Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?
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Gibbons_Formal measures.pdf
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476.06 KB
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Author(s)
Gibbons, Robert S.
Kaplan, Robert S.
Date Issued
May 2015
Journal
American Economic Review
Publisher
American Economic Association
Citation
Gibbons, Robert, and Robert S. Kaplan. “Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?.” American Economic Review 105, no. 5 (May 2015): 447–51. © 2015 American Economic Association
Version
Final published version
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.
MIT Department
Sloan School of Management
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/aer.p20151073
