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IJPPM
60,7 When is a balanced scorecard a
balanced scorecard?
Marvin Soderberg
688 Alberta Union of Public Employees, Edmonton, Canada, and
Suresh Kalagnanam, Norman T. Sheehan and
Received August 2010 Ganesh Vaidyanathan
Revised December 2010
Accepted January 2011 Edwards School of Business, University of Saskatchewan, Saskatoon, Canada
Abstract
Purpose The Balanced Scorecard (BSC) is widely applied as a performance measurement and
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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 Nortons 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 Nortons BSC.
Practical implications The five-level BSC taxonomy scheme provides managers working with
Kaplan and Nortons 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.
Keywords Performance measurement (quality), Balance scorecard, BSC taxonomy, Control systems
Paper type Research paper
The authors would like to thank the journals reviewers for their insightful comments plus
International Journal of Productivity reviewers and seminar participants at the 2007 American Accounting Association Annual
and Performance Management
Vol. 60 No. 7, 2011 Meeting and The Performance Measurement Association Conference for their feedback. They
pp. 688-708 would also like to thank Margaret Shackell, Brooke Dobni, and Glen Kobussen for their helpful
q Emerald Group Publishing Limited
1741-0401
comments. They owe a special debt of gratitude to Bill Langdon and CMA Canada for their help
DOI 10.1108/17410401111167780 administering the survey.
write that the BSC is the most popular, least criticized and widely implemented. Given its When is a BSC
widespread acceptance and use by practitioners, the BSC is well-entrenched in the a BSC?
management accounting teaching literature (Eldenberg and Wolcott, 2005; Hilton et al.,
2007; Merchant and Van der Stede, 2007; Anthony and Govindarajan, 2007; Horngren et al.,
2010) and frequently researched by academics (e.g. Chan and Ho, 2000; Hoque and James,
2000; Lipe and Salterio, 2000; Malina and Selto, 2001; Ittner and Larcker, 2003; Banker et al.,
2004; Othman, 2008; Wiersma, 2009; Greiling, 2010). 689
Kaplan and Nortons (1996, 2001) BSC construct is a management tool that, when
correctly understood and properly implemented:
.
clearly communicates the organizations strategy to its employees;
.
allows employees to see how they contribute to the organizations strategic goals
by translating these goals into specific, measurable activities;
.
increases employees motivation by attaching well thought-out objectives and
targets to performance measures and then pays incentives when reached;
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.
enhances employees learning and accountability by measuring and providing
feedback on their actions; and
.
enables managers to monitor and update their organizations strategies as their
environments change.
In short, Kaplan and Norton (1996, 2001) designed the BSC to harness the multiple
benefits of performance measurement in order to aid organizations in implementing
their strategies. Whether the BSC, in fact, leads organizations to realize the benefits
outlined above is an empirical question. A logical precondition for research seeking to
ascertain whether organizations implementing the BSC have realized these benefits is
that the construct is consistent with that proposed by its originators. Is there
consistency among the organizations that have implemented the BSC? This empirical
question is the impetus for our research.
The question is prompted by the fact that despite the widespread literature on the
BSC, there is little agreement regarding what a Balanced Scorecard is. Lawrie and
Cobbold (2004) report that the most frequent question posed on a performance
measurement discussion board was What is a Balanced Scorecard?. As an example
of confusion among practitioners, a CMA Canada study (CMA Canada, 1999) found
that the term balanced scorecard may be understood differently by managers across
organizations or even those in the same organization. Lawrie and Cobbold (2004) note
that while Kaplan and Norton (1996, 2001) were effective in motivating managers to
adopt a Balanced Scorecard and describing how to use it, they were not helpful with
respect to operationalizing the BSC. Marr (2005) agrees with this statement, noting that
organizations have different interpretations of what a BSC is, while Franco-Santos et al.
(2007) argue that there is a lack of consensus among both managers and researchers on
what constitutes a BSC. The implication is that the transformation from concept to tool
is non-trivial and challenging for practitioners and researchers alike.
Why should managers lack of agreement of what is a BSC concern researchers?
Researchers studying the BSCs efficacy across firms are vulnerable to a potential
confound if they do not control for differences in implementation and use across firms.
