Electronic copy available at: http://ssrn.com/abstract=2244239. Causal Implications of Performance Management for Strategic Control. 1. Content. Abstract .
Causal Implications of Performance Management for Strategic Control
Wolfgang Ossadnik / Jan Steins
Prof. Dr. Wolfgang Ossadnik Dr. Jan Steins
Chair of Management Accounting and Control School of Economics and Management Science University of Osnabrueck Rolandstraße 8 D-49069 Osnabrück (Germany)
Electronic copy available at: http://ssrn.com/abstract=2244239
Causal Implications of Performance Management for Strategic Control
1
Content
Abstract ...................................................................................................................................... 2 Introduction: Performance Management as a Multi-Cyclical Process ...................................... 3 Causal Orientation of Performance Management ...................................................................... 3 Strategic Control within the Concept of Performance Management ......................................... 6 Objectives of a causal-oriented Meta-Control ........................................................................... 9 Reconstruction and Interpretation of Causal Hypotheses................................................................... 10 Implications for a Meta-Control ................................................................................................................. 26 Conclusion ................................................................................................................................ 28 References ................................................................................................................................ 29
Electronic copy available at: http://ssrn.com/abstract=2244239
Abstract In contrast to conventional concepts of management accounting, which are limited to measuring the value realization of firms, the research field of performance measurement and management explicitly focuses on the managerial process of creating value. This process should be analyzed and subsequently reconstructed in the form of cause-and-effect relationships. Such relationships consist of causes, effects and causal attributions. In management science cause-and-effect-relationships can not be detected and identified as “ontological truth”. They can only be reconstructed on the basis of individual knowledge and individual decisions on the explanation power of available statistical data. Causal enlargement of the value creation task - as induced by the concept of performance measurement and management - affects the function of strategic control. Its causal reinterpretation requires generating causal information and reconstructing cause-effect relationships underlying the strategic management process. The adequacy of these relationships should be systematically reflected within the framework of a meta-control, which is developed as a subfunction of strategic control in the following. Meta-control can protect strategic management against control deficits of the classical single loop and double loop learning. By implementing a meta-control, possible misinterpretations of the causal relevance of events and circumstances, e.g. based on logical implications or spurious correlations, can be reduced. With such a support the efficiency and effectiveness of performance measurement and management can be ensured.
Causal Implications of Performance Management for Strategic Control
3
Introduction: Performance Management as a Multi-Cyclical Process Performance management represents a complex system of planning, realisation and control as cyclical phases of the strategic management process.1 Especially against the background of highly dynamic environmental developments, the process of creating the corporate value has to be analysed systematically. Only a coherent model of value creation and value realization offers companies the opportunity of controlling their performance proactively. According to the continuously changing process of value creation, a corresponding adjustment in terms of planning, implementation and control is required. Against this background, so called performance management systems represent conceptualizations of the causal structures which constitute the value creation process, that is to say, they have a significant influence on how value creation is understood and observed.2 Controlling objects such as "enterprise value", "performance" or "value drivers" turn out to be necessary. As they cannot be determined by ontological contemplation,3 a process of individually based reconstruction is necessary. This process is governed by considerations describing the meansend-scheme on the one hand and a causal oriented consideration on the other hand, as well as a subsequent link of both levels.4 Given the situation, that these relations are not perceived and realized by the managers identically, a common appreciation on the firm-specific value creation can only be induced by communication and sense making process.5 Performance management systems conduce the support of these essential tasks of management control.
Causal Orientation of Performance Management Performance management and measurement systems expand the past-oriented, primarily financial regard of accounting. 6 It serves to integrate this deterministic perspective of realized
Causal Implications of Performance Management for Strategic Control
4
values with the causal-oriented view of value creation.7 Indicators not necessarily being financial are in the focus of a temporal up-, respectively downstream analysis. A connection of temporal upstream indicators (value driver, level of value creation) with temporal downstream financial indicators (level of value realization) cannot be justified by a performance measurement system based only on formal logic.8 The analysis of a linking structure like this provides a basis for an early influence on the future development of performance. For this purpose, it is necessary to reconstruct a linkage between the levels of value creation and value realisation (value creating path). In economics, causality is not directly observable. In fact, it represents an a priori adjudgement on certain contexts of a subjectively perceived reality which is synthetic, i.e. constructed by individuals’ observations.9 Causality requires observations of events and facts, over and above an observer, as well as the use of instruments for observation. These aspects reveal a psychological and empirical perspective of causal relations, i.e. cause-effect-hypotheses, which have been reconstructed subjectively. Such a concept of causality offering subjective reference does not comply with a concept of objective knowledge. Causal coherences in value enhancement need to be reconstructed subjectively as well as their application within the scope of means-ends-relations. The observation of causal coherences always requires a selection based on two endless horizons: The one of infinitely many other causes and the one of infinitely many other effects.10 Certain events are selected from an infinite set of events and are ordered chronologically.11 The measurement of correlations between selected and defined events bases on the observers’ attribution to causal-relevant evidences (cues-to-causality).12 As cues-to-causality different concepts are analyzed in literature, such as similarity/similarities, temporal coherences, correlation and contiguity.13 Especially statistical tests can be used for the foundation of a causaloriented performance control. However, it is necessary to distinguish between correlation and
Causal Implications of Performance Management for Strategic Control
5
causality. To be able to talk about causal-coherences between situation A (cause) and B (effect) the following conditions have to be fulfilled:14 - There must exist a cognizable (significant) statistical coherence between A and B (correlation); - A must exist (respectively be noticed) temporally prior than B (time asymmetry); - The A-B-system has to be isolated, i.e. disturbing factors of the A-B-relationship have to be identifiable and eliminable; - There must not be systematic errors in the measurement of A and B It is problematical to understand the measurement of statistical correlations between two phenomena as an essential condition between them. This results from the fact that within the strategic corporate management not all of the uncertainties are known and thus not all of the disturbing factors are identifiable. If disturbing factors or errors cannot be ruled out completely, it cannot be assumed that there is no causal-coherence between A and B, even if ’NonCorrelation’ has been measured. Against this background, the reconstructions of causal coherences as well as the interpretation of causal coherences and models have to be checked continuously because of new information becoming known over time.15 An uncritical use of causal hypotheses concentrated only on statistical findings bears the risk that the complexity of the construct "causality" is underestimated in the context of performance control. This implies an illusion of control on closer inspection, which has to be considered in the context of performance management. This phenomenon occurs if the value creation is planned, implemented and controlled on the basis of statistical correlations, which do not represent the real causal system of value creation anymore.16 To avoid such an illusion it requires a study of the causal foundation by a
Causal Implications of Performance Management for Strategic Control
6
systematic performance control as part of a management accounting with a coherent concept of strategic control.
