IDEAS home Printed from https://ideas.repec.org/a/eme/ijppmp/ijppm-08-2015-0109.html
   My bibliography  Save this article

Rethinking balanced scorecard (BSC) measures: formative versus reflective measurement models

Author

Listed:
  • Sungbum Park
  • Heeseok Lee
  • Seong Wook Chae

Abstract

Purpose - Most empirical balanced scorecard (BSC) studies have shown a tendency to wrongly employ reflective indicators instead of the more theoretically suitable formative indicators. However, formative indicators are difficult to apply due to the lack of statistical software support and a standardized model testing method. The paper aims to discuss these issues. Design/methodology/approach - This study empirically compares the reflective and formative measurement method with standardized model comparison criteria. After collecting 217 valid questionnaires from companies in South Korea, the authors applied a structural equation modeling technique to analyze the data. Findings - The result shows that the formative measure provides greater validity for the corporate performance measurement using BSC. Further, this study shows the indicators’ relative influence on each BSC perspectives using the formative measure. Practical implications - This study proved the usefulness of the formative measure analysis method and suggested its practical use, focusing on the indicators most useful in developing corporate strategies. In addition, the authors showed that formative indicators could be used in the corporate environment by overcoming the limitations of conventional studies that were confined to causal relationships with latent variables. Originality/value - This study may be the pioneering work that compares formative and reflective indicators simultaneously, addressing the usefulness of formative measurement and its application validity in the existing empirical studies using reflective measurements.

Suggested Citation

  • Sungbum Park & Heeseok Lee & Seong Wook Chae, 2017. "Rethinking balanced scorecard (BSC) measures: formative versus reflective measurement models," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 66(1), pages 92-110, January.
    • Handle: RePEc:eme:ijppmp:ijppm-08-2015-0109
    DOI: 10.1108/IJPPM-08-2015-0109
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-08-2015-0109/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-08-2015-0109/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/IJPPM-08-2015-0109?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bahtiar Mohamad & Adamu Abbas Adamu & Muslim Diekola Akanmu, 2022. "Structural Model for the Antecedents and Consequences of Internal Crisis Communication (ICC) in Malaysia Oil and Gas High Risk Industry," SAGE Open, , vol. 12(1), pages 21582440221, March.
    2. Adilson Carlos Yoshikuni & José Eduardo R. Favaretto & Alberto Luiz Albertin & Fernando de Souza Meirelles, 2018. "The Influences of Strategic Information Systems on the Relationship between Innovation and Organizational Performance," Brazilian Business Review, Fucape Business School, vol. 15(5), pages 444-459, September.
    3. Robert M. Yawson & Amy K. B. Paros, 2023. "Systems Perspective of the Use of the Balanced Scorecard for Organization Development and Change," SAGE Open, , vol. 13(4), pages 21582440231, December.
    4. Jitender Kumar & Neha Prince & H. Kent Baker, 2022. "Balanced Scorecard: A Systematic Literature Review and Future Research Issues," FIIB Business Review, , vol. 11(2), pages 147-161, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijppmp:ijppm-08-2015-0109. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.