The role of causal links in performance measurement models
Abstract
Purpose
Several well‐known managerial accounting performance measurement models rely on causal assumptions. Whilst users of the models express satisfaction and link them with improved organizational performance, academic research, of the real‐world applications, shows few reliable statistical associations. This paper seeks to provide a discussion on the “problematic” of causality in a performance measurement setting.
Design/methodology/approach
This is a conceptual study based on an analysis and synthesis of the literature from managerial accounting, organizational theory, strategic management and social scientific causal modelling.
Findings
The analysis indicates that dynamic, complex and uncertain environments may challenge any reliance upon valid causal models. Due to cognitive limitations and judgmental biases, managers may fail to trace correct cause‐and‐effect understanding of the value creation in their organizations. However, even lacking this validity, causal models can support strategic learning and perform as organizational guides if they are able to mobilize managerial action.
Research limitations/implications
Future research should highlight the characteristics necessary for elaboration of convincing and appealing causal models and the social process of their construction.
Practical implications
Managers of organizations using causal models should be clear on the purposes of their particular models and their limitations. In particular, difficulties are observed in specifying detailed cause and effect relations and their potential for communicating and directing attention. They should therefore construct their models to suit the particular purpose envisaged.
Originality/value
This paper provides an interdisciplinary and holistic view on the issue of causality in managerial accounting models.
Keywords
Citation
Kasperskaya, Y. and Tayles, M. (2013), "The role of causal links in performance measurement models", Managerial Auditing Journal, Vol. 28 No. 5, pp. 426-443. https://doi.org/10.1108/02686901311327209
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited