A proposed solution to counteract this undesirable
behavior, consistent with the informativeness principle, is to link compensation to a firm’s strategic context
through the use of appropriate performance measures in compensation contracting (Rappaport, 1978).
The assumption in the strategy literature is that forcing executives to focus on measures linked to strategic
forces will compel them to consider the long-term health of the organization when making decisions and
employ a balanced focus and vision (Kaplan and Norton, 1996).4