The usage of balanced scorecard measures, business strategy and firm performance

Loading...
Thumbnail Image
Date
2006
Authors
Jusoh, Ruzita
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Sole reliance on financial or accounting based performance measures is inadequate in the new manufacturing environment. Increase awareness of the importance of nonfinancial performance measures in providing long-term value creation and long-term strategic focus as well as their effects on firm performance has led to several innovations in the area of performance measurement system. One of the widely known innovations in this area is called balanced scorecard (BSC) which has been originated by Kaplan and Norton in 1992. The BSC supplements the traditional financial measures with non-financial measures focused on at least three other perspectives – customers, internal business processes, and learning and growth. The main objective of this study is, therefore, to investigate empirically the extent of usage of performance measures, conceptualized as the BSC measures, within an organizational context. Also, the objective of this study is, in part, to determine whether factors such as perceived environmental uncertainty and firm size can act as antecedent variables to the BSC measures and business strategy. Specifically, this study investigated the relationship between business strategy (using Miles and Snow strategic types) and the BSC measures usage and their main and alignment effects on firm performance. The sample was obtained from 120 Malaysian manufacturing firms operating in West Malaysia. The results revealed that the usage of financial measures is still high and ranked first among the four perspectives of the BSC measures. However, the usage of non-financial measures is gaining momentum. Also, there was indication that firm size can be antecedent variable to the BSC measures and business strategy. The results of the selection approach to fit provide enough evidence for the proposition that the degree to which a firm emphasizes a given business strategy is associated with the extent to which it uses appropriate BSC measures. Besides, there is evidence suggesting that emphasizing prospector strategy and analyzer strategy and using internal business process and learning and growth measures have main effects on firm performance. The results of the interaction approach to fit only show some support for the interactive effects of prospector strategy and BSC measures on firm performance, while analyzer strategy and defender strategy did not. Finally, however, the results of the systems approach indicated that an appropriate match of all four perspectives of the BSC measures with all types of business strategies is associated with high firm non-financial performance.
Description
PhD
Keywords
Management , Scorecard , Business strategy , Firm performance
Citation