Franco-Santos et al. (2007) argue that this potential confound is retarding progress in the
field of performance measurement as it limits the comparability and generalizability of
IJPPM research studies. This paper seeks to establish the existence of this confound by
60,7 empirically demonstrating that there are differences in firms BSC implementation and
use. Awareness of these differences should help researchers control for these in future
BSC studies and thereby enhance progress in the field of performance measurement.
Why should practitioners care if managers have differing conceptions of a BSC?
Bourne (2008) and Pforsich (2006) argue that one reason firms are not getting the full
690 value from their BSCs is that they are not implemented and used properly, which is
largely due to the difficulty managers have in properly operationalizing Kaplan and
Nortons BSC. The aforementioned CMA Canada study (CMA Canada, 1999) reported
that many managers believe that any performance measurement system that includes
both financial and non-financial measures, reported across multiple dimensions, is a
BSC. More recently, Bourne (2008) noted that due to the newness of the field of
performance measurement some firms devised their BSCs by simply taking their
existing key performance indicators and then divided these into four perspectives. The
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existence of such disparate understandings of the BSC among managers points to the
need for a taxonomy of Kaplan and Nortons BSC construct. Such a BSC taxonomy
would provide managers a common language, which they can use to ascertain where
their organization is relative to Kaplan and Nortons BSC construct, and what they still
need to do to reach full implementation of a Kaplan and Norton BSC.
This study develops a five-level taxonomy that operationalizes Kaplan and Nortons
BSC construct and then applies this BSC taxonomy to a large sample of Canadian
firms. There have been cross-sectional studies of BSC usage in Austria, Switzerland,
Germany (Speckbacher et al. 2003), Norway (Stemsrudhagen, 2004), and the USA
(Marr, 2005), but to our knowledge there has not been a similar study of BSC usage in a
broad cross-section of Canadian firms. While the Canadian context is similar to the
American context, there are subtle differences between the countries (Boys et al., 2005)
that may impact the implementation and use of the BSC, including differing laws and
regulations, such as labor and tax laws that impact compensations systems, differing
financial reporting standards which impact the amount and type of financial data
collected, managers attitudes towards governmental intervention in the economy, and
a higher level of social support systems.
The rest of the paper is organized as follows: The next section of the paper
operationalizes the unique attributes of Kaplan and Nortons Balanced Scorecard into a
taxonomy and introduces the studys research questions. The paper then discusses the
research methods, presents the results, and concludes with a discussion of the studys
findings.
Firms that have a BSC containing each of the three structural elements and the two use
elements are considered to have a fully developed BSC.
Structural attributes of the BSC When is a BSC
Kaplan and Nortons BSC has three key structural features: a BSC?
(1) its measures are derived from strategy;
(2) there is balance among measures; and
(3) the measures are causally linked.
Measures derived from strategy. Given that the primary purpose of the BSC is to help
691
implement strategy, Kaplan and Norton (1996, 2001) argue that its metrics must
measure those activities which lead to strategy implementation. This idea is consistent
with Nanni et al.s (1992) integrated performance measurement system wherein
strategy drives the selection of measures. Similarly, McNair et al. (1990) strategic
measurement system framework also emphasizes that the measures must have a
strategic focus. This leads us to posit that if the organizations performance measures
are not derived from its strategy, the organizations performance measurement system
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Those Level 1 BSC organizations whose measurement systems only include the
attribute of balance are classified as Level 2a BSC organizations, while those Level 1
BSC organizations whose measurement systems only include the attribute of causal
linkages are classified as Level 2b BSC organizations. Ideally, an organization would
like its performance measurement system to have both balance and causal linkages
attributes. Organizations with BSCs containing both attributes balance and causal
linkages attributes are classified as Level 3 BSC organizations these organizations
are considered as having structurally complete BSCs. Our decision to define Levels 2a
and 2b separately from Level 3 was due to the fact the literature on implementation of
the BSC in organizations does not provide unambiguous guidance on the issue of
whether balance and causal linkage are independent concepts. Consequently, we have
chosen to leave it as an empirical question to verify or refute the assumption.
measurement systems are structurally complete and are used appropriately to steer the
organization towards the fulfillment of their strategic plans.
The BSC taxonomy can be summarized as follows (see Figure 1); each level denotes
a progressively more complete implementation of the BSC by an organization:
.
