates
the two tests. To test H2a, which states that managers weigh financial measures more
heavily than other measures, a mixed between-within subjects analysis of variance is
conducted. We assess the impact of the positioning of measures within the BSC on the
weighting of the performance measures. Hence, the dependent variable in this test is the
weighting of the different measures. We use the beta coefficients from the judgement
models only from the first period[7]. Because Mauchly’s test of sphericity is significant
[␹2(5) ⫽ 16.580; p ⫽ 0.005], we use the Greenhouse–Geisser correction. Supporting H2a,
we find a significant main effect for the within-subject factor (repeated measure)
perspective [F(2.749, 310.69) ⫽ 18.081, p ⬍ 0.001, partial eta squared ⫽ 0.138]. The main
effect of the between-subject factor positioning is not significant [F(1, 113) ⫽ 1.181, p ⫽
0.279]. The interaction between positioning and perspective is also not significant
[F(2.749, 310.69) ⫽ 0.400, p ⫽ 0.736, partial eta squared ⫽ 0.004]. We use a contrast
analysis to further compare the differences in the weighting of the financial measure
versus the three non-financial measures. The results of the a priori contrast support
H2a. There is a significant main effect for the type of measure [F(1, 113) ⫽ 16.376, p ⬍
0.001, partial eta squared ⫽ 0.127]. Again, we do not find a significant interaction [F(1,
113) ⫽ 0.599, p ⫽ 0.440, partial eta squared ⫽ 0.005]. The results show that the
participants weighed the financial perspective more heavily than the non-financial
perspectives, independent of the positioning of the perspectives. Table III presents the
descriptive statistics, and Table IV presents the results of the mixed between-within
subjects ANOVA and the a priori contrast.
To test H2b, we conduct an analysis similar to that we used to test H2a, with the
process data recorded by MouselabWEB. In this case, the dependent variable is
the cognitive effort the participants invested in the different measures to evaluate the
managers’ performance. Similar to the test of H2a, we only use the process data from the
first period. The cognitive effort is operationalised as the multiplication of the two Functional
process measures’ amount of cell openings and the acquisition time of each cell in all
tasks from the first period (Willemsen and Johnson, 2011, p. 27)[8]. We sum the cognitive
fixation and the
effort for each perspective over all tasks in the first period. Thus, we obtain a measure balanced
for the cognitive effort the participants invested in evaluating the four different scorecard
measures in the first period. Again, Mauchly’s test of sphericity is significant [⫼2(5) ⫽
89.723; p ⬍ 0.001], so we use the Greenhouse–Geisser correction. There is a significant 553
main effect for the within-subject factor (repeated measure) perspective [F(2.002, 226.26) ⫽
Perspective Position Mean SD N
Financial Financial on top 0.4544 0.23953 62

Customer on top 0.4408 0.21146 53

Total 0.4482 0.22615 115
Customer Financial on top 0.4261 0.17039 62
Customer on top 0.4519 0.18564 53
Total 0.4380 0.17727 115
Processes Financial on top 0.2674 0.24093 62
Customer on top 0.3142 0.16290 53
Total 0.2890 0.20908 115
L&G Financial on top 0.2925 0.19806 62 Table III.
Customer on top 0.3002 0.21513 53 Descriptive statistics
Total 0.2960 0.20522 115 weighting of measures
Type III sum Mean Partial eta

