Creating value through the balanced scorecard: how does it work?

Abstract

Purpose The purpose of this paper is to further research on the Kaplan and Norton (1996) balanced scorecard (BSC) model after having discerned that previous work has so far neglected to explore the interrelationships between the model’s dimensions and the influence contextual factors may have. Design/methodology/approach The data set used to meet this paper’s main objectives was collected using a structured online survey sent to the member companies of the Catalan Association of Accounting and Management (ACCID). Specifically, the surveys were directed to the heads of the finance departments. From the 3,500 mails sent, 336 companies decided to participate in the study. These figures represent an acceptable response rate of 9.6 per cent. As 83 of the companies declared that they would only use financial indicators, the final study sample totalled 253 firms. Findings The results demonstrate the mediating effects intermediate constructs have, and highlight how important leadership is in achieving success or high performance. These results follow on from previous empirical literature that analysed other management systems such as the Baldrige, the EFQM or the Deming models. In addition, some differences in the relationships as per the contextual factors studied have been detected. Therefore, the conclusions reached in this paper will be of interest to both academics and professionals in perceiving and understanding the logical flow of consequences any decision taken will produce. Originality/value The authors’ main contributions are: to have strictly followed the theoretical BSC model by combining both formative and reflective dimensions using the emerging partial least squares methodology; to have based the study on 253 firms and to have used 37 category indicators which, to our knowledge, are more than any other previous work; to have developed a mediation model designed to appreciate the interrelationships the dimensions in the BSC model have; to have analysed the possible differences there are in the interrelationships between the dimensions using two widely accepted influencing contextual factors in current literature, namely a firm’s size and its typology.

Comprehensive performance measurement systems design and organizational effectiveness

“…The assumption is that an equal allocation of attention is most optimal and resembles a comprehensive measurement system as suggested by Braam and Nijssen (2004). Recently, Llach et al (2017) revealed that internal processes and customer dimensions are found to be equally important in terms of the contribution to financial results and that a balance between the four components is needed. They empirically show how “a non-appropriate behavior of the second or third perspectives could cause a 50 percent decrease in financial results, which is consistent with the original ideas developed by Kaplan and Norton (1996)” (p. 2194).…”

“…In particular, Kaplan and Norton's prescriptions suggest that a BSC design should rely on both financial and non-financial performance measures. This is an overall design consideration on how to apportion performance measures across financial and non-financial categories(Chalmeta and Palomero, 2011;Llach et al, 2017) Bryant et al (2004). found significant differences between organizations implementing BSC systems using both financial and non-financial performance measures versus organizations with BSCs relying solely on financial measures, suggesting that the inclusion of both financial and non-financial performance measures is indispensable for a comprehensive BSC design.…”

The Effect of Applying Balanced Scorecard on Earnings Quality among Banks Listed in Palestine Exchange

“…The necessity to utilize a measure after the internal processes as it is interesting metrics that also act an important role in decreasing costs of service delivery. Furthermore, Llach et al (2017) revealed that there is a positive association between adoption and implementation of BSC and the financial performance of the organization. Correspondingly, Tarurhor and Osazevbaru (2019) revealed that the usage of the four perspectives of the balanced scorecard affects positively the firms' performance.…”

9. Lønner det seg å bruke «balansert målstyring»(BMS)?

“…inngår som del av målingen av foretaksprestasjonen. De ikke-finansielle indikatorene er drivere av finansielle indikatorer, direkte og indirekte (Kaplan & Norton, 2004a;Chenhall & Langfield-Smith, 2007;Llach, Bagur, Perramon & Marimon, 2017). Det tredje omfanget legger til enda flere interessentgrupper (Neely & Adams, 2002).…”