Level 1 BSC performance measures are derived from the organizations strategy;
.
Level 2a BSC Level 1 plus the attribute of balance;
.
Level 2b BSC Level 1 plus the attribute of causal linkages;
.
Level 3 BSC Level 1 plus the attributes of both balance and causal linkages;
.
Level 4a BSC Level 3 plus the attribute of double-loop learning;
.
Level 4b BSC Level 3 plus the attribute of linkage to compensation; and
.
Level 5 BSC Level 3 plus the attributes of double-loop learning and linkage to
compensation.
Figure 1.
BSC classification scheme
IJPPM Research questions
60,7 There are two research questions that we investigate in our study. First, we ask What
attributes of a Kaplan and Norton BSC are present in organizations performance
measurement systems?. This question speaks to the previously noted disparity in the
understanding of the BSC concept by managers in various organizations. Using
the five-level classification scheme to classify organizations that have implemented the
694 BSC, we are able to provide a description of the nature of the BSC implementation in
our sample of organizations. The act of classifying the firms participating in our
research enables us to examine the characteristics of the organizations at each level of
BSC implementation as well as the differences between organizations across various
levels of BSC implementation. Thus our second research question asks, What are the
characteristics of organizations that have adopted BSCs of a particular level and how
do these organizations differ when compared to organizations with different levels of
BSC adoption?.
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Although our study is similar to that of Speckbacher et al.s (2003) study in that both of
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our studies develop and apply a BSC taxonomy to categorize organizations that have
implemented BSCs, the studies differ with respect to their classification schemes. Our
studys taxonomy differs from the typology employed in the Speckbacher et al. (2003)
study in three ways: Firstly, we do not believe Speckbacher et al.s Type I BSC captures
the essence of Kaplan and Nortons BSC. Speckbacher et al.s (2003, p. 363) Type I BSC
emphasizes the mix of financial and non-financial measures an attribute that this
study labeled balance, whereas we define our Level 1 BSC as a performance
measurement system that derives its measures from strategy. We believe that our
definition of a Level 1 BSC is superior as it is the link to strategy that is the defining
feature of Kaplan and Nortons (1996, 2001) Balanced Scorecard. In addition, the
Speckbacher et al. Type I BSC includes both our Level 1 and Level 2a classifications.
This leads to a second key difference; our studys BSC taxonomy is a richer
operationalization of Kaplan and Nortons BSC. For example, the Level 2a classification
operationalizes balance as more than just financial and non-financial measures; it also
includes outcome and driver measures.
The Type II BSC of the Speckbacher et al. (2003) study introduces cause and effect
relationships to enrich the BSC implementation, which appears to be similar to our
Level 2b BSC. Our BSC taxonomy views balance and causal linkages as being
independent of one another, whereas Speckbacher et al.s scheme indicates a sequential
progression from balance (in terms of financial and non-financial measures) to causal
linkages. Their Type II BSC is equivalent to our Level 3 BSC. Finally, the Type III BSC
in the Speckbacher et al. study, which focuses on the use of the BSC for implementation
of strategy, resembles our Level 5 BSC. Notably, however, it differs from our Level 5
BSC in one important way; the concept of double-loop learning is absent from their
classification scheme.
Research methodology
This research uses descriptive research methods for which a large survey is considered
the most appropriate data gathering methodology (Babbie, 1990). We developed a
web-based survey consisting of seven sections. In the first four sections of the survey
participants were asked to respond to questions about the structural and use attributes
of performance measurement system, which allows us to classify organizations as
non-BSC and Level 1 through five BSC organizations. Specific questions (summarized
IJPPM in Figure 2) were used as gate(s) to assist in classifying the responding organizations.
60,7 The fifth section of the survey invited participants to self-report their organizations
performance along five dimensions:
(1) customer satisfaction;
(2) product/service quality;
696 (3) return on equity (ROE);
(4) sales margin; and
(5) market share.
Sections six and seven of the survey sought the organizations demographics as well as
optional respondent information. A multi-step process was used to develop the survey
including pre-testing it at different stages, which allowed us to develop a survey that
was clear and easily understood by respondents.
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Of the 2,297 e-mails sent on our behalf by CMA Canada, 79 of the e-mails were
undeliverable, leaving a sample size of 2,218.
