SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
THE EFFECT OF COGNITIVE AND AFFECTIVE ASPECTS IN DECISION MAKING USING BALANCED SCORECARD
Unika Widya Mandala Surabaya
Universitas Gadjah Mada Yogyakarta
This study examines the effect of decision makers’ cognitive and affective aspects in decision making, especially when a firm implementing Balanced Scorecard (BSC). Cognitive aspect deals with decision makers’ cognitive capabilities and characteristics in utilizing all kinds of BSC measures, including common and unique measures. Affective aspect deals with negative emotions that often present in interpersonal relationships. There were three hypotheses being tested in a laboratory experiment using 2x2x2x2 mixed-subjects design. 168 Accountancy and Management graduate students from Gadjah Mada University were randomly assigned in one of eight treatment cells.
The results show that common and unique measures do have statistically significant effects on performance evaluation judgment and bonus allocation, and decision makers place greater emphasis on common than unique measures. These findings consistent with prior research that suggest sample with BSC knowledge will be able to utilizing both kinds of BSC measures. Although there were no statistically significant support for affect effect, this study provide important evidences for the BSC adopters to consider the makers’ cognitive (and affective) aspects if they want to pursue effective Balanced Scorecard.
Keywords: Balanced Scorecard, Cognitive, Affective, and Decision Making.
[Acknowledgements: M.G. Lipe (University of Oklahoma) and S.E. Salterio (University of Waterloo); T.E. Kida (University of Massachusetts), K.K. Moreno (Virginia Polytechnic Institute and State University), and J.F. Smith (University of Massachusetts) for sharing their experimental instruments with us.
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Swa Sembada’s (2005) survey result concluded that Balanced Scorecard (BSC) concept were being adopted by many Indonesian companies and was known as the second most popular strategic management concepts. Being BSC adopters mean that organizations use financial, customer relation, internal business process, and learning and growth performance measures (Kaplan and Norton, 1996b). Chosen performance measures were those that best reflected organization, business unit, and its individual members’ objectives and strategies, that probably similar and/or different one another. As performance and strategy determinants, adopting this large set of BSC measures could be relatively complex and costly.
We will conduct an experimental research (in BSC implementation context) to investigate the effect of decision makers’ cognitive and affective aspects in making performance evaluation and bonus allocation judgments, that will be adopted from Lipe and Salterio’s (2000) and Kida et al.’s (2001) instruments. Kida et al.’s (2001) instruments will be used to extent Lipe and Salterio’s (2000) research, which only investigate decision makers’ cognitive aspect. Cognitive aspect deals with decision makers’ cognitive capabilities and characteristics in benefiting all BSC measures, and affective aspect deals with negative emotions that often present in organizational interpersonal relationships. Affect effect need to be considered, beside cognition effect, because Allred et al. (1997), Betancourt and Blair (1992) in Kida et al. (2001) indicates that interpersonal relations will often generate affective reactions, including in BSC context which is conditional on team interactions (Kaplan and Norton, 1993; Hughes et al., 2005).
*SIMPOSIUM NASIONAL AKUNTANSI 9 PADANG
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