of square df square F Significance squared
Source: within subjects effects

Perspective
Sphericity Assumed 2.569 3 0.856 18.081 0.000 0.138
Greenhouse-Geisser 2.569 2.749 0.934 18.081 0.000 0.138
Perspective*Position
Sphericity Assumed 0.057 3 0.019 0.400 0.753 0.004
Greenhouse-Geisser 0.057 2.749 0.021 0.400 0.736 0.004
Error (Perspective)
Sphericity Assumed 16.057 339 0.047
Greenhouse-Geisser 16.057 310.69 0.052
Source: between subjects effects
Position 0.128 1 0.128 1.181 0.279 0.010
Error 12.207 113 0.108
Source: within subjects contrasts
Perspective Table IV.
Contrast 11.468 1 11.468 16.376 0.000 0.127 Results mixed between-
Perspective*Position within subjects’ ANOVA
Contrast 0.420 1 0.420 0.599 0.440 0.005 and a priori contrast with
Error (Perspective) weighting of measures as
Contrast 79.134 113 0.700 dependent variable
JAOC 78.054, p ⬍ 0.001, partial eta squared ⫽ 0.409], and the main effect of the
between-subject factor positioning is again insignificant [F(1, 113) ⫽ 0.219, p ⫽ 0.640,
10,4 partial eta squared ⫽ 0.002]. The interaction between positioning and perspective is also
not significant [F(2, 226) ⫽ 0.456, p ⫽ 0.634, partial eta squared ⫽ 0.004]. The results of
the a priori contrast support H2b. There is a significant main effect for the type of
measure [F(1, 113) ⫽ 94.979, p ⬍ 0.001, partial eta squared ⫽ 0.457]. The interaction is
554 not significant [F(1, 113) ⫽ 0.740, p ⫽ 0.440, partial eta squared ⫽ 0.391]. The results
show that the participants invested more cognitive effort on the financial perspective
than on the non-financial perspectives, independent of the positioning of the
perspectives. Table V presents the descriptive statistics, and Table VI presents the
results of the mixed between-within subjects’ ANOVA and the a priori contrast. Overall,
we find a similar picture from an input-output perspective (H2a) and from a process
tracing perspective (H2b).

4.2.3 Test of H3 and the binary logistic regression model. H3 states that the preference
for deliberation decreases the probability of demonstrating fixated judgements. To test
H3 and the determinants of the probability of fixated decision-making behaviour, we
develop a binary logistic regression model because our dependent variable is categorical
(fixated behaviour or cognitive adaption). We integrate the independent variables PID
(H3, see Section 2.4), weighting, change, cognitive effort, experience, familiarity and
equality (see Section 2.5) in the logistic regression model. Additionally, we test the
influence of the control variables position, sex, academic degree, age, time-task,
time-change, class and semester. The variable position is one of the manipulations.
Academic degree expresses whether participants had already received a bachelor’s
degree, a diploma/master’s degree, or no degree. The variable time-task measures the
time the participants invested in reading the task description, and time-change
measures the time the participants invested in reading the manipulation description.
The independent variable class measures whether the participants had attended a
university lecture that explicitly dealt with the BSC structure. The variable semester
provides information about the number of university semesters the participants had
already passed. We use dummy variables to contrast the categorical independent
variables. For each variable, we choose a baseline category and contrast all of the
Perspective Position Mean SD N
Financial Financial on top 5.0297 0.41454 62

Customer on top 5.0376 0.38311 53
Total 5.0333 0.39865 115
Customer Financial on top 4.9926 0.39117 62
Customer on top 5.0175 0.37535 53
Total 5.0040 0.38249 115
Processes Financial on top 4.8227 0.42929 62
Customer on top 4.8549 0.39874 53
Table V. Total 4.8375 0.41389 115
Descriptive statistics L&G Financial on top 4.6742 0.39140 62
distribution of cognitive Customer on top 4.7380 0.41531 53
effort Total 4.7036 0.40208 115
Type III sum Mean Partial eta
Functional
of square df square F Significance squared fixation and the
Source: within-subjects effects balanced
Perspective scorecard
Sphericity assumed 8.020 3 2.673 78.054 0.000 0.409
Greenhouse–Geisser 8.020 2.002 4.005 78.054 0.000 0.409
Perspective*Position
555
Sphericity assumed 0.047 3 0.016 0.456 0.713 0.004
Greenhouse–Geisser 0.047 2.002 0.023 0.456 0.634 0.004
Error (Perspective)
Sphericity assumed 11.610 339 0.034
Greenhouse–Geisser 11.610 226.26 0.051
Source: between-subjects effects

