A Descriptive Analysis On The Implementation of Balanced Scorecards in German-Speaking Countries

Management Accounting Research 14 (2003) 361–387
A descriptive analysis on the implementation of Balanced

Scorecards in German-speaking countries
Gerhard Speckbacher a,∗ , Juergen Bischof b , Thomas Pfeiffer c
a
Vienna University of Economics, Vienna, Austria
b
Vorarlberg University of Applied Sciences, Dornbirn, Austria
c
University of Vienna, Vienna, Austria
Abstract
This paper provides systematic research-based evidence on the usage of the Balanced Scorecard (BSC) concept
in German-speaking countries. We develop three primary types of BSC usage reflecting the successive phases in the
evolution of the BSC concept and of its implementation in practice. This typology ranges from the BSC’s origin as a
multidimensional framework for strategic performance measurement that combines financial and non-financial mea-
sures to its advanced usage as an integrated strategic management system that describes strategy by a cause-and-effect
logic and that is linked to the reward system. We use this theoretical framework to analyze the spread, implementa-
tion and benefits of the different types of Balanced Scorecards. Moreover, the impact of size and industry on BSC
usage is analyzed. Our sample consists of a clearly defined segment of the most important publicly traded firms in
Germany, Austria and Switzerland and we achieved an overall response rate of 87%.
© 2003 Elsevier Ltd. All rights reserved.
Keywords: Balanced Scorecard; Performance management; Empirical study
1. Introduction
In recent years the Balanced Scorecard (BSC) has attracted considerable interest in practice as well as
in theory. A great deal of literature on the Balanced Scorecard concept has been published and there have
been countless seminars and workshops dealing with BSC issues. Success stories of companies that have
implemented Balanced Scorecards seem to promise high benefits for BSC users. Several surveys indicate
that the BSC concept is widely used in large companies in the United States and throughout Europe.
For example, Silk (1998) estimates that 60% of the Fortune 1000 companies in the United States have
had experience with Balanced Scorecards. Marr (2001, p. 30) reports: “The latest data suggest that over
50% of the largest US firms had adopted a measurement framework, such as the Balanced Scorecard,
∗
Corresponding author.
1044-5005/$ – see front matter © 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/j.mar.2003.10.001
362 G. Speckbacher et al. / Management Accounting Research 14 (2003) 361–387
by the end of 2000”. Another study estimates that more than 40% of all Fortune 500 US companies use
Balanced Scorecards (see Williams, 2001). In the UK 57% of the businesses are reported to use Balanced
Scorecards and 56% of non-users are discussing possible implementation (Anonymous, 2001). In a
worldwide study of management tools, Rigby (2001) shows that the Balanced Scorecard has a utilization
rate of 44%.
Even though these studies seem to support the thesis that Balanced Scorecards are widely used in large
companies, only limited systematic research has been done on BSC applications (see, particularly on this
point, Atkinson et al., 1997; Otley, 1999; Ittner and Larcker, 1998, 2001; Norreklit, 2000; Malina and
Selto, 2001). One obvious reason is that most previous studies suffer from methodological shortcomings
like a bias with respect to the selected companies, low response rates or unreliable estimates. Accordingly,
the findings are quite different and often incoherent. We will return to this point in Section 3. Another
major problem is that, in both theory and practice, quite different opinions exist on what the defining
characteristics of the BSC concept are. In a recent contribution Kaplan and Norton (2001b, p. 94) wrote
that many companies “claim to have a Balanced Scorecard because they use a mixture of financial and
non-financial measures”. They argue that their own idea of the BSC concept goes far beyond this.
Moreover, the BSC concept is not static one. It is evident that Kaplan and Norton themselves have
continually expanded the concept from their early writings to their most recent contributions (for an
overview see Atkinson et al., 1997; Otley, 1999; Malmi, 2001). Besides, empirical evidence suggests
that BSC users often start with a simple and rudimentary scorecard and try to enhance its functions
and its scope of applications step by step (see Kaplan and Norton, 2001a). Unfortunately this implies
that the Balanced Scorecard is far from being a clearly definable concept (see, also, Ittner and Larcker,
1998; Norreklit, 2000; Malmi, 2001). Empirical research therefore has to consider that BSCs spread,
content, implementation and applications as well as the individual user’s experiences, expected benefits
and satisfaction are likely to vary depending on the concrete type of BSC used.