Strategic Control within the Concept of Performance Management The task of strategic control is to monitor the strategic management process to secure the ongoing existence and further development of a company. 17 This includes the continuous, mutual review and coordination of formulating and implementing a strategy.18 In literature exists different concepts of strategic control.19 As concretizations in order to realize advantages of specialization, feedback control (single loop learning/implementation of control) and feedforward control (double loop learning/premise control) are generally accepted as special functions of overall strategic surveillance, i.e. strategic control in general.20 It is the capacity of single loop learning as a formal information system to point out irregularities in the process of strategy implementation, which exist as ex post detected differences due to ex ante defined objectives or targets.21 Economic countermeasures by the management will only be performed when defined milestones could not be achieved as intended. To structure a single loop learning, i.e. to develop a decision-making and supervisory framework, it requires a definition and formulation of assumptions. As selection schemes on the one hand, they determine the control spectrum of single loop learning. On the other hand, a large number of events and facts which are potentially relevant for controlling corporate performance will be disregarded by the setting of assumptions. Thus their influence on the implementation of a strategy is excluded from strategic control, especially single loop learning, that is to say, such events and facts are not observable by a company's strategic management. In this respect, it is necessary to check the adequacy of these assumptions systematically. According to that, learning to avoid malfunctions within the process of setting assumptions (be-
Causal Implications of Performance Management for Strategic Control
7
cause of planning errors) is the aim of double loop learning, also named as premise control. The double loop learning requires the management’s continuous attention from the date of strategy formulation unlike single loop learning.22 The remaining risk because of discontinuous environmental developments, which single loop learning and double loop learning can not remove, will be controlled by the strategic monitoring. The strategic monitoring is aimed at the identification of developments, which can change the potential of success of a planned strategy. This undicrectional control includes reflecting the adequacy of a strategy, which shall secure the continuous existence and further development of a company. Such control would imply the reflection of the conceptual dysfunctionalities of the single loop and double loop learning process. A strictly causal reference as it is required by a consistently understood performance measurement and performance management, raises multiple, mostly disregarded problems within the strategic control.23 In the course of such a control, the whole strategic management process is based on hypotheses of cause-and-effect relationships. Against this background, strategy can be regarded as a system of hypotheses of cause-and-effect relationships. Accordingly, the strategy implementation should result from formulated causal chains, of which is the ultimate effect the financial performance (profitability). Such an understanding can be e.g. a conceptual basis for the Balanced Scorecard (BSC). Within performance management, strategic control problems result within single loop learning because the validity of the formulated causal hypotheses is assumed. These hypotheses provide a basis for planning, implementing and modifying the corporate strategy, the derivation of its milestones and the implementation of strategy-conform (operational) actions and the accordant measures. If these hypotheses take inadequate causal assumptions as a basis or will be obsolete because of meanwhile changes of their premises, the single loop learning is not able to provide relevant information, that is to say, information about effects and the rela-
Causal Implications of Performance Management for Strategic Control
8
tions to certain events and circumstances as their causes. By means of the double loop learning these problems can be countervailed. The fact that the assumption of objectively determinable and actually existing causal chains is not questioned in this concept reveals the double loop learning as a deficit within the BSC. In this concept the influence of the experiences and values of the observer to assess the adequacy of certain underlying hypotheses of a strategy is neglected.24 Furthermore, it must be pointed out and taken into account that causality represents a unidirectional construct. Assuming that a cause-and-effect relationship is in line with reality, it can be suggested that at an observation of a cause (A) the postulated effect (B) will result. However, an accordant reference is excluded by definition. By the observation of B, the conclusion that A has been occurred and has been causal for this purpose must not be drawn. Similarly, assuming that a postulated effect has not occurred ('Not-B'), it cannot be argued that A would not have existed, i.e. otherwise 'Not-A' would be responsible. This problem of (causaloriented) single loop learning cannot be solved by the concept of the BSC’s double loop learning. Furthermore, the concept of double loop learning poses another problem of causal-oriented strategic control by using the BSC. First of all, it is not discussed how alternative causes and effects should be identified and interpreted by the four management perspectives vectoring economic observations. Secondly, potential relevant events and facts are only to be interpreted with respect to sequential causal linkages between the perspectives. However alternate effective paths or even feedbacks may exist. The control perspectives of the BSC and their linkage are based on the market based view of the strategic management of the company. This paradigm determines the modality how to monitor management relevant events and facts as well as how to formulate causal hypotheses. Otherwise its adequacy due to companyspecific means-end-relations is not reflected within the BSC's double loop learning-concept.
Causal Implications of Performance Management for Strategic Control
9
Given alternative strategy approaches (resource based view, dynamic capabilities approach), the adequacy of the four management perspectives and their sequential linkages cannot be taken for granted a priori, but this has to be verified continuously in the context of an effective strategic control.25 These deficits of the single loop and double loop learning imply the risk of malfunctions of strategic control and subsequently corporate performance management. The result is the demand for a superior control. A strategic surveillance as it is defined by Schreyögg/Steinmann26 is not defined explicitly within the BSC concept. For an undirected, super-ordinate form of control related to single loop and double loop learning, this is a paradox. Non-directedness implies the ability of an observer to recognize and reduce the directness of an observation. Here judgments of the directness of the single loop learning and double loop learning are necessary, which can not be generated within these concepts, but rather require a meta-perspective. This perspective includes the reflection of the causal attribution of an observer as well as its subjective selection scheme within a causal-orientated strategic control concept. This pattern is constituted as a managers' subjective system of purposes regarding (1) planning, (2) management and (3) control against the background of personal experiences, values and skills.27
Objectives of a causal-oriented Meta-Control A meta-control, in the context of a causal-based performance management, is used as a superior form of control, to compensate causal-theoretical gaps of single loop and double loop learning, which have already been pointed out.28 In this respect, it requires a single loop and double loop learning but it also serves for its optimization. A causally ambitious meta-control represents a permanent review and validation of the subjective reconstruction and interpreta-
Causal Implications of Performance Management for Strategic Control
10
tion of causal systems and models. This complements the single loop and the double loop learning as controls of reconstructed causality. The meta-control-concept accounts for a non-selective (unfocused) search and control of potentially relevant events and facts by being aimed at alternative assessments of causal coherences and types of causal misinterpretations. This meta-control leads to the doubt about defined causal hypotheses, their interpretation, underlying (explicit or tacit) assumptions and (ultimately) the observation of the strategic management process in the whole. The metacontrol constitutes a counterbalance of single loop learning and double loop learning. This is realized by questioning defined purposes as well as observed causes, effects and used resources with respect to their (non-)importance for the development of performance. This meta-control takes a consolidated knowledge of (alternative) causes and effects for granted. After all, only the knowledge of causal alternatives admits an adequate assessment of actually made decisions or implemented actions for a performance management.
