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Procedia Economics and Finance 5 (2013) 413 422

International Conference on Applied Economics (ICOAE) 2013

Balance Scorecard and Performance Measurement in a Greek

Industry
Nikos Kartalis*, John Velentzas and Georgia Broni
TEI of Western Macedonia, Koila, Kozani,50100, Greece

Abstract

The aim of this paper is to deal with the analysis of the concept of Balance Scorecard and performance
measurement in a Tourism company using the case study method. This paper analyze the theoretical and
practical approach of strategic Balance scorecard tool, analyzing the advantages and disadvantages, areas that
can be applied and the procedures followed in hierarchical order when applied to an industry. The conclusion
is that the Balance Scorecard method (BSC) can be applied as a performance measurement to an industry in
Greece.

Authors.
Published
by Elsevier
B.V. Open
2013
2013The
The
Authors.
Published
by Elsevier
B.V.access under CC BY-NC-ND license.
Selection
peer-review
underunder
responsibility
of the Organising
CommitteeCommittee
of ICOAE 2013
Selectionand/or
and/or
peer-review
responsibility
of the Organising
of ICOAE 2013.

Keywords: Accounting; Management Accounting; Balance Scorecard;

1.

Literature Review

The Balance Scorecard method was introduced by Kaplan and Norton(1992, 1996), it has been successfully
implemented into a wide range of areas such as manufacturing companies, government units, nonprofit
companies, service organizations and other industries around the world (Said, et.al., 2003.,Banker, et.al.,

* Corresponding author. Tel.:0030 24610 68063.

E-mail address:kartalisdn@gmail.com.

2212-5671 2013 The Authors. Published by Elsevier B.V. Open access under CC BY-NC-ND license.
Selection and/or peer-review under responsibility of the Organising Committee of ICOAE 2013
doi:10.1016/S2212-5671(13)00049-X

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Nikos Kartalis et al. / Procedia Economics and Finance 5 (2013) 413 422

2004;; Zopiatis, 2010). Many researchers as Lipe & Salterio, (2000), in their study provides evidence that
despite the Balance Scorecard (BSC) focus on unique, non-financial, division-specific performance measures,
individuals still evaluate performance based on common, financial measures. Moreover, many researchers
argue that the Balanced Scorecard is a major performance measurement system for many industries because
provides a broad performance measurement of both financial and non-financial perspectives (Yap,et.al. 2005;
Papalexamdris, et. al 2005; Braam & Nijssen, 2004). Furthemore, Frigo & Krumwiede, (2000) said that
Balance Scorecard method has experienced an increase in popularity as a performance measurement system
for translating an organizations mission into goals, aligning individual and organizational goals, actions and
performance measures, and measuring processes related to goal achievement. In addition the balanced
scorecard (BSC) is one of the most highly rated management tools today ( Atkinson and Epstein 2000; Frigo
and Krumwiede 2000; ).
Andra, G. and Robert N.(2006) said that Balance Scorecard (BSC) can help organizations achieve better
results when compared to traditional performance measurement system. Many researchers (Fletcher & Smith,
2004; Rickards, 2007) have criticized the limitations of Balance Scorecard (BSC), such as BSC applies a large
number of variables that create complex optimization problems. Moreover, Banker, Potter, & Srinivasan,
(2000) said that the Balance Scorecard (BSC) does not provide a common scale of measurement, and it lacks
a standardized baseline or benchmark to compare performance. Furthermore, Rickards, (2007) said that the
Balance Scorecard (BSC) does not have a mathematical model or a weighting scheme. In addition, Banker et
al., (2004); Neves & Lourenco, (2008) argues that the BSC does not have a comprehensive index to review
the interaction between measures of performance.
In addition several studies as Chen & Chen, (2007); Eilat, Golany, & Shtub, (2008); Najafi, Aryanegad,
Lotfi, & Ebnerasould, (2009); Rickards, (2007) have been conducted to solve these limitations of BSC, and
researchers have found that data envelopment analysis (DEA) can complement the complexities of BSC.
2.Research Method
The research approach adopted case study involving a business company in Greece. A case study is an
empirical inquiry that investigates a contemporary phenomenon within a real-life context where the
boundaries between phenomenon and context are not clearly evident, and in which multiple sources of
evidence are used (Yin, 1994). Yin (1994) argues that case study research represents the intersection of
theory, structures and events.
In qualitative methods, including case research, coding represents another tool to support researchers during
early analysis. Codes are especially useful tools for data reduction purposes and having a coding scheme in an
appendix helps to facilitate a replication or an extension to a given study and allows the reader to see the
logical link between the theoretical model and the codes.
In this way will be studied and evaluated the effectiveness of the performance measurement balanced card as
well as the possible defects. Saunders et al. (2007), sets the case study as an "empirical research" that focuses
on a specific incident of "real-life" framework for an organization.
The approach selected for this study is a descriptive case study, in order to determine whether or not existing
theory maintained or extended (Saunders et al., 2007). In addition, as reported by the Collis and Hussey
(2003), a case study helps the researcher to gain a clearer picture of the dynamics within a single environment.
Finally, using a case study, the researcher can gather critical information to formulate a detailed "analysis of
success factors" in evaluating and improving .

