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.

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