Faced with (1) ambiguous definitions of the BSC concept in the theoretical literature and (2) various
studies that seem to suggest an enormous practical importance of the BSC concept to firms throughout
world, the main purpose of our paper is to provide an unbiased picture of the content and use of Balanced
Scorecards in German-speaking countries. Specifically, our paper will make the following contributions:
1. In accordance with the literature on the BSC, we have derived three main types of BSCs, ranging
from a “minimum-standard BSC” (Type I) to a “fully-developed BSC” (Type III). In particular, these
different types of BSCs reflect the evolution of the BSC concept in Kaplan and Norton’s writings over
time. Moreover, they can be interpreted as evolutionary steps in the BSC implementation process in
firms. We intend to contribute to the theory behind the BSC concept by discussing how the concept of
BSC differs from other approaches to performance measurement and management. Our BSC typology
provides the structure for this discussion.
2. Since we have selected a clearly defined segment of the 200 most important publicly traded firms
and got an extremely high response rate (87%) from highly competent respondents, we can provide
reliable data on the practical application of the BSC concept in German–speaking countries. Based on
this data, our study reveals the spread of the BSC concept (with respect to the types defined) in this
segment and provides detailed answers to important questions on the content and implementation of
Balanced Scorecards: How many and, in particular, what perspectives are used? Are cause-and-effect
relationships reflected in scorecards? Are action plans made on the basis of scorecards? Are targets
set for BSC measures? Are managers rewarded on the basis of BSC measures?
G. Speckbacher et al. / Management Accounting Research 14 (2003) 361–387 363
3. Furthermore, we use our new typology to analyze the application of the BSC concept as well as
users’ perceived benefits and satisfaction depending on the type of BSC used. The relationship be-
tween the implementation of BSC types and users’ perceived benefits and satisfaction leads to in-
teresting findings. In as much as the different types are interpreted as “evolutionary steps” of BSC
implementation, this can provide information on benefits and problems at different stages of BSC
implementation.
4. Finally, we have tried to shed some light on why firms decide to terminate their BSC projects. For
example, we tried to find out if companies already had similar management tools, and therefore making
it meaningless to implement BSC.
Overall, our paper differs from previous studies because we have developed a new theoretical framework
to analyze the spread, implementation and benefits of different types of Balanced Scorecards. Furthermore,
for methodological reasons, our study provides a more systematic and unbiased picture than previous
studies.
The paper is organized as follows: in Section 2, we define and discuss the three different types of BSCs.
Section 3 describes the research method. In Section 4, we present the findings of our study. Concluding
remarks are provided in Section 5.
2. BSC—defining characteristics and underlying ideas
In this section, we will discuss the characteristics of and ideas behind the BSC concept as developed
in the literature and tie these different ideas and characteristics to three different types of BSCs. The
three types range from minimum-standard (Type I BSC) to fully developed (Type III BSC). They can be
interpreted as three typical evolutionary steps in the process of BSC implementation. After a preliminary
definition of these three types, we will discuss the characteristics of the respective types in the subsections
that follow. In particular, we will discuss the characteristics where the BSC concept differs from other
possible approaches to performance measurement and management based on these classifications.
• Type I BSC: a specific multidimensional framework for strategic performance measurement that com-
bines financial and non-financial strategic measures.
• Type II BSC: a Type I BSC that additionally describes strategy by using cause-and-effect relationships.
• Type III BSC: a Type II BSC that also implements strategy by defining objectives, action plans, results
and connecting incentives with BSC.
2.1. Type I BSC: a specific strategic performance measurement system
According to Kaplan and Norton, the starting point for the development of the BSC concept was the
idea that traditional performance measurement systems were adequate in an industrial-age environment,
but not for today’s information age (see Kaplan and Norton, 1996a, 2001a). While competitive advantage
was mainly driven by superior management of tangible assets in the industrial age, it is driven today by
managing intangibles such as service, innovation, flexibility or knowledge (see, for example, Chandler,
1990; Blair, 1995; Balkcom et al., 1997). Traditional performance measurement uses an accounting model
of the firm based on two important assumptions:
(1) that all relevant information on performance can be expressed through financial measures;
(2) that the value creation process can be described (and managed) by a linear additive model.