Position 0.474 1 0.474 0.219 0.640 0.002
Error 243.91 113 2.158
Source: within-subject contrasts
Perspective Table VI.
Contrast 34.697 1 34.697 94.979 0.000 0.457 Results mixed between-
Perspective*Position within subjects’ ANOVA
Contrast 0.270 1 0.270 0.740 0.391 0.007 and a priori contrast with
Error (Perspective) cognitive effort as
Contrast 41.281 113 0.365 dependent variable
remaining categories with this baseline. For the coding of the categorical variables (PID,
academic degree, position, class, sex and change), see Table VII.
Table VIII shows the results of the binary logistic regression model, which is
significant overall [X2 ⫽ 52.131; p ⬍ 0.001; Nagelkerke pseudo R2 ⫽ 0.493]. We find that
the participants with a preference for deliberation were less likely to show functionally
fixated behaviour than the participants with a PID (p ⫽ 0.004), which supports H3. The
variable “change”, which implies a change in either the financial or the customer
category, is significant (change, p ⫽ 0.001). We do not find significant effects for the
variables weighting (p ⫽ 0.773), cognitive effort (p ⫽ 0.278), experience, (p ⫽ 0.348),
familiarity, (p ⫽ 0.204) and equality, (p ⫽ 0.856). The control variables position (p ⫽
0.002), academic degree (1) (p ⫽ 0.037), academic degree (2) (p ⫽ 0.003) and age (p ⫽
0.022) help to explain the variation. Thus, the higher the academic degree, the more
likely the participants were to show fixated behaviour. In contrast, older participants
were less likely to show fixated behaviour. The remaining control variables do not have
a significant influence on the probability of showing fixated behaviour. Overall, these
results imply that some personal factors (PID, age and academic degree) drive or lower
the probability of behaving in a functionally fixated manner.
5. Discussion
5.1 Contribution
Our results extend the BSC literature in several ways. Our study shows the presence and
persistence of functional fixation in judgements based on the BSC. We align our results
with the earlier functional fixation literature (Ghani et al., 2011; Morssinkhof et al., 2009;
JAOC Categorical
10,4 variables and Parameter coding
categories Frequency (1) (2) (3)
PID
PID-I 28 0.000 0.000 0.000
PID-D 22 1.000 0.000 0.000
556 PID-S-plus 20 0.000 1.000 0.000
PID-S-minus 45 0.000 0.000 1.000
Academic degree
None 30 0.000 0.000
Bachelor 38 1.000 0.000
Diploma/master 47 0.000 1.000
Position
Financial on top 62 0.000
Customer on top 53 1.000
Class
Yes 96 0.000
No 19 1.000
Sex
Male 83 0.000
Female 32 1.000
Table VII. Change
Categorical variables Financial 60 0.000
codings Customer 50 1.000
Viger et al., 2008; Nichols and Buerger, 2006; Hodge et al., 2004; Arunachalam and Beck,
2002), which, to date, has focussed on financial accounting and auditing.
Our results indicate that BSC users weigh the categories within a BSC differently,
both from an input– output perspective and from a process tracing perspective. BSC
users rely more on financial measures, independent of their positioning and despite
being told that every BSC measure was in line with strategic goals. Thus, we replicate
the previous results from Knechel et al. (2010) and Cardinaels and van Veen-Dirks (2010),
but we provide a more process-oriented viewpoint of the “financial bias” of BSC users.
Using a process tracing method, we find that the different weights for performance
measures can already be observed in the pre-decisional phase of the judgements.
We also demonstrate that a more familiar positioning of the performance measures
within the BSCs (financial measures on top) increases the probability of being fixated.
This finding could imply that BSC users who are more familiar with their individual
reporting system and the organisation of the information within a report could have
difficulties in overcoming fixation. BSC users might need time and cognitive effort,
which are limited resources, to adapt to a new report structure (Simon, 1982).
The results also indicate that changes in different categories of the BSC have
different impacts on the probability of functionally fixated behaviour. A change in the
benchmarking of the financial measure increases the probability of functional fixation,
whereas a change in the benchmarking of the customer measure decreases this
95.0% CI for
Functional
EXP(B) fixation and the
Step 1a expected B S.E. Wald df Significance Exp(B) Lower Upper balanced
PID 13.183 3 0.004 scorecard
PID(1) ⫺ ⫺3.049 1.061 8.261 1 0.004 0.047 0.006 0.379
PID(2) ⫹/⫺ 1.556 0.955 2.654 1 0.103 4.739 0.729 30.810
PID(3) ⫹/⫺ 0.292 0.643 0.206 1 0.650 1.339 0.380 4.723
557
Position(1) ⫹/⫺ 2.083 0.673 9.564 1 0.002 8.027 2.144 30.049
Change(1) ⫺ ⫺2.151 0.623 11.920 1 0.001 0.116 0.034 0.395
Sex(1) ⫹/⫺ 1.272 0.699 3.311 1 0.069 3.569 0.907 14.054
Academic
degree ⫹/⫺ 9.438 2 0.009
Academic
degree(1) ⫹/⫺ 1.700 0.813 4.373 1 0.037 5.475 1.113 26.946
Academic
degree(2) ⫹/⫺ 4.373 1.450 9.092 1 0.003 79.268 4.621 1359.893
Time_Task ⫹/⫺ 0.000 0.000 0.500 1 0.480 1.000 1.000 1.000
Time_Change ⫹/⫺ 0.000 0.000 3.298 1 0.069 1.000 1.000 1.000
Familiarity ⫺ ⫺0.279 0.220 1.615 1 0.204 0.756 0.492 1.163
Class(1) ⫹/⫺ 0.439 0.866 0.258 1 0.612 1.552 0.284 8.471
Semester ⫹/⫺ ⫺0.069 0.082 0.698 1 0.404 0.934 0.795 1.097
Experience ⫹ 0.085 0.091 0.879 1 0.348 1.089 0.912 1.300
Age ⫹/⫺ ⫺0.364 0.159 5.257 1 0.022 0.695 0.509 0.948
Equality ⫺ 0.000 0.000 0.033 1 0.856 1.000 1.000 1.000
Cognitive Effort ⫺ ⫺1.342 1.238 1.175 1 0.278 0.261 0.023 2.960
Weighting ⫹ 0.363 1.260 0.083 1 0.773 1.437 0.122 16.979
Constant 13.644 7.511 3.300 1 0.069 842367.916
Notes: a Variables entered on step 1: PID, Position, Change, Sex, Academic degree, Time_Task,
Time_Change, Familiarity, Class, Semester, Experience, Age, Equality, and Weighting; Modell ␹2 ⫽
52.131; p ⫽ 0.000; Nagelkerke pseudo R2 ⫽ 0.493; percentage of cognitive adaption predicted correctly Table VIII.
⫽ 76.8%; percentage of functionally fixated behavior predicted correctly ⫽ 80.4% Variables in the equation
probability. These results provide evidence that it is still worthwhile to focus on specific
changes in accounting tasks (similar to Beresford, 1994).
Our findings indicate that a preference for deliberation helps BSC users overcome
functional fixation. Thus, we contribute to the literature on functional fixation that
personal characteristics influence the probability of behaving in a functionally fixated
manner. The results indicate that it is necessary to understand how personal variables,
in addition to task and information variables, influence cognitive adaptation. Our
results extend the findings from prior research showing that a decision-maker’s relevant
accounting knowledge, general problem-solving ability and intrinsic motivation
decrease the likelihood of being fixated (Dearman and Shields, 2005).
5.2 Implications for BSC education and practice