Reconstruction and Interpretation of Causal Hypotheses Previous research activities on the causal analyses in management science have been particularly concentrated on the question, how managers control the influence of certain factors with respect to an explicitly or implicitly assumed causal model.29 Thereby, the influence of confounded causes is controlled and the related contingency is used in the absence of other causes as a measure of the causal effectiveness of the considered cause(s). In this regard, other results suggest that the sensitivity of decision makers on alternative causal models respectively the variation of assumed causal models depends on cognitive processing capacity. Thus it was shown, assuming the same contingency of observed events that individuals are able to reconstruct causal relationships more adequately in those cases, where a plausible mechanism
Causal Implications of Performance Management for Strategic Control
11
is known which connects the events.30 Therefore, assessing the causal relevance of observed phenomena within the process of single loop learning depends on the assumptions underlying the defined causal hypotheses. It is the assignment of a double loop learning to reconsider these hypotheses and to review the premises of single connexional hypotheses. Often the existence of a certain causal model is implicitly assumed. Within the BSC the underlying assumptions deterring the adequacy of the four management perspectives and the modality of their logical and causal linkage are not questioned by Kaplan’s and Norton’s double loop learning concept.31 Regarding the reconstruction of the strategic process, causal coherences are complex and uncertain. If causal patterns are uncertain, events and facts could be ignored or misinterpreted, because their causal relevance is not (correctly) identified. It requires the additional instrument of meta-control, which also reconsiders the indirect coherences between causes and effects (hypotheses structure/structural implications) to compensate deficits of control (resp. learning). These structural implications have to be fulfilled in addition to the direct subordinate related hypotheses, so that a plausible causal model is adopted. Such a performance review ought to aviod false reconstructions of causal coherences and their misinterpretation. In the following, systematically different issues of the constellation of causes and effects will be considered within a causal analysis. By doing so, the complexity of causal structures gets more transparent. This more sophisticated view of causality serves as a basis for the identification of possible types of misinterpretation within causal-oriented single loop and double loop learning. For illustration, a typical causal model formulated in the context of performance management, is used especially within the BSC-concept (figure 1).32
Causal Implications of Performance Management for Strategic Control
Increase of Revenue
12
Profitability
Customer Loyalty Customer Satisfaction Intrinsic Value of external Service Performance
Business Loyalty of Employees
Employee Productivity
Employee Satisfaction Internal Service Quality Figure 1: Cause-effect-chain within the Balanced Scorecard
Referring to the causal chain it will be assumed that A, B and C are real existing phenomena, such as customer satisfaction, customer loyalty, profitability etc. In addition, it will be supposed that A temporally exists before B and B temporally exists before C. 'Not-A', 'Not-B' and 'Not-C' describe the situation that the phenomena A, B and C do not exist or can not be observed at a certain date or within a defined period of time. Against this background, hypotheses are formulated ex ante to describe a causal chain regarding customer satisfaction (A), customer loyalty (B) and profitability (C). This is coherent to BSC-methodology (figure 1). It is further assumed that additional information calling for a reinterpretation of this ex ante assumed causal chain (causal model), will be available over the course of time. This may be due to observations of a potentially relevant, however ex ante unknown phenomenon. Therefore, managers and management accountants have to investigate what consequences arise from the (additional) observation of A, B or C onto the relationship(s) between the other two
Causal Implications of Performance Management for Strategic Control
13
ex ante known phenomena. The following cases show the complexity of (re)interpreting ex ante hypothesized causal relations against the background of additional information over the course of time. The cases are based on the systematization of Spohn.33 They show the gaps of single loop and double loop learning in general, especially within the BSC-methodology due to the requirements of causal oriented strategic control. Therefore, the derived types of causal misinterpretation serve as a basis to clarify the need and the content of a meta-controlperspective.
C (Profitability) B (Customer Loyalty) A (Customer Satisfaction) Figure 2: Case 1
The following cases represent different hypotheses about the causal (non-)coherences between A, B and C. Case 1 describes a situation, in which no causal coherence between A, B and C is suspected (figure 1). To verify this case, an empirical analysis with reference to figure 1 is needed to make sure that there are no hints, which constitute that customer satisfaction (A) is a cause of customer loyalty (B) and profitability (C) and customer loyalty is/are causes of profitability. Otherwise, figure 2 is false, therefore derivated actions (or omitted actions) due to this causal model lead to suboptimal results. All other relevant implications are already excluded by the previous assumptions. According to the four conditions of the existence of a causal coherence, it has to be noticed that the measurement of non-correlations between the three phenomena can not prove that there is no causal link. This has to be considered to avoid a confirmation bias. Case 1 points out that it is not only important within the analysis of a causal model to ensure the manner in
Causal Implications of Performance Management for Strategic Control
14
which a phenomenon can be a cause of another. Furthermore, there must be a specific control of each model to make sure that particular phenomena are not the causes of other phenomena. Otherwise the whole causal model would be questionable.
Profitability
Profitability Customer Loyalty
Customer Satisfaction
Profitability Customer Loyalty
Customer Satisfaction
Case 2.1
Customer Loyalty Customer Satisfaction
Case 2.2
Case 2.3
Figure 3: Cases 2.1, 2.2 and 2.3
This previously mentioned problem is illustrated by case 2 in which exactly one phenomenon is assumed as the cause of the other one. The third phenomenon is causally insignificant (figure 3). If the plausibility of the causal model is reviewed in case 2.2, it has to be tested statistically, if customer satisfaction (A) does not have any impact on customer loyalty (B) and again customer loyalty has no effect on profitability (C). The evidence of a correlation between A and C is not sufficient to control the plausibility of the causal model in case 2.2. The further analysis of the implications of case 2 requires approximately the consideration of another case and will be discussed subsequently.
Profitability
Profitability
Customer Loyalty
Customer Loyalty Customer Satisfaction Case 3.1 Figure 4: Cases 3.1 and 3.2
Case 3.2
Causal Implications of Performance Management for Strategic Control
15
The causal model represented by case 3.1 postulates customer loyalty as a cause of profitability (figure 4, case 3.1). Lets assume that the management, due to a lack of experience, does not know that the phenomenon customer satisfaction (A) has an effect on profitability (C).That does not mean that A actually is not existing (i.e. 'Not-A' is existing) or that it is not possible to observe A or ‘Not-A’. The management simply does not think of the idea to include A in the causal calculus of performance control and so just speculates about the relationships between B and C. This case basically refers to a possible type of misinterpretation, if one of three phenomena is ex ante unknown. This corresponds to the question, which deceptions reveal the explicit observation respectively involvement of the third phenomenon. It is still assumed that the management has determined ex post that A or ‘Not-A’ might be relevant for the causal model of B and C (B-C-system) (case 3.2). Furthermore it is estimated that the existence of B could be confirmed ex post. So what are the consequences for the ex post interpretation respectively statistical tests of the A-B-C-system? It is conceivable that empirical studies indicate that A is a cause of B and C. This does not change the ex ante causeeffect-hypotheses describing the B-C-relation, because they do not exclude an interpretation of B as a cause of C. Furthermore, it is possible that the inclusion of A proves the fact that B is not a cause of C, but it is just a noticed spurious correlation. This correlation results as a logical consequence of the fact that A is the direct cause of B and C. It may not be confused with an evidence of a causal relation between B and C. Obviously, it is not probable to reason from the context of a closed-analysis of the B-C-systems (single loop learning) to the existence of ex ante unobserved A. These coherences describe a first type of a causal misinterpretation, which cannot be covered with single loop or double loop learning as claimed by the BSC-concept.