These assumptions are not only made in the financial accountants’ approach of defining a firm’s value
and profit by adding the value of (tangible) assets in balance sheets. They are also found in residual
income-models like the Economic Value Added approach (see Stewart, 1991). Both models evaluate
assets on the basis of historical costs (adjusted for depreciation). The Economic Value Added approach
goes beyond the traditional financial accounting model and explicitly considers intangible assets such
as research and development. But the valuation of such assets is still quite traditional, i.e. it is based
on historical costs and an additive model (see, for example, Stewart, 1991; Stern and Shiely, 2001).
Commonly used value driver models (serving as models of the value creation process) behind these
concepts are mainly additive linear and based on purely financial information. Historical costs adjusted
by depreciation can reasonably approximate the value of physical assets. The additivity assumption is
also less restrictive in how it describes the value creation process driven by physical assets. The situation
is, however, different if most of the firm’s value comes from intangibles (see also Kaplan and Norton,
2001b, p. 89). The problem is the dramatically increasing gap between a company’s book and market
value (see, for example, Blair, 1995; Webber, 2000).1
Even the discounted cash flow approach of valuation uses a linear additive functional for financial
values, assuming annual cash flows are linearly additive over time. Discounted cash flow models usually
rely on the assumption of value additivity. A firm’s value is commonly assumed to be the sum of the
value of business units (Copeland et al., 1996; Rappaport, 1997). Consequently, commonly used cash
flow driver models are linear and additive. Moreover, cash flows are often calculated using financial
accounting data that are again the result of a linear additive approach.2
The main reason why the financially-focused, additive linear model (i.e. assumptions (1) and (2)) has
become inadequate for today’s knowledge-based firms is that problems of separability and attributability
are much more severe for intangibles than for physical assets. While most physical assets are separable
and a financial (market) value can be attributed, intangibles are typically inseparable and do not have
any financial (market) value in themselves. Since intangibles are usually bundled with other tangible
or intangible assets, they often do not have any value in themselves (or at least the total value of such
bundled assets is not consistent with the sum of the individual values). Service, on time delivery or client
loyalty, for example, cannot usually be disconnected from the respective products. Staff knowledge and
skills do not have stand-alone value. Their value depends heavily on processes, organizations, routines
and, in particular, on company strategy (see Balkcom et al., 1997; Malina and Selto, 2001; see Ittner
and Larcker, 2001 on customer satisfaction). Kaplan and Norton (2001b, p. 89) view company strategy as
a specific way of linking tangible and intangible assets. They stress that value does not ordinarily reside in
any specific intangible asset. They feel it is created by a strategy that links a set of (tangible and intangible)
assets in a specific way. Consequently, value creation is not additive or linear and cannot be captured
by linear and (mainly) financial cash flow driver models that try to link decisions to financial results
in a “mathematical way”. In contrast, industrial age companies mainly convert tangible resources (with
1
Kaplan and Norton (2001b, p. 88) refer to several studies showing that today only 20% of the market value of firms is
represented by tangible book values while this percentage was at 62% 20 years ago. This means that today 80% of a firm value
cannot be captured by adding historical costs of physical assets and, therefore, management systems based on the traditional
accounting logic can capture only a small fraction of the value creation process.
2
See Copeland et al. (1996) and Rappaport (1997) and their proposed value driver models.
individual market values) into products and create value as long as the sum of the price times the amount of
output exceeds the (market) price times the amount of input. This value creation process can be adequately
described using a financial, linear and additive accounting model (Kaplan and Norton, 2001b, p. 89).
Moreover, it is much more difficult to attribute the benefits of intangibles to specific business units
than the benefits of physical assets. Whereas value effects of physical assets usually can be captured by
the business unit “owning” the asset, intangibles like innovation, expertise, reputation typically imply
spillovers (which are quite difficult to quantify) into other business units. In both cases costs are usu-
ally attributed entirely to the unit making the investment. Hence, the incentive for underinvestment in
intangibles is clear (on this see also Porter, 1997; Epstein and Manzoni, 1998; Norreklit, 2000).
