Keywords

strategic performance measurement systems, surrogation, strategy selection, buy-in

Abstract

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.

Original Publication Citation

Choi, J., G. Hecht, and W. B. Tayler. 2013. Strategy selection, surrogation, and strategic performance measurement systems. Journal of Accounting Research 51(1):105-133.

Document Type

Peer-Reviewed Article

Publication Date

2012

Publisher

Journal of Accounting Research

Language

English

College

David O. McKay School of Education

Department

Accountancy

University Standing at Time of Publication

Full Professor

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Accounting Commons

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