Causal Implications of Performance Management for Strategic Control
16
Misinterpretation of Type 1: Measured correlations (Non-correlations) may be logical implications instead of confirmations of causal (in-)dependence.
With respect to case 1, it is to be added that the suspected causal hypotheses about B and C resp. A and C do not change, if case 3 occurs. Case 3 describes in this context the subsequent observation of a third phenomenon, A or B. Thus, the subsequent observation of A can not confirm that B has no causal relation to C, if the observation does not concern B and C. The same goes for case 2, exemplarily case 2.2. If a cause A of a phenomenon C is identified ex post, and an integrated hypothesis concerning relations does not exist previously, the observation of A does not draw any conclusion about the relevance of B or ‘Not-B’ for C. The same goes for case 3. The causal hypotheses of A and C would not change, if an additional, separated effect B on A has been taken into consideration. Therefore, new empirical evidences of causal relationships have to be generated, if other phenomena arise. Within the concept of strategic control a perspective of control beyond the scope of statistical methods is required. The analysis of correlation cannot provide information about alternative causal coherences.
Profitability
Profitability Customer Loyalty
Customer Satisfaction Figure 5: Case 4
Customer Loyalty Customer Satisfaction Figure 6: Case 5
Case 4 describes a model, which corresponds to the context of figure 1. Customer satisfaction (A) is a direct cause of customer loyalty (B). The profitability (C) is directly influenced by customer loyalty (chain model, figure 5). A merely represents an indirect cause of C. The direct causal relevance of A for C is shielded by B. That does not mean that A is not a cause of
Causal Implications of Performance Management for Strategic Control
17
C, but A merely loses its relevance for C, just as B exists resp. could be observed. This type of shielding differs from case 3. If only B and C are known (i.e. before the existence of A is identified), the causal relation between B and C is not to be judged differently than after the detection and inclusion of A into the causal model. With respect to A a different argumentation is necessary. Before knowing the existence of B, A could be regarded as a direct cause of C. The detection of B changes the causal status of A. A becomes an indirect cause. Moreover it is also conceivable that the causal relation between A and C is not noticed ex ante (this would correspond to case 1), and this causal relation can only be reconstructed as soon as B is detected. This case refers to another type of possible misinterpretation of causal relations. Misinterpretation of Type 2: In the case of independent formulation and review of connexial hypotheses, it is possible that indirect relationships and dependencies between them are not recognized. Wrong conclusions about the actual coherences can result from the non-consideration of such structures.
Within the strategic control it has to be checked continuously how far explicitly or implicitly presumed causal models influence the reconstruction and interpretation of connected hypotheses. The possibility of alternative causal models has to be considered and their plausibility has to be analysed. Only the knowledge of alternative causal models authorizes an adequate control of certain causal coherences. If these alternatives remain unappreciated there is a risk that the causes of performance-relevant effects are controlled by paths of effects, which do not correspond to reality. A strategy based upon such assumptions, would inevitably lead to dysfunctionalities within the process of performance management and measurement. Case 5 describes a situation in which A and B are causes of C. However, A and B are only direct causes in combination. Thereby, a causal coherence between customer satisfaction and
Causal Implications of Performance Management for Strategic Control
18
customer loyalty does not exist. Let’s assume, that the management ex ante regards customer satisfaction (A) in neglect of customer loyalty (B) as a cause of profitability (C). The ex postdetection of B as a necessity of the effect of A on C would change the implications of the AC-hypothesis in a fundamental way. It also has to be considered that the effect of A on C would not have been attracted attention without the knowledge of B. This is equally valid for B. This model thus implies a third type of possible misinterpretation. Misinterpretation of Type 3: In a course of observations, single events and circumstances can be perceived as causes, if causal related. Thereby the conditions which have to be fulfilled to affirm that a certain effect can appear as suspected are often not perceived as relevant causes.
In this context, the so-called ‘fundamental attribution mistake’ has to be considered within the framework of strategic control. This describes the preference of an observer to consider such events and circumstances as primal for an effect, which he is able to influence directly while events and circumstances beyond a scope of influence tend to be blocked out as relavant causes or (side-) effects.34 To avoid such control relevant measurement and management biases, managers have to consider the relevance of this mistake for their own analyses of the value creation process.
Profitability Customer Loyalty Customer Satisfaction Figure 7: Case 6.1
Causal Implications of Performance Management for Strategic Control
19
In case 6.1, it is assumed that the customer satisfaction (A) and the customer loyalty (B) are causes of the profitability (C) (figure 7). However, they do not have a combined effect, but each on itself, i.e. they are independent. If A (resp. B) does not occur, B (resp. A) could cause C (symmetrical over-determination). There is a causal chain from A to C (resp. B to C), which does not deal with B (resp. A). Therefore, in figure 7, two arrows have their end in C. It can be argued that it is quite unlikely that two independent phenomena cause an identical effect exactly at the same time. This means in a logical conclusion that only the effect which firstly appears on C is causally responsible for C and the other one can be ignored. This situation can be marked as a form of asymmetric overdetermination, which will be discussed in the following cases. It can not be taken for granted that an exact specification of the temporal coherences is always possible resp. economical, so that case 6.1 cannot be excluded from causal analysis, especially because it points out further difficulties of interpreting causal models adequately. Decision makers are generally inclined to equal the statement "if the customer satisfaction (A) changes, the profitability (C) changes, too" and the statement "if the customer satisfaction (A) does not change, the profitability (C) does not change either". Moreover, this implies a logical fallacy, which has to be considered within the strategic control of causal relations. Case 6.1 illustrates that C can be affected, even if A does not exist. From the previously mentioned comparison the (wrong) conclusion can result that A is not a cause of C. Alternatively, the comparison could be abandoned. But in this case a declaration, if C would be caused in case of ‘Not-A’ or if A would even exist in case of ‘Not-C’, would not be possible anymore. Obviously, there exists a dilemma. On the basis of a conjunctional interpretation, the complex ’A-or-B’ is the cause of C. However, this would not meet case 6.1 (but case 5). From an adjunctive point of view, the complex ’A-and-B’ is the cause of C. This is indistinct in the sense that both phenomena could be
Causal Implications of Performance Management for Strategic Control
20
causes of C at the same time. Such problems of interpreting value creation from a causal oriented perspective have to be considered as the object of a systematically meta-control as overall surveillance of single loop and double loop learning. In reference to case 6.1, the following misinterpretations are possible, if only two of the three phenomena are to be known ex ante. First of all, it is assumed that B cannot be noticed ex ante. Therefore A will be interpretated as a (solitary) cause of C. If B is noticed ex post, the overdetermination of C becomes obvious. Thus, the observation of B does not contribute to clarify possible errors of the A-C-relation, but only specifies the definiteness of C. An analogue conclusion results, if just A is noticed ex ante and B is noticed ex post. But possibly resulting causal relations have a subdivided meaning within strategic control, i.e. the misinterpretations are less serious than in the cases 1-5. A new kind of misinterpretation only becomes obvious, if case 6.1 is systematically combined with the cases 1-5. In the course of this, different, but not necessarily relevant structures result. With the cases 6.2 and 6.3 causal structures are discussed, which lead to slightly different implications than the cases 1-6 (figure 8).
