Behavioral Performance Evaluation

Behavioral Performance Evaluation

Mohsen Afsharian (Technische Universität Braunschweig, Germany), Heinz Ahn (Technische Universität Braunschweig, Germany) and Nadia Vazquez Novoa (Technische Universität Braunschweig, Germany)
Copyright: © 2014 |Pages: 14
DOI: 10.4018/978-1-4666-5202-6.ch024
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Performance evaluation, understood as a comprehensive process that includes framework building, performance measurement, and performance data interpretation, has been extensively studied by the management control and business accounting community. In the respective literature, performance evaluation has been recognized as an element of critical importance that provides valuable information for decision facilitating and decision influencing (Sprinkle, & Williamson, 2007). Previous research has especially addressed the combination of different performance indicators, such as financial and non-financial criteria (Ittner, Larcker, & Randall, 2003b).

The additional consideration of non-financial performance criteria offers a series of benefits to the decision maker, but it also poses significant challenges (Luft, 2009). A main kind of challenges results from the limited rationality of the decision makers and the complex nature of the evaluative task, which motivates managers to resort to a heuristic approach (Ding, & Beaulieu, 2011). Research on such behavioral performance evaluation has mostly focused on the application of a balanced scorecard (BSC), providing insights into the current use and interpretation of this instrument by decision makers.

The operations management (OM) literature, on the other side, has mainly concentrated on the development of quantitative models to measure performance. These models allow sophisticated decision making, but they also have been criticized by experts of the behavioral operations field since they ignore human behavior and cognition, thus failing to provide support to real-world decision making (Loch, & Wu, 2005; Bendoly, Donohue, & Schultz, 2006; Gino, & Pisano, 2008). However, despite this criticism and the associated potential of behavioral operations management (BOM) as a productive research field, the number of publications in this area is still limited. A reason for this gap may be the considerable effort related to the acquisition of knowledge from cognitive and social psychology (Bendoly, Croson, Goncalves, & Schultz, 2010).

Based on a short review, the objective of this chapter is to investigate possibilities for a fruitful BOM research on performance evaluation. As an example, a set of research hypotheses for the case of behavioral performance evaluation using Data Envelopment Analysis (DEA) will be proposed.

Key Terms in this Chapter

Experimental Research: Method that allows the isolation of effects by means of controlled variable manipulation and permits studying cause-effect relations.

Behavioral Performance Evaluation: Heuristic decision making in the performance evaluation phases of framework building and performance assessment, involving the risk of biased decisions.

Cognitive Tasks: Judgmental activities including choice, categorization and estimation.

Cognitive Biases: Violations of the axioms of prescriptive decision making theory.

Data Envelopment Analysis (DEA): Optimization-based approach to calculate the relative efficiency of n homogeneous DMUs on the basis of m weighted inputs and s weighted outputs.

Heuristics: Rules of thumb that reduce cognitive effort and facilitate decision making.

Behavioral Operations Management (BOM): Branch of operations management that considers the effects of cognitive biases, social preferences, and cultural norms on operations management issues.

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