Salterio (2012) noted that previous research had missed the opportunity to aid BSC users
to perform better in handling the BSC concept or to influence the development of the BSC
concept to be more suitable to BSC users’ expectations. He also suggested that the use of
JAOC human information processing knowledge could help to improve BSC research. We
provide a first attempt to close this gap by opening up the black box of the pre-decisional
10,4 phase in BSC judgements. We believe that more BSC research might benefit from
process tracing methods in general and MouselabWeb in particular.
Nørreklit et al. (2012) suggested the need to overcome the relevance gap between BSC
research and practice. A “scholarly methodological basis” for accounting innovations
558 such as the development of the BSC concept would be needed to solve problems in
practice. Hence, practice and the relevance of research for practice could be improved.
Based on empirical observations, Dechow (2012) found differences in executive
education at business schools in what the concept of BSC indicated and what BSC users
made out of the concept. These findings could be a starting point in examining what BSC
users do with the BSC concept and what works for the BSC. In line with Dechow’s (2012)
suggestions, our results emphasise that a large proportion of BSC users do not
adequately use the BSC concept. Scholars should be aware of why and how BSC users
fail to adapt to changes in the BSC. To business educators, we suggest making
prospective BSC users aware of their cognitive limitations.
We show that BSC users with a higher level of academic education are more likely to
show functionally fixated behaviour; in contrast, older BSC users are more likely to
adapt their mental models. These results indicate that life experience may positively
influence the mental flexibility of decision-makers. Our findings are in line with Mata
et al. (2007), who already have found that older adults are adaptive judges.
However, our results suggest that education strengthens BSC users’ mental models
and thereby makes them more resistant to fundamental changes in their
decision-making. These results could be a hint that the manner in which the concept of
BSC is taught in academic education is not appropriate to its requirements in practice.
Our results also support a need for further research on the practical use of the BSC and
respective changes in education (Nørreklit et al., 2012; Salterio, 2012; Dechow, 2012;
Kaplan, 2011).
5.3 Limitations of our study and opportunities for future research