Profitability
Profitability Customer Loyalty
Customer Satisfaction Case 6.2
Customer Loyalty Customer Satisfaction Case 6.3
Figure 8: Cases 6.2 and 6.3
In case 6.2, A and B effectuate C together by a causal chain. Moreover, A has an independent effect on C, which is independent from B. Therefore, an effect of C can always be observed, if A exists. But B just could only have an effect on C, if A exists. It is essential that case 6.2 represents a causal overdetermination, which is different to case 6.1. B is not independent
Causal Implications of Performance Management for Strategic Control
21
concerning the effect on C, on the other hand is A causal for C in a multiple way. A possible misinterpretation results if the interaction between A and B is known and B, as a result of this knowledge, would be understood as a part of the cause of C. Additionally the direct connection between A und C is observed ex post, the – false – interpretation could result that it is a mistake to define B as a cause of C, because A leads independently from B to C. Regardless of the terminological problems, it is obvious that the task of an observer within the context of a comprehensive strategic control-concept is to make all possible factual linkages transparent. Otherwise, it is not possible to identify pathways of effects and to calculate the probability of certain actions having led to registered effects. These coherences imply another type of misinterpretation. Misinterpretation of Type 4 : The observation of other causal coherences may induce a modification or neglection of the causal status of a phenomenon even though these observations do not imply the necessity to alterate the structure of coherences.
With regard to case 6.3, it has to be noticed that this case may not be confused with case 4. In case 4, it is negligible whether A has existed as long as the existence of B was observed. A is also causative for B in case 6.3, however, C can not exist if A and B do not appear as causes at the same time. Therefore, A should not be understood as an indirect cause of C. This case indicates that it is not appropriate to delimitate causal analysis to the causal relation of two phenomena. It is rather necessary to control multiple mechanisms of action to calculate the emergence of a planned action. Without such a control, only suboptimal results could be reached in the case of a pre-control of performance by so-called value drivers (“leading indicators”).
Causal Implications of Performance Management for Strategic Control
22
Profitability
Subsidiary Change of Customers Product Line Relocation Figure 9: Case 7
Within the cases 1-6 it is implicitly assumed that ex ante presumed causal relations have actually been realized over the course of time. This assumption is questioned in case 7 (figure 9). The implementation of a new product line can serve as an example. This new line could have a negative impact on the customers of a subsidiary 1 (sales decrease). Therefore, the management decides to roll it out on a subsidiary 2 and not on subsidiary 1 (A). However, the unsatisfied customers shift from subsidiary 1 to subsidiary 2 (B) at the same time. In an isolated way, neither the relocation of the product line nor the subsidiary-shift of the customers is a cause of an absent negative effect on profitability (C). C may result from other reasons, such as an inconspicuous location of the problematic product line in subsidiary 2. Thus, the interpretation can be accepted that 'Not-A' has to be considered as a cause of C in attendance of B. A similar interpretation is possible for 'Not-B' in attendance of A. However, because A and B have been occured in case 7 it can be concluded that neither A nor B are causes of C. Ultimately, the causal relations in case 7 do not answer the question what the actual cause of C is. Two consequences for a causal strategic control result. Firstly, alternative causes of variances of the profitability could exist. This may relate to previously completely unobserved events and situations. Known phenomena, which have not been noticed by an observer, also come into consideration as value drivers (causes). Both variations correspond to a change in observed causal relations by an implied control. Such a self-referential view proves to be typical for a meta-control. Secondly, it has to be considered that C may not even be a causal
Causal Implications of Performance Management for Strategic Control
23
phenomenon. For instance, this would be the case, if C is a logical consequence, which cannot be comprehended by the concept of causality. Such a problem can be presumed within the BSC-concept, because Kaplan/Norton define loyal customers as profitable customers.35 A changed customer loyalty would not be a cause36 of increasing profitability in that case. Profitability would rather result as a definitional logical consequence.37 Case 8 is similar to case 7, because the double repeal can of course exist in simple form (figure 10, Cases 8.1 und 8.2). In case 8.1, A has been a cause of C, if B has not been existed (case 8.3, vice versa). In this respect, B (resp. A) changes the causal status of A (resp. B) concerning C. Such situations are current. For example, a marketing analysis for an enhancement of the customer satisfaction is carefully executed (A). Simultaneously, a news item about problems in quality of the main competitor has been published unpredictably (B). This is primarily perceived by customers, so the relative customer satisfaction increases (C). Case 8.2 can be sighted analogously. The report about the problems of quality of the competitor (B) has not been appreciated in this case because the customers are sensitized on the basis of the marketing activities (A) to the specific characteristics of the product (e.g. an unrivaled cost-benefit-ratio). So neither A nor B are causes of C in case 8. Therefore, the actual cause of C cannot be clarified within single loop or double loop learning, as it is possible in case 7. In contrast to case 7, case 8 constructs a situation in which the statement „…would have happened, if not…” is only accurate in relation to one cause a time. Actually, case 7 and 8 constitute a concretization of case 1. Ex post, different situations are conceivable why a certain phenomenon is not a cause of a noticed effect.