An e-mail, along with a cover letter, was sent by CMA Canada to all eligible CMAs
asking individuals to respond to the web-based survey. Subsequent to this, CMA
Canada sent two reminder e-mails to all 2,218 potential respondents (as we had no
knowledge of the identities of the respondents). We received 152 complete survey
responses, but three responses were from not-for-profits, which left 149 useable
responses resulting in a 6.7 percent response rate.
The survey method poses some threats to the validity and generalizability of our
findings. For example, the low response rate raises the issue of non-response bias.
Unfortunately, given that we did not have access to the universe of respondents and
that the survey was administered by a third party, it was not possible to identify the
non-respondents, or to fully ascertain if there were multiple respondents from the same
firm. Fifty out the 152 respondents provided their contact information including the
name of the organization. Although one organization is featured twice in this list the
respondents are from different business units, one located in Central Canada and the
other located in Western Canada. We mitigated the risk that more than one individual
in the same organization (business unit) may complete the survey by requesting CMA
Canada only send a survey to the most senior ranked individual in that organization.
An analysis of the early and late respondent groups revealed no significant differences.
However, when compared to the survey population, the respondent group is
significantly different in the following ways. We found that our sample consisted of a
When is a BSC
a BSC?
697
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Figure 2.
Alignment of survey
questions to the Balanced
Scorecard classification
scheme
IJPPM higher proportion of controllers (p # 0:001) and a lower portion of managers (p # 0:10)
60,7 and supervisors (p # 0:005). Moreover, the sample consisted of a higher proportion of
manufacturing organizations (p # 0:001).
Results
Research Question 1
698 To answer the first research question we used our five-level taxonomy to classify each of
the responding organizations. We classified 111 of the 149 organizations (74.5 percent) as
Level 1 BSC organizations they had a well-developed strategy and their performance
measurement systems were derived from their strategies. The remaining 38
organizations (25.5 percent) were classified as non-BSC organizations. We further
analyzed the 111 Level 1 BSC organizations with respect to the presence of other
structural and use attributes. Of the 111 Level 1 BSC organizations, only 16 (10.7
percent)[2] did not have any additional BSC elements in their performance measurement
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Figure 3.
BSC classification results
organizations (24.2 percent) contained both double-loop learning and tie-in to When is a BSC
compensation. This means that four (40-36) organizations are classified as Level 4a a BSC?
BSC organizations, meaning that the performance measurement systems of these are
structurally complete and contain only the double-loop learning attribute of BSC use.
Nineteen (55-36) organizations are classified as Level 4b BSC organizations, meaning
that the performance measurement systems of these are structurally complete and
contain only the linkage to compensation attribute of BSC use. The 36 organizations 699
whose BSCs contained both use elements consequently are Level 5 Level 5 BSC
organizations with fully developed BSCs that exemplify the BSC construct as
developed by Kaplan and Norton.
Research Question 2
To answer Research Question 2, we examined differences between the 111 BSC and 38
non-BSC organizations, and between the BSC organizations classified at different
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60,7
700
Table I.
IJPPM
Proportion of
agree/strongly agree or
organizations responding
The only significant difference we found pertained to the ROE measure. Only 8 percent
of the BSC organizations rated themselves as having a below average ROE when
compared to rivals, whereas 29 percent of the non-BSC organizations rated themselves as
IJPPM having a below average ROE. This difference is significant (p # 0:001); however,
60,7 readers must be careful when drawing conclusions from self-assessed performance data.
The lack of significant differences on the other dimensions of comparison might be due
to the construct validity problems. Customer satisfaction or product quality are difficult
to measure for organizations and use for comparing against competitors. Respondents
might have had this in mind when answering the questions on the survey. Sales margin
702 and market share are performance variables closely correlated in principle with customer
satisfaction and consequently it should not be a surprise that our data failed to identify
significant differences on these performance measures. Overall, we find some important
differences between BSC and non-BSC organizations, as well as between organizations
placed at the two extreme levels within the BSC taxonomy (Level 1 and Level 5).
