Another Look at the Use of Forecasting Accuracy on the Assessment of Management Performance in Business Simulation Games

Abstract

Research in business games show that the reduction in forecast error can be used as a predictor of team performance. The objective of this study was to evaluate these findings with respect to high- versus low-level individual management functions. Using multiple linear regression, the study found that the set of independent variables (prediction error for indicators relevant to each management function) explained 40.75% of the overall company performance, while another portion is explained by external factors. As expected, the study found that the forecast accuracy for high-level functions (general management) had the greatest predictive impact and lowlevel functions (sales, human resources, and finance) the lowest. This supports the notion that Teach’s (1990) forecast-accuracy approach to performance evaluation can be used in top-level strategic management simulations as well as lower-level functional simulations rather than limiting it functional simulations only, as Wolfe (1993a) suggests.