Causal Implications of Performance Management for Strategic Control
Customer Satisfaction
Profitability
Press Release of Competitor Marketing Action Case 8.1
24
Subsidiary Change of Customers Product Line Relocation Case 8.2
Figure 10: Cases 8.1 and 8.2
Which misinterpretation is possible in the cases 7, 8.1 and 8.2? On the one hand it is possible that the causal link between A and C in case 7 and in case 8.1 is not appreciated as causal link in the presence of 'Not-B', because the causal link would not be achieved by the existence of B. Strictly speaking, there would not be an error concerning the causal status of A as a cause of C. On the other hand, it has to be clarified, if ’Not-B’ has been implicitly taken for granted in the reconstruction of the A-C-relation. A serious error could arise, if the dependence of the A-C-relation on ’Not-B’ had not been explicitly recognized in the process of causal reconstruction. Therefore A would be understood as a cause of C. Such a misinterpretation is also conceivable in case 8.2. In this way a marketing campaign could be brought off (B) and the customer satisfaction could increase as a result (C). However, the campaign could be ineffective, because the customers have already bought the product, because of a foregone price cut (A) and their satisfaction improves in the period of using the product. This misinterpretation is widespread, because C appears indeed so that the hypothesis about the A-C-relation (resp. B-C-relation) is approved. In the course of the reconstruction and verification of causal models in case 8, combinations with other cases, particularly cases 2.1, 2.2 and 2.3, are significant for the analysis of possible misinterpretations (figure 3). In case of 8.3 (combination of 8.1 and 2.1), A causes its own suspension in relation to C, because A is the direct cause of the disturbing influence of B (fig-
Causal Implications of Performance Management for Strategic Control
25
ure 10). Case 8.3 is a fundamental description of a negative feedback. This case exists, if 'Not-C' describes a particular status (constant customer satisfaction), A represents a disturbing influence (quality defects) and B is interpreted as a mechanism for maintenance of 'Not-C' (price cut), which is switched on by A and switches A off. It is an important finding that a causal model can be understood as a constellation of conditions serving as a base for the interpretation of hypotheses concerning (impact) relations between factors. In this respect, the cases 1-8 refer to a further possible type of misinterpretation, which is required by the classic representation of cause-and-effect-relationships in causal models. So A is a cause of C in case 2.2 (drawn through arrow). However, this relation does not say anything about alternative relations due to the existence of ‘Not-A’, which can also lead to C, so that ‘Not-A’ could be interpreted as a cause of C, too. With regard to case 5, in which A and B initially are partial causes of C, the complexity of the implications becomes apparent. An alternative causal chain could exist, which comprehends A and 'Not- B' as necessary causes of C, i.e. B would be a condition in this case. It has to be remembered consequently that both A and B serve as a condition of a causal chain, in which 'Not-A' and 'Not-B' are partial causes of an actually effected C. This implies a misinterpretation of type 5. Misinterpretation of Type 5: In causal models, specific hypotheses concerning two phenomena (“graphs”) as well as the exclusion of specific phenomena as causes ( “missing graphs”) can conceal the fact, that graphs as well as blank areas represent compelling conditions for the existence of other causal relations.
Examples are also easily conceivable for case 8.4 (combination of cases 8.2 and 2.1) (figure 11).38 The implications with regard to possible misinterpretations are equal to case 8.3 (combination of cases 8.1 and 2.1).
Causal Implications of Performance Management for Strategic Control
C
26
C
B
A
B
A
Case 8.3
Case 8.4
Figure 11: Cases 8.3 and 8.4
Implications for a Meta-Control The previously derived types of possible misinterpretation can be used to specify the functions of a meta-control.39 Misinterpretation of type 1 hints at the necessity to justify the metacontrol by means of falsification. Even repeated measurements of relevant correlations can not confirm the assumption of a causal coherence. On the other hand, if it is possible to prove a non–correlation only once a time, not only a hypothesis concerning relations between factors, but the more comprehensive causal model within which the hypothesis was formulated, will be questioned. Other functions of a meta-control result from misinterpretation of type 2. To avoid misinterpretations of causal coherences and models, which are based on spurious correlations, tests of non-correlations between phenomena are necessary. Moreover, conditional information concerning a specific causal hypothesis could be generally relevant for all coherences of a causal model. On the one hand, the meta-control thus promotes, as a surveillance of the single loop learning, the sensitivity in terms of causal model-specific structure-hypotheses. Otherwise there would be the risk to control causal coherences separately and to misconstruct the sum of the results as knowledge about the underlying causal model. On the other hand, a meta-
Causal Implications of Performance Management for Strategic Control
27
control has in divisional companies the function to promote the communication about relevant facts and events. Finally, observations, which do not admittedly question a specific hypothesis concerning relations between factors, could be relevant for the assumed causal model as a whole. The misinterpretation of type 3 points out that enhancing the management's sensitivity concerning the relevance of the value creation context accrues to a meta-control. Firstly, a focus on defined causes, as it is the case in the concept of single loop learning and double loop learning, leads to a neglect of the causal conditions under which a noticed phenomenon can be classified as a cause. Secondly, a cause does not necessarily lead to the presumed effects, but only under the condition of the existence and non-existence of other phenomena, which therefore have to be considered (explicitly as causes or implicitly as necessary conditions). In addition to the double loop learning, not only assumptions, which underlie the formulation of a causal coherence, are checked. But the assumptions, which determine the plausibility of the formulated hypotheses, have to be examined with regard to the value creation context or a concrete management approach. The reconstruction of causal hypotheses always presumes an overarching framework of justification, which determines the relevance of certain events and situations for a defined purpose. With respect to the BSC, this represents the necessity to control the strategic paradigm continuously, which determines the adequacy of elected management perspectives as well as the way of their causal linkage. The identification of alternative paths of efficiency does not necessarily lead to the adjustment of ex ante formulated connexial hypotheses. However, the observation of further paths of efficiency can question a presumed causal model, i.e. the underlying structural hypotheses. Therefore, the assumptions of the complete structure-hypotheses (causal model) have to be checked with regard to the ex post noticed coherences within a meta-control-concept.
Causal Implications of Performance Management for Strategic Control
28
The misinterpretation of type 5 points to the necessity to involve the management-context in the analysis of causal coherences and models by a meta-control. Formulated connexial hypotheses may possibly obscure a number of not explicitly recognized, however absolutely necessary conditions, which must be fulfilled in order to realize a desired effect. Furthermore, in the process of formulating causal hypotheses, conditions are often taken for granted and constant, but they can change over the course of time. In this respect, the meta-control does not only refer to explicit causal knowledge, i.e. formulated hypotheses, but also to the implicit causal knowledge of managers. Such knowledge can only be made available by an intensive communication, so that the meta-control has to ensure the communication in the context of corporate performance management. The fact that each level of control requires a metalevel of self-control generally leads to an infinite process, which has to be interrupted at an appropriate level to make the concept of strategic control manageable in day-to-day management practice.