Our study offers numerous opportunities for future research. The participants in our
study did not have prior knowledge or experience with the (fictitious) firm and did not
know the branch managers they were asked to evaluate. However, the literature
indicates that even experienced managers fail to utilise the conceptual ideas of the BSC
in practice (Dechow, 2012). Furthermore, there is still an ongoing debate in behavioural
accounting research about to use student subjects to examine psychological effects in an
accounting setting (Birnberg, 2011). Using professionals in behavioural research in
financial accounting and auditing has been the default method in the past. In contrast,
laboratory studies in managerial accounting have relied much more often on students as
subjects to understand the impact of individuals’ cognitive constraints on behaviour
(Shields, 1980; Kachelmeier et al., 2008). This procedure was typical, especially in
research on the decision-making of BSC users (Lipe and Salterio, 2000; Libby et al., 2004;
van Veen-Dirks, 2010; Cardinaels and van Veen-Dirks, 2010, see Salterio, 2012 for an
overview). More recently, a shift towards using students in behavioural research in
financial accounting can be observed (Elliott et al., 2007; Libby et al., 2002). In this
context, Libby et al. (2002, p. 802) argued for the need to “match subjects to the goals of
the experiment, but to avoid using more sophisticated subjects than is necessary to
achieve those goals”. Libby et al. (2002) used student subjects to examine the general Functional
cognitive abilities of individuals. For our study, we believe that using students as
subjects is acceptable. This method also makes our results comparable to previous
fixation and the
research on judgemental biases in BSC use and additionally allows us to determine balanced
possible implications for BSC education. However, using students as subjects limits the scorecard
generalisability of our results for the specific behaviour of experienced managers and
their individual information distortions in “on the job” judgements. To understand a 559
multitude of determinants in one setting, such as organisational constraints,
management control systems or incentive systems, case studies would be most suitable
and could complement our research.
The artificial case setting, which was necessary for our experimental design, also
limits the generalisability of our findings. For example, we did not focus on superior–
subordinate interaction. Future research could examine when, if at all, personal
variables interact with situations or tasks. While we examined a change in a positive

direction (enhanced information quality through external benchmarks), future research
could also compare positive versus negative changes in data quality (Ashton, 1976). We
would assume that participants adapt their judgement processes more heavily to
negative changes in information quality, as expected from prospect theory (Kahneman
and Tversky, 1979).
Future research could also investigate the impact of decision aids on functional
fixation as they relate to different personal variables (Libby et al., 2004; Cardinaels and
van Veen-Dirks, 2010). From our point of view, more effort is needed to develop easily
implementable practical measures that help managers adequately operate within the
BSC framework (Barnabé and Busco, 2012). In this context, Salterio (2012) “[…]
questions and documents limitations that arise from the reliance on an underlying
psychology paradigm that focusses on human limitations, rather than one focussed on
aiding humans to perform better” (Salterio, 2012, p. 458).
5.4 Process tracing in behavioural accounting research

Our findings also have important methodological implications. Research on the BSC has
used a variety of methodological approaches to understand the prevalence, effectiveness
and usage of the BSC. One popular stream of literature was based on case studies or
semi-structured interviews to examine BSC implementations, their use and BSC
understanding “on the job” (Northcott and Smith, 2011). Case studies are likely the most
suitable to understand the organisational perspective of the BSC. These studies
examined why organisations adopt the BSC, its role in organisational change, and the
purposes the BSC serves within an organisation (Malmi, 2001; Kasurinen, 2002; Ittner
et al., 2003; Modell, 2012). Another popular stream of research studied the
decision-making of the individual BSC user. Most of these studies were experimental
laboratory studies that derived their research model from general psychological theories
(Lipe and Salterio, 2000, 2002; Knechel et al., 2010; Cardinaels and van Veen-Dirks, 2010).
These studies examined the judgements of individual BSC users and their cognitive
constraints in understanding the BSC or working with it. In line with this increasing
body of research, we also focus on the individual BSC user and the potential cognitive
constraints or judgemental biases in BSC use. This approach seems most suitable for
answering our research questions. Furthermore, our notion to monitor the information
acquisition process dictates the application of a computer-based experiment.
JAOC We believe that the method we use may be suitable for other areas of behavioural
accounting research. Process tracing methods, which monitor information acquisition
10,4 processes, help researchers understand why certain judgemental biases occur.
Additionally, process tracing methods provide researchers with a more accurate
approximation of participants’ cognitive effort compared to choice time
(Schulte-Mecklenbeck et al., 2011a). Most importantly, applying a process tracing
560 method and an outcome-based analysis allows researchers to capture managers’
behaviour from different perspectives.
Notes
1. While Ashton (1976), Barnes and Webb (1986), Moon (1990) and Riahi-Belkaoui (2002)
differentiated between functional fixation as a psychological paradigm and data fixation as

