A replication about cause-effect linkage benefits and managers’ strategic judgments

Managers must constantly scan a sea of new information and judge (1) if this information is relevant to evaluating the firm’s strategy (i.e. information relevance judgments), and (2) if this information suggests the firm’s strategy is appropriate or inappropriate (i.e. strategy appropriateness judgments). I examine these judgments in a behavioral experiment with Amazon Mechanical Turk workers. Replicating prior research, I test how these judgments are affected by formatting the firm’s strategy to include cause-effect linkages, a defining feature of strategic performance measurement systems. I also add a manipulation of causal relatedness, i.e. the subjective probability of a given cause-effect linkage, especially as it relates to the inferred bridging mediators that can logically connect a cause-effect linkage. Like prior research, I find that adding cause-effect linkages improves managers’ information relevance judgments, specifically improving managers’ ability to filter out irrelevant information. Extending prior research, I also find that cause-effect linkages only improve strategy appropriateness judgments when those linkages have high causal relatedness. Experience also moderates this latter improvement such that it is limited to those with relatively low experience