Conclusion The development of the concept of strategic control can be associated with the domain of performance measurement and performance management.39 The necessity to adequately reconstruct causal relations constituting the value creation process is a not yet sufficiently acclaimed aspect of the strategic control which is thereby analyzed. The concept of causality emphasizes the subjectivity of the (re)construction process. This process has to be continuously retrieved due to the permanent changing of the “macro system” of a company. The effectiveness and efficiency of causal reconstructions by the management ensures the adequacy of the performance control. With the presented approach of a meta-control, causal-theoretical gaps are closed within the concepts of a strategic control and performance management.
Causal Implications of Performance Management for Strategic Control
29
References 1. In the following see Ossadnik, W. and J. Steins (2009), p. 3. 2. Colville, I. (1981), pp. 127-131; Dent, J.F. (1991), pp. 705-708; Hopwood, A.G. (1987), pp. 214-218. 3. Cokins, G. (2004), pp. 45-47. 4. Lebas, M.J. (1995), pp. 32-34; Mattessich, R. (1995), pp. 260-263. 5. Brown, C. (1987), pp. 120-125; Boland Jr.; R.J. (1979), pp. 262-263; 266-267; Weick, K.E. (1995), pp. 167-170. 6. In the following see Ossadnik, W. and J. Steins (2009); Nørreklit, H. (2000), pp. 68-71. 7. Bryant, L.; D. Jones and S. Widener (2004), p. 107; Lebas, M.J. (1995), p. 26. 8. Nørreklit, H. (2000), pp. 70-75. 9. Kant, I. (1781). 10. Luhmann, N. (2000), pp.178-180; 454-458. 11. Luhmann, N. (1999), pp. 25-27; 48-54. 12. Brown, C. (1987), pp. 122-124; Kelley, H.H. and J.L. Michela (1980), pp. 471-472; Fiedler, K.; E. Walther and S. Nickel (2000), pp. 615-620. 13. Mackie, J.L. (1974); Einhorn, H.J. and R.M. Hogarth (1987), pp. 68-69. 14. Schnell, R.; P.B. Hill and E. Esser (2008), pp. 53-54; 156-157. 15. Cavalluzzo, K.S. and C.D. Ittner (2004), pp. 243-244; 264-265; Chenhall, R.H. (2005), pp. 400-404. 16. Landau, M. and R. Stout Jr. (1979), pp. 148; 150-152; Rosanas, J.M. and M. Velilla (2005), pp. 87-88; Einhorn, H.J. and R.M. Hogarth (1987), pp. 68-69; Luhmann, N. (1999), pp. 48-54. 17. In the following Ossadnik, W. and J. Steins (2009), pp. 6-9. 18. Pearce, J.A. and R.B. Robinson (2009), p. 15.
Causal Implications of Performance Management for Strategic Control
30
19. Lorange, P. (1984), pp. 249-254; Schreyögg, G. and H. Steinmann (1987), pp. 94-98; Preble, J.F. (1992), pp. 394-396; Ittner, C.D. and D.F. Larcker (1997), pp. 293-294; 296297. 20. Argyris, C. (2003), pp. 1178-1179; Julian, S.D. and E. Scifres (2002), pp. 142-146; Schreyögg, G. and H. Steinmann (1987), pp. 96-99. 21. Dodgson, M. (1993), pp. 381-384; Schreyögg, G. and H. Steinmann (1987), pp. 92-93; Argyris, C. (2003), pp. 1178-1179. 22. Baskerville, R. and A. Dulipovici (2006), pp. 95-99; Visser, M. (2007), pp. 660-663; Julian, S.D. and E. Scifres (2002), pp. 144-149. 23. Kaplan, R.S. and D.P. Norton (1996), pp. 250-269. 24. Kaplan, R.S. and D.P. Norton (1993), pp. 137. 25. Teece, D.J.; G. Pisano and A. Shuen (1997), pp. 515-516; Eisenhardt, K.M. and J.A. Martin (2000), pp. 1106-1108. 26. Schreyögg, G. and H. Steinmann (1987), pp. 97-99. 27. Kaplan, R.S. and D.P. Norton (1993), pp. 137; 142. 28. In the following Ossadnik, W. and J. Steins (2009), p. 10. 29. In the following Ossadnik, W. and J. Steins (2009), pp. 10-26; Baker, A.G.; P. Mercier, F. Vallee-Tourangeau, R. Frank and M. Pan (1993), pp. 427-430; Waldmann, M.R. and Y. Hagmayer (2001), pp. 29-39. 30. Koslowski, B. (1996), pp. 17-27. 31. Kaplan, R.S and D.P. Norton (1996), pp. 267-269; Keinath, A. and J.F. Krems (1999), pp. 213-218; Hagmayer, Y.C. (2000), pp. 81-82. 32. See for the coherence of such systems Kaplan, R.S. and D.P. Norton (1993), pp. 135-138; Kaplan, R.S. and D.P. Norton (1996), pp. 30-31. 33. Spohn, W. (1983), pp. 64-87.
Causal Implications of Performance Management for Strategic Control
31
34. Manz, C.C. and H.P. Sims Jr. (1980), pp. 362-366. 35. Kaplan, R.S. and D.P. Norton (1993), pp. 135-140; see also Reichheld, F.F. and W.E. Sasser (1990), pp. 166-168. 36. Scriven, M. (1966), pp. 247-250; Lewis, D. (1973), pp. 563-566; Mackie, J.L. (1987), pp. 68-69. 37. Nørreklit, H. (2000), pp. 70-71. 38. Scriven, M. (1966), pp. 247-250; Lewis, D. (1973), pp. 563-566; Mackie, J.L. (1987), pp. 68-69. 39. In the following Ossadnik, W. und J. Steins (2009), pp. 26-28.
Literature Argyris, C. (2003): A Life full of Learning, Organization Studies, 24(7), 1178-1192. Baker, A.G.; P. Mercier, F. Vallee-Tourangeau, R. Frank and M. Pan (1993): Selective Associations and Causality Judgments: Presence of a strong causal Factor may reduce Judgments of a weaker one, Journal of Experimental Psychology, 19(2), 414-432. Baskerville, R. and A. Dulipovici (2006): The theoretical Foundations of Knowledge Management, Knowledge Management Research & Practice, 4(2), 83-105. Boland Jr., R.J. (1979): Control, Causality and Information System Requirements, Accounting, Organizations and Society, 4(4), 259-272. Brown, C. (1987): Diagnostic inference in performance evaluation: effects of cause and event covariation and similarity, Contemporary Accounting Research, 4(1), 111-126. Bryant, L.; D. Jones and S. Widener (2004): Managing Value Creation within the Firm: An Examination of Multiple Performance Measures, Journal of Management Accounting Research, 16, 107-131.