(2004), we examine if the results of our study are substantively different from those two
studies. First, we applied the Speckbacher et al. (2003) classification scheme to our
survey data. Employing their three-level typology led us to classify 75 organizations
(50.3 percent) as BSC organizations; this number is much lower than the 111 (74.5
percent) according to our classification scheme. There are two main reasons for this
difference. First, our criteria for labeling an organizations performance measurement
system as a Balanced Scorecard is that the measures should be derived from strategy,
whereas Speckbacher et al.s criteria include the additional component of balance.
Second, in their study, the respondents self-classified themselves as BSC organizations,
whereas in our study, we labeled organizations as BSC or non-BSC based on their
responses to specific questions. However, if we were to use only those respondents that
self-classified themselves as BSC organizations, our numbers are very similar to theirs
(23 percent versus 24 percent). Interestingly, a higher proportion of their BSC
organizations are Type I, whereas ours are Type III. We present a comparative
summary of our results versus Speckbacher et al.s using their typology in Table II.
A critical difference between the two studies is the use of the term balanced
scorecard in the survey questionnaire. Speckbacher et al.s (2003) study explicitly used
the term balanced scorecard in the survey, which we did not. In order not to bias the
results, we positioned the following question near the end of the survey: Do you think
This study
Respondents who indicated
their performance
measurement system was a
Speckbacher et al. (2003) All respondents BSC
Percentage Percentage Percentage Percentage Percentage Percentage
of BSC of all of BSC of all of BSC of all
n users respondents n users respondents n users respondents
Type 1 21 50 12 14 19 9 2 6 1
Table II. Type 2 9 21 5 6 8 4 0 0 0
Comparative summary of Type 3 12 29 7 55 73 37 33 94 22
results 42 100 24 75 100 50 35 100 23
your performance measurement system is a balanced scorecard?. Finally, and more When is a BSC
importantly, respondents to Speckbacher et al.s survey self-identified themselves as a a BSC?
BSC organization, whereas this study used the respondents answers to several survey
questions in order to classify the level of implementation of their performance
measurement systems. Given these differences, we believe that our study is not a
replication of Speckbachers study, but rather it is an improved approach to reach a
shared research objective of better understanding what a BSC is. 703
One interesting result was the answer to the final question in the survey where we
asked respondents whether they believed that their organizations performance
measurement system was a balanced scorecard. As classified by the BSC taxonomy,
only 41 percent of the BSC organizations indicated they thought they had a BSC,
whereas 16 percent of the non-BSC organizations thought they had a BSC; this
difference is statistically significant (p # 0:01). Although 41 percent appears to be a
low number of organizations self-identifying as BSC organizations, it is comforting to
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Conclusion
Kaplan and Norton (1996, 2001) argue that the Balanced Scorecard is not just another
performance measurement system, but rather it is a holistic strategic performance
measurement and management system a tool that management can use to assist the
organization in reaching its vision/mission and strategy. They argue that firms
IJPPM contemplating implementing a BSC require commitment from senior management and
60,7 that unless the firms performance measurement system is tied to its strategy, the
potential benefits of the BSC are unlikely to be realized. Further, organizations that fail
to link performance measures in cause and effect relationships, or have measurement
systems with a paucity of non-financial measures, are also likely to be unsuccessful.
While the performance measurement community awaits empirical findings that
704 support the presence of these benefits in the organizations that have implemented
advanced BSCs, there is an implicit assumption in many empirical studies that all
firms that have implemented a BSC, have done so in similar ways. Although there is
research showing there is no agreement as to what a BSC is, or when an organization
might be considered as a BSC organization, no research has sought to empirically
validate this assumption. Our research attempts to address this gap in the performance
measurement literature. We developed a taxonomy for describing organizations with
BSCs that do not fully conform Kaplan and Nortons BSC construct. The study then
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If firms were clustered at any particular level of BSC implementation, this would
inform future researchers regarding what may be expected with respect to the level of
BSC implementation in organizations. If the characteristics of the firms differed
depending on the level of BSC implementation, this too would be relevant to
researchers since testable hypotheses about the effect of the BSC on performance could
be localized at a given level of BSC implementation.
