Analysis of sustainability balanced scorecard influences on decision processes and investment decisions

Many managers use balanced scorecards (BSCs) to aid in evaluative and investment decisions. This study investigates (1) whether environmental data incorporated into a BSC changes investment decisions, (2) whether the presentation of the environmental data affects investment decisions, and (3) why these factors produce different outcomes. Data indicate participants choose the more environmentally-friendly investment option when the environmental data is added as a fifth perspective, but not when the data is embedded. Mediation analyses reveal that decision strategies fully mediate the effect of experimental manipulations (presence/absence of environmental data, and BSC data presentation) on investment decisions. The findings contribute to our understanding of how sustainability BSCs can be used in investment decision making. Also, the results have real-world applicability for companies wishing to stress environmental considerations in managerial investment decisions but must compensate for weak environmental data quality.