Causal Implications of Performance Management for Strategic Control
32
Cavalluzzo, K.S. and C.D. Ittner (2004): Implementing Performance Measurement Innovations: Evidence from Government, Accounting, Organizations and Society, 29(3/4), 243-267. Chenhall, R.H. (2005): Integrative Strategic Performance Measurement Systems, Strategic Alignment of Manufacturing, Learning and Strategic Outcomes – An Exploratory Study, Accounting, Organizations and Society, 30(5), 395-422. Cokins, G. (2004): Performance Management – Finding the Missing Pieces (to close the Intelligence Gap), Wiley, Hoboken Colville, I. (1981): Reconstructing “behavioural accounting”, Accounting, Organizations and Society, 6(2), 119-132. Dent, J.F. (1991): Accounting and organizational cultures: A field study of the emergence of a new organizational reality, Accounting, Organizations and Society, 16(8), 705-732. Dodgson, M. (1993): Organizational Learning – A Review of some Literatures, Organization Studies, 14(3), 375-394. Einhorn, H.J. and R.M. Hogarth (1987): Decision Making: Going Forward in Reverse, Harvard Business Review, 65(1), 66-79. Eisenhardt , K.M. and J.A. Martin (2000): Dynamic Capabilities: What are they?, Strategic Management Journal, 21(10/11), 1105-1121. Fiedler, K.; E. Walther and S. Nickel (2000): Covariation based attributions: On the ability to assess multiple covariates of an effect, Personality and Social Psychology Bulletin, 25, 607-622. Hagmayer, Y.C. (2000): Thinking with and about Causal Models [Denken mit und über Kausalmodelle], Göttingen, 78-82, 86-88. Hopwood, A.G. (1987): The Archaeology of Accounting Systems, Accounting, Organizations and Society, 12(3), 207-234.
Causal Implications of Performance Management for Strategic Control
33
Ittner, C.D. and D.F. Larcker (1997): Quality Strategy, Strategic Control Systems, and Organizational Performance, Accounting, Organizations & Society, 22(3/4), 293-314. Julian, S.D. and E. Scifres (2002): An Interpretive Perspective on the Role of Strategic Control in Triggering Strategic Change, Journal of Business Strategies, 19(2), 141-159. Kant, I. (1781): Criticism of the pure Rationality [Kritik der reinen Vernunft], Reclam, Stuttgart. Kaplan, R.S. and D.P. Norton (1993): Putting the Balanced Scorecard to work, Harvard Business Review, 71(5), 137-147. Kaplan, R.S. and D.P. Norton (1996): The Balanced Scorecard – Translating Strategy into Action, Harvard Business School Press, Boston. Keinath, A. and J.F. Krems (1999): Anomalous data integration in diagnostic reasoning, A. Bagnara (Ed.), Proceedings of the 1999 European Conference on Cognitive Science, 213-218, Siena: Consiglo Nationale delle Ricerche. Kelley, H.H. and J.L. Michela (1980): Attribution Theory and Research, Annual Review of Psychology, 31, 457-501. Koslowski, B. (1996): Theory and Evidence. The Development of Scientific Reasoning, MIT Press, Cambridge. Landau, M. and R. Stout Jr. (1979): To Manage Is Not To Control – Or the transparency of Type II Errors, Public Administration Review, 39(2), 148-156. Lebas, M.J. (1995): Performance Measurement and Performance Management, International Journal of Progressive Education, 41(1-3), 23-35. Lewis, D. (1973): Causation, Journal of Philosophy, 70, 556-567. Lorange, P. (1984): Strategic Control: Some Issues in making it operationally more useful, Lamb, R.B. (Ed.), Competitive Strategic Management, Prentice-Hall, Englewood Cliffs (NJ), 247-271.
Causal Implications of Performance Management for Strategic Control
34
Luhmann, N. (1999): The Concept of Ends and Systems Rationality – About the Functions of Ends in Social Systems [Zweckbegriff und Systemrationalität – über die Funktion von Zwecken in sozialen Systemen], Suhrkamp, Frankfurt (Main). Luhmann, N. (2000): Organization and Decision [Organisation und Entscheidung], Westdeutscher Verlag, Opladen and Wiesbaden. Mackie, J.L. (1974): The Cement of the Universe, Clarendon Press Oxford. Manz, C.C. and H.P. Sims Jr. (1980): Self-Management as a Substitute for Leadership – A Social Learning Theory Perspective, Academy of Management Review, 5(3), 361367. Mattessich, M. (1995): Conditional Normative Accounting Methodology – Incorporating Value Judgements and Means-End Relations of an Applied Science, Accounting, Organizations and Society, 20(4), 259-284. Nørreklit, H. (2000): The Balance on the Balanced Scorecard – A critical Analysis of some of its Assumptions, Management Accounting Research, 11(1), 65-88. Ossadnik, W. and J. Steins (2009): Causal Implications of Performance Management, No. 2009/06 of the Contributions of the School of Economics and Management Science of the University of Osnabrueck [Beiträge des Fachbereichs Wirtschaftswissenschaften der Universität Osnabrück], Osnabrück. Pearce, J.A. and R.B. Robinson (2009): Formulation, Implementation, and Control of Competitive Strategy, 11th ed., McGraw-Hill/Irwin, Boston. Preble, J.F. (1992): Towards a comprehensive System of Strategic Control, Journal of Management Studies, 29(4), 391-409. Reichheld, F.F. and W.E. Sasser (1990): Zero Defections – Quality comes to Services, Harvard Business Review, 68(5), 105-111.
Causal Implications of Performance Management for Strategic Control
35
Rosanas, J.M. and M. Velilla (2005): The Ethics of Management Control Systems – Developing Technical and Moral Values, Journal of Business Economics, 57(1), 83-96. Schnell, R.; P.B. Hill and E. Esser (2008): Methods of empirical Social Research [Methoden der empirischen Sozialforschung], 8th ed., Oldenbourg, Munich. Schreyögg, G. and H. Steinmann (1987): Strategic Control: A New Perspective, Academy of Management Review, 12(1), 91-103. Scriven, M. (1966): Causes, Connections and Conditions in History, W. Dray (Ed.), Philosophical Analysis and History, Harper & Row, New York, 238-264. Spohn, W. (1983): A Theory of Causality [Eine Theorie der Kausalität], Munich. Teece, D.J.; G. Pisano and A. Shuen (1997): Dynamic Capabilities and Strategic Management, Strategic Management Journal, 18(7), 509-533. Visser, M. (2007): Deutero-learning in Organizations – A Review and a Reformulation, Academy of Management Review, 32(2), 659-667. Waldmann, M.R. and Y. Hagmayer (2001): Estimating Causal Strength: The role of Structural Knowledge and Processing Effort, Cognition, 82(1), 27-58. Weick, K.E. (1995): Sensemaking in Organizations, Sage Publications, Thousand Oaks, London and New Delhi.