Based on our studys BSC taxonomy we found that 24.2 percent had fully developed
BSCs (Level 5), and an additional 16.8 percent had structurally complete BSCs with at
least one use attribute (Level 3 plus 4a and 4b). We found that senior management
involvement in the implementation process was higher in BSC firms; a smaller number
of BSC firms reported their performance measurement systems as being contaminated
with inappropriate measures and/or measures not linked in cause-effect relationships;
more BSC firms reported explicit links between traditional management controls
systems like the budget and the BSC; more BSC firms tended to view their performance
measurement systems as a success; and finally, fewer BSC firms tended to perceive
their ROE performance as inferior to their competitors. These results provide some
indirect support to the conclusion that BSC firms are more likely to experience the
benefits envisioned by Kaplan and Norton from adopting the BSC, since the
characteristics of comparison between the BSC and non-BSC firms are very likely
correlated with success. For example, it is difficult to contemplate how a firm can
achieve success in implementing strategy and monitor performance without the
attention and commitment of senior management. Nonetheless, we remind the reader to
interpret this finding with caution. Improved organizational performance is likely a
function of several factors; a performance measurement system aligned with the
organizations strategy may be just one of the factors (Bourne et al., 2005). Moreover,
there may be significant differences among the performance measurement systems of
sample firms; these differences might pertain to the actual performance metrics, the
nature of the incentives tied to performance, the length of time BSC has been in place in When is a BSC
the organization and the acceptance of the BSC within the organization. a BSC?
Our studys results reveals some clustering along the five levels of BSC
implementation, with about a third of the sample firms with a BSC reporting a Level 5
BSC implementation. When we examine the firms in each level it would seem that the
major differences are between Level 1 and Level 5 organizations. The most marked
difference being for the senior management involvement, inappropriate performance 705
measures and/or measures not linked in cause-effect relationships, and success of the
performance measurement system. These results seem to make sense. If organizations
wish to progress to higher levels of BSC implementation greater involvement of senior
management is needed; and as organizations strive to implement a BSC with all of the
nuances of the Kaplan and Norton construct, there is a greater requirement for the
organization to ensure that traditional control systems like the budget is made to
articulate with the BSC. The small sample sizes in each cell precluded us from carrying
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out tests of significance for differences (except for the Level 1 and Level 5
organizations). This study points to the need for further research in the area of
investigating differences between organizations with lower level BSCs and those with
fully complete BSCs. Future studies may focus on BSC use in other countries and in
not-for-profit industries (c.f. Greiling, 2010).
The studys primary contribution for practitioners is its description of current
performance measurement system practices in Canadian organizations, which allows
managers to guide and gauge their organizations BSC implementation progress as
compared to the BSC taxonomy.
This study is not without its limitations. A sincere attempt was made to ensure that
the survey link was not sent to multiple professional accountants employed in a single
organization (business unit); nonetheless it is possible that more than one person in an
organization received and answered the survey. This could have occurred if the
individual had changed employers and not updated their member profile, or if the
person receiving the survey link forwarded it to one or more people in the organization.
If so, then each response cannot be considered to be an individual organization. The
anonymity of the survey meant that the possibility of more than one response from an
organization could not be verified.
A second limitation is that the low response rate may limit the generalizability of the
results. Added to this is the fact that our sample is somewhat biased in terms of the type
of respondents (e.g. higher proportion of controllers) and the industries (bias towards
manufacturing organizations). Nonetheless, the absolute number of responses is large
enough to provide results that offer some consistency and validation of the taxonomy. A
final potential limitation may be the lack of clarity of certain questions or specific terms
used in the questionnaire. We attempted to mitigate this by pre-testing the survey with
several academics and three professional accountants before finalizing it.
Notes
1. Kaplan and Norton (2001, p. 375) later reported that firms should typically have 25 measures
divided among the four perspectives: 22 percent in the financial perspective, 22 percent in the
customer perspective, 22 percent in the learning and growth perspective, and 36 percent in
the internal business process perspective.
2. All percentages are calculated based on the 149 responding firms.
IJPPM 3. We also found a greater presence of a cross-functional involvement in the BSC organizations
compared to the non-BSC organizations (not reported in Table I).
60,7
4. We compare only the Level 1 and Level 5 BSC organizations; Level 1 represents a basic BSC,
whereas Level 5 represents a fully developed BSC.
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Banker, R.D., Chang, H. and Pizzini, M.J. (2004), The Balanced Scorecard: judgmental effects of
performance measures linked to strategy, The Accounting Review, Vol. 79 No. 1, pp. 1-23.
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