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Transcribing the balanced scorecard into system dynamics: from idea to design

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Listed:
  • Steen Nielsen
  • Erland Hejn Nielsen

Abstract

The purpose of this paper is to show how a system dynamics modelling approach can be integrated into the balanced scorecard (BSC) for a case company with special focus on the handling of causality in a dynamic perspective. The BSC model includes five perspectives and a number of financial and non-financial measures. The overall idea of BSC is to make the strategy operational, as proposed by Kaplan and Norton (2007) and to use the strategy for simulation. Our results indicate that a company may gain great insight from simulation studies. The hypothesised model may be used as the first step in quantifying the cause-and-effect relationships of an integrated BSC model. Including dynamic aspects of BSCs into the discussion is only in its infancy, so the aim of our work is also to contribute to both scholars' and practitioners' general understanding of how such delayed dynamic effects propagate through system and time.

Suggested Citation

  • Steen Nielsen & Erland Hejn Nielsen, 2013. "Transcribing the balanced scorecard into system dynamics: from idea to design," International Journal of Business and Systems Research, Inderscience Enterprises Ltd, vol. 7(1), pages 25-50.
  • Handle: RePEc:ids:ijbsre:v:7:y:2013:i:1:p:25-50
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