The Balanced Scorecard is a specific approach to handling these problems using an alternative model
of the value creation process (i.e. a model that does not rely on assumptions (1) and (2)). The Balanced
Scorecard differs from other performance measurement systems in that it does not try to attribute financial
value to intangibles and it does not put these assets on “balance sheets”—in contrast to the EVA approach
or Lev’s (2001) approach.3 According to the BSC concept, these assets are measured in units other than
currency, i.e. by non-financial strategic measures. The Balanced Scorecard is a framework for describing
value-creating strategies that link tangible and intangible assets. This is done by formulating strategic
objectives with respect to these assets in four perspectives: “financial”, “customer”, “internal business
process”, “learning and growth” (Kaplan and Norton, 2001b, pp. 89–90; Malmi, 2001; Norreklit, 2000).
As a result, Type I BSC can be defined as a performance measurement system that implies a specific
approach to measuring intangibles. Intangibles are identified and measured by non-financial strategic
measures rather than by their financial value. The BSC concept proposes a specific structure for measuring
tangibles and intangibles (the four perspectives above). Obviously our definition of a Type I BSC is
compatible with Malmi’s definition of BSC (2001, p. 216).4
2.2. Type II BSC: a strategic performance measurement system that describes strategy via
cause-and-effect relationships
While Malmi (2001, p. 216) explicitly states that “measurement systems without cause-and-effect logic
may also qualify as BSCs” other authors consider cause-and-effect chains as a defining characteristic of the
BSC concept. For example, Atkinson et al. (1997, p. 26) interpret Kaplan and Norton’s cause-and-effect
logic as the “essence of their approach”. Norreklit (2000, p. 70) writes: “The cause-and-effect chain
is central to the balanced scorecard. The chain distinguishes the model from other approaches”. Also,
Hoque and James (2000, p. 2) argue: “The use of a BSC does not mean just ‘using more measures’; it
means putting a handful of strategically critical measures together in a single report, in a way that makes
cause-and-effect relations transparent . . . ”.5
In their recent book “The Strategy Focused Organization” Kaplan and Norton stress that the Bal-
anced Scorecard differs from other performance measurement systems in the way it describes strategy
3
Kaplan and Norton (2001b, p. 89) note that a valuation of intangibles with historical costs, i.e. the costs of creating them, is
a “poor approximation”.
4
Malmi’s (2001, p. 216) definition of BSC is: “For a measurement system to be a BSC, it should fulfil the following criteria:
it should contain financial and non-financial measures, these measures should be derived from strategy and the measurement
framework should contain perspectives derived from the original four”.
5
Interestingly, Hoque and James explicitly thank the referees of JMAR for their insightful comments on this definition (see
Hoque and James, 2000, Footnote 3).
(Kaplan and Norton, 2001a, p. 104). Kaplan and Norton (2001a, p. 26) write: “The BSC makes a unique
contribution by describing strategy in a consistent and insightful way. Before the development of strat-
egy scorecards, managers had no generally accepted framework for describing strategy: They could not
implement something that they could not describe well. So the simple act of describing strategy via
strategy maps and scorecards is an enormous breakthrough”.6 In Kaplan and Norton’s approach, strat-
egy is specifically described as a set of hypothesis about cause-and-effect (Kaplan and Norton, 1996a,
p. 31, p. 149) that Kaplan and Norton call a “strategy map” in their recent contributions (see Kaplan
and Norton, 2001a, pp. 69–105). This strategy map “describes the process of transforming intangi-
ble assets into tangible customer and financial outcomes” (Kaplan and Norton, 2001a, p. 69; 2001b,
p. 89).7
The literature on strategy and management has long recognized that there are many possible approaches
to describe strategy (see, for example, Mintzberg, 1987, 1994; Porter, 1997; Prahalad, 1997). Different
concepts for describing strategy are the result of employing different models of the firm, its environment
and of the value creation process. For example, from a financial manager’s point of view a strategy is
described by the induced financial consequences (e.g. cash flows). Atkinson et al. (1997, p. 27) view the
modern corporation as “a complex web of contracts, both explicit and implicit, that specify relationships
between the company and its stakeholders”. They believe that a company’s strategy is reflected by the
relationships that the company negotiates with each stakeholder group. These contracts specify what the
company expects from each stakeholder group to achieve its main objectives (financial performance) and
what each stakeholder expects from the company in return for his/her co-operation. As a consequence
they propose an approach to performance measurement that views the performance measurement system
as “the tool the company uses to monitor those contractual relationships” (Atkinson et al., p. 26). Since
the approach of Atkinson et al. (1997) proposes simultaneously managing stakeholder relations, it is
clearly different from Kaplan and Norton’s approach that proposes a sequential consideration of stake-
holders through cause-and-effect relationships.8 Consequently, both approaches qualify as stakeholder
approaches to management because they both emphasize (1) that a central task of strategic management is
to actively manage stakeholders (see Freeman and McVea, 2001, p. 192) and (2) that describing strategy
means defining the stakeholders’ role in corporate success (see also Freeman and McVea, 2001, p. 199).