Nikos Kartalis et al. / Procedia Economics and Finance 5 (2013) 413 422

2.1 Quality research methods

The research outlined the application of BSC to a limited company (SA) located in, Serres, Greece This
company operates in heavy industry sector. The industry have more than 1000000 euro earnings and have
more than 200 employees..
The first phase involved interviews with managers at various levels of decision making. A number of
managers in each department were interviewed, with each of the interviews lasting two hours on average. The
interview questions concerned management and procedures followed in performance evaluation. It was
understood by the interviewees that the main thrust of the research was about using Balance Scorecard. The
interaction between interviewer and interviewee at times led to results that could not have been predicted.
Some flexibility in the asking of questions sometimes times led to the interview being extended, sometimes
lasting over two hours.
In addition an interview has been set with the Financial Director of the industry and the questions was about,
the environment, the challenges and processes of organization. Advantages of semi-structured interviews
perhaps the most basic advantage of semi-structured interview is the trans-active (interactive) character of
(Ritchie and Lewis 2003). This structure ensures interview immediacy and freedom in his reply when,
outlining not only the answers but also the manner in which it was given, impressing many times the
personality and experiences. Furthermore this structure allows the flow of the interview should be determined
by the answers and moods of when. Finally, the use of semi-structured interview ensures contact face to face
avoiding possible incomplete understanding of the subject .
Managers working throughout the year on behalf of the company, while the remaining staff of this work in the
context of seasonal employment fluctuations in presenting staff depending on the season. This company
although that exists in the field of industry for over four decades has changed ownership in recent years,
which makes it a very interesting case study of the application of BSC. Hence the need is reasonable, to
measure the effectiveness of the methods used so far, to achieve the strategic objectives, with the use of a
strategic tool such as BSC. The questionnaire was summoned to answer the management and staff of the
company consists of four aspects in order to accommodate the BSC: customers, innovation, Learning
Development Clients internal processes & initially applying a specially designed questionnaire was answered
by executives of the company and its customers. The questionnaire included all necessary measurements
taking into account all the parameters.
The interviews are divided into three categories: Structured, semi-structured, Unstructured. According to the
Saunders et al. (2007) structured are those carried out by an official and standard set of predefined questions.
The semi-structured and unstructured interviews are conducted without having to follow a restrictive form of
allowing a "flow of discussion" between the two parties, in order to serve the purposes and objectives of the
study. The interviews are considered the most valuable research tools and are used predominantly in
qualitative primary data collection method by providing a rich source of material. Taking into account the
properties and parameters of each interview format for this work was considered the appropriate use of semistructured interview format.

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3.Results
The first step in the development of research is the creation of S.W.O.T Analysis. Using appropriate
questionnaires and interviews with the managers of the company. The results shown in table 1 below.

EXTERNAL

Internal

Table 1. S.W.O.T ANALYSIS

Positive
Strengths
Positive internal aspects which depend on the
same business and may be used

Negative
Weaknesses
Positive internal aspects depend on the same
business (largely) need improvement

S1 long presence
S2 Reputation and prestige
S3 Cooperation with major commerce agencies
S4 Competitive prices
S5 Facilities
S6 Innovating products
S7 Product Quality
S8 Experienced personnel
S9 Promotion

W1 Uncertainty
W2 State deficit
W3 Industry deficit
W4 employee uncertainty
W5 Old facilities need renovating
W6 Sale in Greece
W7 High cost
W8 past Debts

Opportunities
Positive external aspects that are not controlled
by the company but may exploit.

(Threats)
Negative external aspects that are not
controlled by the company, but they can
minimize their impact.

