Balanced scorecard design preferences according to subjects' knowledge and expertise

This study is motivated by the need to further explore judgmental bias within the balanced scorecard (BSC). The focus is not only within its use as a performance measurement tool with bonus and incentive implications (Lipe and Salterio, 2000) but more importantly with its design stages which are little explored yet. This study evaluates if differences in the frequency of use of measures in each perspective of the BSC are affected by any of the following three elements: 1) the subjects' accounting knowledge (Dilla and Steinbart, 2005); 2) the subjects' professional expertise (Dilla and Steinbart, 2005); 3) the BSC purpose of use (Malina and Selto, 2001). This study asks four groups of subject to design a BSC and although the results reported do not belong to a pure laboratory experiment, the systematic analysis of its results provides a clear positive answer to Dilla and Steinbart (2005) alternative explanations. The results show that accounting trained subjects and professionals exhibit a different understanding and design of the BSC, however, there are no significant differences in the measures used at the design phase when the BSC is designed for compensation or strategy implementation purposes.