an accounting paradigm, we use the terms synonymously. Actual experimental studies in
accounting also use the term functional fixation without differentiating between the two
terms (Chan et al. (2009); Viger et al. (2008); Belzile et al. (2006); Arunachalam and Beck (2002)).
2. The wording of the four goals was “WW achieves excellent financial results. WW is number
1 in the eyes of our customers. WW’s work is process-oriented and highly efficient. WW
employs competent male and female employees.”
3. The contrast code was (11 ⫺1 ⫺1).
4. In some of the regressions we found outliers. We tested whether the outliers (more than two
standard deviations from the mean) had a significant influence on the regression. In a
regression, however, some outliers have more influence on the regression than others. Thus,
we used a supplemental regression. We added a dummy variable to the original regression in
which the outliers had the value 1 and the rest of the observations had the value 0. If the
variable was significant in the regression, we excluded the outlier.
5. The four independent variables or predictors were established using orthogonal cues. This
method provided high discriminatory power by reducing standard errors in the regression
analyses (Dearman and Shields, 2005, p. 377). The correlation coefficients were the following:
FINANCIAL with CUSTOMER (0.016), INTERNAL PROCESS (0.018) and LEARNING AND
GROWTH (0.020); CUSTOMER with INTERNAL PROCESS (0.021) and LEARNING AND
GROWTH (0.012); and INTERNAL PROCESS with LEARNING AND GROWTH (0.039).
None of the correlations were significant (p ⬎ 0.05). As described previously, we reduced the
amount of cases used in the analyses. Of course, this reduction changed the correlation
coefficients but they were still insignificant (p ⬎ 0.05). The values were: FINANCIAL with
CUSTOMER (⫺0.091), INTERNAL PROCESS (0.025) and LEARNING AND GROWTH
(⫺0.009); CUSTOMER with INTERNAL PROCESS (0.163) and LEARNING AND GROWTH
(⫺0.121); and INTERNAL PROCESS with LEARNING AND GROWTH (0.121).
6. Studies renounce such a formalised test for the overall functional fixation hypothesis
(Arunachalam and Beck, 2002; Dearman and Shields, 2005; Morssinkhof et al., 2009). The
proportion of fixated and non-fixated participants is in line with other functional
fixation-related studies (Vergoosen, 1997).
7. To reduce the influence of outliners, we Winsorised the dependent variable.
8. To reduce the influence of outliners, we log-transformed the dependent variable.
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specific changes in accounting, Maines (1994) recommended an examination of general

versus deliberate preferences on the probability of behaving in a functionally fixated

2. Literature review and hypotheses

2.2 Weighting of financial versus non-financial measures in the BSC

2.3 Cognitive effort in evaluating performance measures

decision-making processes are described as unconscious, automatic, fast, parallel,

2.5 Determinants influencing the probability of fixated behaviour

3.2 Experimental materials and procedure

4.2 Tests of hypotheses

Financial ⫽ measure of the financial perspective

Customer ⫽ measure of the customer perspective

L&G ⫽ measure of the learning and growth perspective

their decision-making behaviour significantly. The results of the chi-square test

Perspective Position Mean SD N

Financial Financial on top 0.4544 0.23953 62

Customer on top 0.4408 0.21146 53

Type III sum Mean Partial eta

Source: within subjects effects

tracing perspective (H2b).

Perspective Position Mean SD N

Financial Financial on top 5.0297 0.41454 62

Source: between-subjects effects

5.2 Implications for BSC education and practice

5.3 Limitations of our study and opportunities for future research

variables interact with situations or tasks. While we examined a change in a positive

5.4 Process tracing in behavioural accounting research

differentiated between functional fixation as a psychological paradigm and data fixation as

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