O1 Exports
O2 Price reduction
O3 Area development
O4 Wage cost
O5 Government grants to improve facilities
O6 staff appraisal systems Optimization
O7 Increased sales,
O8 the economic crisis works like ' incentive '
to employees to perform better to keep the
positions

T1 Bankrupt
T2 Country's Economic recession
T3 International economic crisis
T4 tax increase
T5 Negative sales
T6 Lack of Credits
T7 Competitive companies
T8 Liquidity
T9 Economic uncertainty

The S.W.O.T. Analysis recorded above the strengths, weaknesses, opportunities and threats in a industry
company. All the information collected to establish the strategic tool auto illustrating the aspects that,
according to the respondents, characterize and shape the profile of that undertaking.

Nikos Kartalis et al. / Procedia Economics and Finance 5 (2013) 413 422

3.1 Swot matrix

The S.W.O.T Analysis constitute the source to set up the S. W. O. T Matrix. In this step the data collected are
combined between them, taking into account in critical thinking. Specifically, the data from every aspect of
primitives with appropriate elements of another dimension to produce a combination of
Possibilities/Opportunities (S/O): according to the possibilities of undertaking that can take advantage of
existing opportunities to improve even more Weaknesses/Opportunities (w/o): in accordance with the
company's weaknesses that can take advantage of existing opportunities to correct the negative aspects of
Opportunities/threats (S/T) : According to the company's capabilities that can prevent any threat, even to work
positively Weaknesses/threats (W/T): in accordance with the company's weaknesses that can reduce the
impact of threats the strategic objectives that will arise can be broken down into four individual aspects of
BSC depending on what fits best with the table 2 below.
Table 2.SWOT MATRIX
Research and Learning
x
x
x
x
x

(W6/O1) Alternative Sales

(W4/O6) recruitment process
(S6/T5) innovating products
(S9/O6) staff Optimization
(S7/O1) exports

Internal jobs
x
x
x
x
x
x
x

W1/O7) guarantees to employees since the increase of Sales

(S9/O7) capture large market share
(W1/O3) creation of new jobs
(W1/T1)un confidence among company
(S9/T3) change the picture for competitors
(W5/O5) Renovation of old facilities
(W2/O8) payroll Renegotiation

Customs
x
(S1/T4) Adaption of new era
x
(S2/O7) Holding strong name for increasing sales
x
(S9/O2) advertising for the change prices
x
(S3/O2) association with the stands advertising business view

Finance

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Nikos Kartalis et al. / Procedia Economics and Finance 5 (2013) 413 422

x
x
x
x
x

(S5/O5) use of Government grants to improve product facilities

(W3/T5) Change of company profile
(W6/T6) Opening to new investors and customers
(W8/T2) debt settlement
(W7/S4) Adjustment cost of services

3.2 Hierarchical analysis of four aspects (Analytic Hierarchy Process-AHP)

After the creation of S. W. O. T Matrix, the basis of choice of respondents, we create the hierarchical analysis
and delineation of these options. This process was attempting to four folds and which of these are most
important in relation to the other. Cost gravity pair compared to the first step of a hierarchical analysis of
four objectives the researcher is asked to construct a table view of respondents ambiences.
Table 3.
Step 1

Finance
1
2
1/4

Finance
Customers
Internal Jobs
Research
and
Learning
Total

Customers
1/2
1

Internal Jobs
4

Research and
Learning
3
3
1/4

1/3

1/3

1/3

3.58

2.08

5.58

4.58

3.3 Adaptation of pairs

In the second step of the hierarchical analysis to estimate the following table, divided by the price of each pair
with all of the corresponding aspect. After calculating the adjusted pair table series is the calculation of the
averages of the values of this table to calculate the allocation and distribution of preferences of the
respondents. .Average rate was calculated by dividing the total of the custom with the crowd ( Table 4).
Table 4.Adjustment
Step 2
Finance
Customers
Internal Jobs
Research and
Learning
Total

Finance
0.279
0.558
0.069

Customers

Internal Jobs

Research and
Learning
0.655
0.072
0.054

0.240
0.480
0.120

0.716
0.044
0.179

0.472
0.288
0.105

0.092

0.158

0.059

0.218

0.131

1.000

1.000

1.000

1.000

1.000

3.4 Calculation of averages (m)

The third step in the AIR is the adjustment method of calculated averages in the combinations. This is
accomplished by multiplying each with the corresponding average compare aspects of first step 1 (Gravity
Pair Table). Itself creates the following table that shows the values of the custom in comparisons through term
of every aspect. whether the results are consistent. (Step 3)
Table 5 Average Adjustment
Finance
0.472

