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Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?

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  • Robert Gibbons
  • Robert S. Kaplan

Abstract

We extend traditional agency theory by exploring the roles for formal measures when managerial behavior is not governed by rules, formulas, or contracts. Part I describes relational incentive contracts with informal weights on formal performance measures. More importantly, it also explores how formal measures could be used in models of informal management, such as adaptation and coordination, politics and influence, leadership, and informal authority. Part II considers the benefits from allowing key stakeholders to develop their own, potentially inferior, performance measures. The collaboration to create a "balanced scorecard" of performance measures can help change an organization's culture.

Suggested Citation

  • Robert Gibbons & Robert S. Kaplan, 2015. "Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?," American Economic Review, American Economic Association, vol. 105(5), pages 447-451, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:447-51
    Note: DOI: 10.1257/aer.p20151073
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    References listed on IDEAS

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    Cited by:

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    9. Margaret A. Abernethy & Chung-Yu Hung & Laurence van Lent, 2020. "Expertise and Discretionary Bonus Decisions," Management Science, INFORMS, vol. 66(1), pages 415-432, January.
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    12. Juan‐José Ganuza & Fernando Gomez, 2022. "Designing relational sanctions in buyer–supplier relationships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(2), pages 470-491, April.
    13. Kopytova, Iryna & Zelinska, Antonina, 2017. "Оцінка Ефективності Діяльності Управлінського Персоналу : Зміст І Соціально-Психологічні Аспекти," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 3(3), September.
    14. Mitra, Sovan & Lim, Sungmook & Karathanasopoulos, Andreas, 2019. "Regression based scenario generation: Applications for performance management," Operations Research Perspectives, Elsevier, vol. 6(C).

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    More about this item

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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