Summary
Belief that the balanced scorecard (BSC) represents one of the most significant developments in management accounting, and deserves rigorous research attention, is widespread. However, this review of the extant practitioner and research literatures indicates that: 1. there has been little examination of the factors associated with the adoption of the BSC, and 2. there still is the need to demonstrate that the adoption and implementation of the BSC is associated with improved financial performance. Research was recently completed specifically examining these two BSC issues. The preliminary tests on a subset of the overall sample did not reveal significant performance improvements in return on sales or return on assets after implementation. However, because a number of adopting firms began implementation after 2003, there was insufficient data to draw any firm conclusions about post-implementation performance.
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The Balanced Scorecard: To Adopt or Not to Adopt?
Over the past decade, the Balanced Scorecard (BSC) has become a widely advocated management tool associated with "best practices." As a management tool, the BSC provides an enhancement to the traditional management planning and control system by looking beyond financial measures to incorporate non-financial measures. According to Kaplan and Norton, the developers and staunch advocates of the BSC:
"The name reflected the balance between short- and long-term objectives, between financial and non-financial measures, between lagging and leading indicators, and between external and internal performance perspectives." (Robert S. Kaplan and David P. Norton, The Balanced Scorecard, Boston, MA: Harvard Business School Press, 1996 p. viii.)"The first BSC-type system, developed by General Electric in the 1950s, was designed to be a performance measurement system, but the BSC has now evolved into a strategic management tool critical to an organization's planning process. The BSC requires that senior management translate the firm's vision and strategy into four performance perspectives: financial, customer, internal business, and learning and growth (see Exhibit 1).A recent Bain & Company sur...See the full content of this document
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