Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?
Author(s)
Gibbons, Robert S.; Kaplan, Robert S.
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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.
Date issued
2015-05Department
Sloan School of ManagementJournal
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
ISSN
0002-8282
1944-7981