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When is a balanced scorecard a balanced scorecard?

Author

Listed:
  • Marvin Soderberg
  • Suresh Kalagnanam
  • Norman T. Sheehan
  • Ganesh Vaidyanathan

Abstract

Purpose - The Balanced Scorecard (BSC) is widely applied as a performance measurement and strategy implementation tool by organizations. Research has revealed that the term “balanced scorecard” may be understood differently by managers both within as well as across organizations implying that the performance measurement systems implemented in organizations may not be similar to the construct envisioned by Kaplan and Norton. Using Kaplan and Norton's Balanced Scorecard construct as a basis, the paper aims to develop and test a five‐level taxonomy to classify firms' performance measurement systems. Design/methodology/approach - A Balanced Scorecard taxonomy is validated using a large sample of professional accountants working in Canadian organizations. Findings - The five‐level taxonomy is used to categorize the performance measurement systems of 149 organizations. It is found that 111 organizations' (74.5 percent) performance measurement systems met the criteria to be classified as a Basic Level 1 BSC, while 61 (40.9 percent) organizations have structurally complete Level 3 BSCs, and 36 (24.2 percent) organizations have fully developed Level 5 BSCs. The paper also discusses differences between Level 1 and Level 5 BSC organizations. Research limitations/implications - While many researchers assume that organizations' performance measurement systems are similar in implementation level and use, the paper demonstrates that organizations are at different levels of BSC implementation and use, a factor that should be taken into consideration when designing empirical studies to test the efficacy of Kaplan and Norton's BSC. Practical implications - The five‐level BSC taxonomy scheme provides managers working with Kaplan and Norton's BSC with a tool to plan their implementation steps and then benchmark their progress towards implementing a fully developed Level 5 BSC. Originality/value - In developing and empirically validating a BSC taxonomy, the paper builds on and extends previous research on BSC implementation and its potential implications.

Suggested Citation

  • Marvin Soderberg & Suresh Kalagnanam & Norman T. Sheehan & Ganesh Vaidyanathan, 2011. "When is a balanced scorecard a balanced scorecard?," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 60(7), pages 688-708, September.
    • Handle: RePEc:eme:ijppmp:v:60:y:2011:i:7:p:688-708
    DOI: 10.1108/17410401111167780
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    Citations

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    Cited by:

    1. Madsen, Dag Øivind & Stenheim, Tonny, 2014. "Balansert målstyring: En kort oversikt over forskningslitteraturen [The Balanced Scorecard: A brief overview of the research literature]," MPRA Paper 65991, University Library of Munich, Germany.
    2. Muhammad Rafiq & XingPing Zhang & Jiahai Yuan & Shumaila Naz & Saif Maqbool, 2020. "Impact of a Balanced Scorecard as a Strategic Management System Tool to Improve Sustainable Development: Measuring the Mediation of Organizational Performance through PLS-Smart," Sustainability, MDPI, vol. 12(4), pages 1-19, February.
    3. Tobias Hahn & Frank Figge, 2018. "Why Architecture Does Not Matter: On the Fallacy of Sustainability Balanced Scorecards," Journal of Business Ethics, Springer, vol. 150(4), pages 919-935, July.
    4. Muhammad Rafiq & Saif Maqbool & José Moleiro Martins & Mário Nuno Mata & Rui Miguel Dantas & Shumaila Naz & Anabela Batista Correia, 2021. "A Study on Balanced Scorecard and Its Impact on Sustainable Development of Renewable Energy Organizations; A Mediating Role of Political and Regulatory Institutions," Risks, MDPI, vol. 9(6), pages 1-18, June.
    5. Dag Øivind Madsen & Blerim Azizi & Albert Rushiti & Tonny Stenheim, 2019. "The Diffusion and Implementation of the Balanced Scorecard in the Norwegian Municipality Sector: A Descriptive Analysis," Social Sciences, MDPI, vol. 8(5), pages 1-31, May.
    6. Benedicta Prihatin Dwi Riyanti & Angela Oktavia Suryani & Christine Winstinindah Sandroto & Silverius Y. Soeharso, 2022. "The construct and predictive validity testing of Indonesian entrepreneurial competence inventory-situational judgment test model," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-19, December.
    7. Dag Øivind Madsen & Kåre Slåtten, 2015. "The Balanced Scorecard: Fashion or Virus?," Administrative Sciences, MDPI, vol. 5(2), pages 1-35, June.
    8. Erland Hejn Nielsen & Steen Nielsen, 2020. "Preparing students for careers using business analytics and data-driven decision making," Economics Working Papers 2020-08, Department of Economics and Business Economics, Aarhus University.

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