Informing Mental Models for Strategic Decision Making with ERPs and the Balanced Scorecard: A Simulation-Based Experiment James L. Ritchie-Dunham Doctoral Candidate University of Texas at Austin, MSIS 3615 Aspen Creek Parkway Austin, Texas 78749 USA (512) 925-9824 Cell (512) 291-0658 Fax jimrd@strategic-clarity.com http://www.strategic-clarity.com/ Abstract To make efficient, effective decisions, organizational leaders use strategic frameworks to see how well the organization is accomplishing its goals and implementing its strategies. These strategic frameworks filter great quantities of information about different parts of the organization into a few, critical elements. To process this vast amount of information, these frameworks depend increasingly on sophisticated information systems. Prior behavioral decision making research supports this practice, suggesting that guiding cue selection and increasing information credibility enhance decision performance. Common practice, however, focuses primarily on increasing information credibility and not enhancing cues. This research develops a theoretical model to explain how the decision maker’s understanding of the decision context is influenced by the strategic framework and by the information processing system. This research tests the theoretical model with a simulator-based experiment, where 118 MBA and MEng students run a wireless telecommunications firm. Key words: experiment, mental model, ERPs, balanced scorecard, simulation Introduction We inform decision makers to help them make efficient, effective decisions – decisions that lead to positive results. In this direction, decision makers use strategic frameworks, which inform them about how well the organization is accomplishing its goals and implementing its strategies. These frameworks guide the decision maker by making explicit the key strategic elements and how they relate. For example, the strategic framework economic value added (EVA) focuses the decision maker on shareholder value creation (the goal) through its components of revenues, operating expenses, cash taxes, and capital charges (the implementation). To inform the decision maker about what is happening in the real world of the organization, these strategic frameworks filter great quantities of information about different parts of the organization into a few, critical elements These critical elements tend to focus on the organization’s stated goals and actions (i.e.,