Customers
0.236

Internal Jobs
1.888

Research and Learning

1.416

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Nikos Kartalis et al. / Procedia Economics and Finance 5 (2013) 413 422

0.576
0.026
0.043
1.117

Total

0.288
0.026
0.043
0.593

0.072
0.105
0.043
2.108

0.095
0.026
0.131
1.668

Rating and cohesion measures to calculate the fourth and last step required both the calculation of scores
collected by each one of the four aspects, as well as the calculation of the corresponding cohesion measures
which support and show how consistent the results

Table 6
STEP 4

Degree

Finance
Customers
Internal Jobs
Research and Learning

Measurement

0,472
0,236
1,888
1,416

2,366
2,516
1,116
1,177
1,792

Average

To check the validity and consistency of results, but also to examine whether the sample was homogeneous,
we need to estimate the number of overall coherence (Consistency). This number should not exceed 0.10
(10%) and is calculated in the following way:
CI/RI= Average -4,
3*1.24

= 0,59>

0.10 acceptable

As scores gathered every aspect, what seems clear is that the most important role, according to the
respondents plays the financial aspect. Follow the customer aspect with almost twice the gravity from the
aspect of learning and development. The basis of gravity and the standings of each aspect, the aspect that will
be explained further in this work is the Financial aspect.

Table 7. Hierarchical analysis of the aspect of financial

Step 1

Changing the profile of

the company

Opening to new
investors for the
exploitation of facilities

Favourable repayment
debt settlement

Cost of services
adjustment

Changing the profile of

the company

0,33

0,5

0,33

0,5

0,33

Favourable repayment
debt settlement

Cost of services
adjustment

4,33

4,66

Opening to new
investors for the
exploitation of facilities

Total

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Table 8.

STEP 2

Changing the
profile of the
company

Opening to new
investors for the
exploitation of
facilities

Favourable
repayment debt
settlement

Cost of services
adjustment

0,125

0,076

0,125

0,070

0,099

0,250

0,230

0,125

0,070

0,168

0,375

0,461

0,250

0,643

0,432

0,250

0,230

0,500

0,214

0,298

1.000

1.000

1.000

1.000

1.000

Changing the
profile of the
company
Opening to new
investors for the
exploitation of
facilities
Favourable
repayment debt
settlement
Cost of services
adjustment
Total

Table 9
STEP 3
Changing the profile of the
company

ADJUSTMENT IN THE MEDIUM TERM

Opening to new investors for
the exploitation of facilities

Favourable repayment debt

settlement

Cost of services adjustment

0,198
0,168
0,216
0,098
0,680
3,434

0,297
0,336
0,432
0,894
1,959
6,595

0,596
0,168
0,864
0,298
1,926
3,231

0,099
0,055
0,216
0,098
0,468
4,727

Table 10.
STEP 4
Changing the profile of the company
Opening to new investors for the
exploitation of facilities
Favourable repayment debt settlement
Cost of services adjustment

CI/PI = Average -4
3*1,24

0,15> 0.10 not acceptable

Degrees

Cohesion Measures

0,468

4,727

0,680

3,434

1,959
1,926

6,595
3,231
AVERAGE 4,496

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After the hierarchical analysis of aspect financial, shows that the number of overall coherence (Consistency)
is greater than 10%. This shows that there is no great coherence and consistency in the responses of the
respondents. This is probably because the survey sample consisted mostly of several employees in the hotel
who basically not able to know the financial intricacies of enterprise cm deep.
4. Conclusions
This paper analyze the theoretical and practical approach of strategic Balance scorecard tool, analyzing the
advantages and disadvantages, areas that can be applied and the procedures followed in hierarchical order
when applied to industry company. The conclusion is that the Balance Scorecard method (BSC) can be
applied as a performance measurement to an industry in Greece. Moreover, the four perspectives offers a
framework for translating strategic objectives into performance measurements that measure the effects of
implemented strategies and provide feedback on the performance of strategic initiatives (Bergen C.W& Benco
D, 2004)
Nevertheless, it appears that the most important role, according to those surveyed, occupies the image that
shows the business and this classifies as a first priority to change the company's image to the general public.
In addition, this follows the strategic objective that calls for adjustment the cost of product. Finally very
major view appears to be the settlement of debts ,concerning the economic crisis.

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