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Strategy Selection, Surrogation, and Strategic Performance Measurement Systems
Author(s) -
CHOI JONGWOON WILLIE,
HECHT GARY W.,
TAYLER WILLIAM B.
Publication year - 2013
Publication title -
journal of accounting research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 6.767
H-Index - 141
eISSN - 1475-679X
pISSN - 0021-8456
DOI - 10.1111/j.1475-679x.2012.00465.x
Subject(s) - operationalization , selection (genetic algorithm) , construct (python library) , strategy implementation , set (abstract data type) , process (computing) , business , strategic fit , deliberation , strategic planning , process management , strategic alignment , strategic management , computer science , risk analysis (engineering) , strategic financial management , marketing , artificial intelligence , philosophy , epistemology , politics , political science , law , programming language , operating system
Strategic performance measurement systems operationalize firm strategy with a set of performance measures. A consequence of such alignment is the tendency for managers to lose sight of the strategic construct(s) the measures are intended to represent, and subsequently act as though the measures are the constructs of interest, a phenomenon referred to as surrogation . We investigate how involvement in strategy selection affects managers’ propensity to exhibit surrogation. We predict and find that strategy selection reduces surrogation. Surprisingly, we do not find that engaging in strategy deliberation, a key process underlying strategy selection, reduces surrogation. Thus, managers’ involvement in the actual choice of strategy appears to be both a necessary and sufficient condition to mitigate surrogation. Our paper broadens understanding of factors that influence surrogation, such as the effects of different aspects of managers’ strategic involvement and buy‐in. Further, by documenting how managers behave within (as opposed to simply with ) strategic performance measurement systems, we highlight the potential for managers to endogenously influence the effectiveness of such systems.