Award-winning research utilizes brain imaging to understand why strategic objectives may fail.

Harbert College of Business faculty member Paul Black has won the American Accounting Association’s Notable Contribution to Management Accounting Literature award for groundbreaking research that may help organizations do a better job of achieving their strategic objectives.

“It’s an honor and I’m grateful to receive this award, especially since it is only given to one paper each year in the entire management accounting field,” said Black. “It was a pleasant discovery.”

Black’s research, which he conducted with colleagues from BYU and Utah Valley University, examined a phenomenon known as surrogation, in which employees confuse strategic objectives with concrete measures that are designed to track progress toward those strategic objectives.

As an example, a company’s strategic objective could be to increase customer satisfaction. To quantify the firm’s progress, managers often implement a customer satisfaction survey that allows them to measure whether they’re reaching the goal of increased customer satisfaction.

However, employees and managers can become so focused on the measures that they end up undermining the objectives.

“The survey score is not a perfect reflection of actual customer satisfaction, but it’s a proxy for it,” said Black, assistant professor and dean’s fellow in the School of Accountancy. “Surrogation occurs when people begin to believe and behave as though the measure—the survey score—is the end goal of customer satisfaction.”

This can be detrimental to achieving the objective, Black said, because managers could start doing things to manipulate the measures.

“They might start only giving surveys to happy customers to boost their scores,” he said. “This is why surrogation is problematic, because people can manipulate the measures in ways that don’t actually affect the actual end goal.”

In the study, Black and his colleagues used functional magnetic imaging (fMRI) technology to perform brain scans while volunteer participants—all of whom had some knowledge of accounting and business—were given abstract and concrete words to review, as well as examples of strategic objectives and measures.

The results of the experiment demonstrated what happens in the brain during surrogation.

“Surrogation occurs as a mental shortcut,” he said. “There is less brain activity happening when people’s behavior suggests surrogation is occurring.”

Implications for business

“The better you understand the cognitive underpinnings of why [surrogation] happens the more you can help come up with solutions,” said Black. “We can think about the best ways to reduce surrogation and focus on the strategy.”

For example, companies can train their managers on what surrogation is and how to avoid it.

In addition, Black said, prior research found that if managers are involved in strategy selection and are not merely executors of strategy, they are less likely to surrogate—they are more likely to discern the difference between objectives and measures.

“This can help managers understand that measures are good and we have them for a reason, but they aren’t perfect, so be sure everything you’re doing is focused on the strategic objective,” he said.

According to Black, several other researchers published papers in the accounting literature looking at surrogation but none of them employed fMRI.

“Nobody really dug as deep as we did and asked why surrogation happens. We actually looked at the neuroscience behind why it happens.”

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“We’re incredibly excited for Paul and his coauthors to be recognized in this way. Their work is an outstanding example of how rigorous, innovative accounting research can provide valuable insight into the fundamental challenges business organizations face.”

Jonathan Stanley, director of Auburn’s School of Accountancy

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Their paper, “An fMRI investigation of the neurocognitive processing of measures and strategic objectives,” was published in Management Science in 2024.

Black shares the award with co-authors Brock Kirwan, executive director of MindCORE Neuroimaging Facility at University of Pennsylvania (formerly at BYU); Tom Meservy, department chair and professor of information systems at BYU Marriott School of Business; Bill Tayler, associate director and Robert Smith professor of accountancy at BYU Marriott School of Business; and Jeff Williams, assistant professor of accounting at Utah Valley University.

They will receive the award in August at the American Accounting Association’s annual meeting in Chicago.

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