When a company creates a balanced scorecard, managers are stating a hypothesis about the results that will occur if certain performance measures are stressed.

Question

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A balanced scorecard is created to identify and prioritize key performance indicators in various aspects of a business. By doing so, managers are stating a hypothesis about what results they expect to see based on the emphasis of certain measures. They are essentially testing their assumptions about cause-and-effect relationships between performance measures and business outcomes.

When a Company Creates a Balanced Scorecard, Managers Are Stating