The Effect of the Strategy Map on the Flow of Lower-Level Employee Feedback to Upper Management

• In Event: Management Accounting 2

Abstract

Feedback from lower-level employees can provide upper management with information that is important for the review of the firm’s strategy. Prior accounting research has not directly examined the flow of feedback regarding firm strategy from lower-level employees to upper management but has provided evidence that a strategy map can improve middle managers’ judgments about the relevance of external information to the firm’s strategy. In my experimental study, participants act as middle managers who receive feedback from lower-level employees that is relevant to the review of the firm’s current strategy and must decide whether to pass this feedback along to upper management. I find that middle managers are less likely to report this feedback to upper management when the feedback is incompatible with the firm’s current strategy. This effect is mediated by middle managers’ cognitive dissonance and their efforts at impression management. Consistent with prior research, I find evidence that when middle managers are provided with a strategy map—as compared to a non-causal list of the same strategic objectives—cognitive dissonance does not affect the likelihood that middle managers’ will report feedback from lower-level employees to upper management. However, this mitigating effect is limited to a setting in which the cost of reporting the information is low. In that low-cost setting, I also find that providing a strategy map to middle managers decreases the likelihood that middle managers’ will report feedback from lower-level employees to upper management.

Author

• Brian Knox, University of Pittsburgh