They do, however, differ in the way they treat stakeholders. While the sequential approach of Kaplan and
Norton treats stakeholders as a means to an end (corporate success), the approach chosen by Atkinson
et al. (1997) is more open and broader in this respect.9 Atkinson et al. make it particularly clear
that the BSC approach is only one way to align strategic stakeholder management with strategic per-
formance management and not simply “the managerial equivalent of stakeholder theory” (Jensen,
2001, p. 9).
6
In early writings of Kaplan and Norton (1993) each perspective was considered separately. The attention was not on the
cause-and-effect relationships between measures and perspectives, as in the subsequent work of Kaplan and Norton (see Otley,
1999, p. 375; Malmi, 2001, p. 207).
7
The idea of linking measures to strategy is not new (see, for example, McNair et al., 1990).
8
See Atkinson et al. (1997, p. 26–28, particularly, Footnote 7). For a discussion on the cause-and-effect logic in the BSC
approach see Norreklit (2000).
9
The BSC treats stakeholders more in the (instrumental) way traditional finance theory suggests. This way is described by
Prahalad (1997, p. 51): “Finance theory says, in effect, that corporations should devote resources to such stakeholders only to
the point where the marginal dollar spent yields at least a dollar in return to the shareholders”. Prahalad (1997) argues that today
such a view may no longer be appropriate. For the concept of stakeholder scorecards, see also Kaplan and Norton (2001b, p. 94).
To summarize, Kaplan and Norton’s concept of cause-and-effect chains is one specific approach to
describing strategy. It differs from other approaches by its sequential, unidirectional nature and its strictly
instrumental treatment of stakeholders.
Therefore, we define a Type II BSC as a multidimensional performance measurement system (in the
sense of Type I) that chooses a specific approach to describe strategy by using a sequential cause-and-effect
logic to link tangible and intangible assets.
2.3. Type III BSC: a strategic management system that implements strategy via communication, action
plans and incentives
According to Kaplan and Norton (2001a), the BSC concept should evolve from an information system
to a strategic management system. Hence, a fully developed Balanced Scorecard should not only describe
the strategy of the company (via cause-and-effect relationships). It should be used to implement the
strategy in the company. Kaplan and Norton (1996a, p. 19) point out: “The real power of the BSC,
however, occurs when it is transformed from a measurement system to a management system”. If this
step is left out, the strategies remain remote from the company’s day-to-day actions. This produces a
gap between the strategy expressed in the activities planned and the strategy expressed in the pattern of
actions actually undertaken (see, for example, Mintzberg, 1987, 1994).
Kaplan and Norton developed a four-step process to enable companies to build a strategic management
system with the BSC approach. One integral part of the process is the communication between the hierar-
chical levels involved. Kaplan and Norton (1996b, p. 77) obviously want to develop a Balanced Scorecard
for the entire company. Communication consequently has to take place in the entire company. Typically,
the communication process starts with a top-down approach, where the headquarters communicates its
preliminary strategy to business units, and then in a second bottom-up step the strategy is refined. This pro-
cess is repeated over and over again to enable learning to take place. The procedure described is intended
to help “refine the vision and strategy”, “establish synergies”, “eliminate non-strategic investments”, etc.
(see Kaplan and Norton, 1996b, p. 78).
Recent studies, however, show that BSCs are primarily applied at the business unit level (see, e.g.
Malmi, 2001, p. 211). Some of these companies plan to develop a corporate level scorecard later on. This
finding is not surprising, because it is usually at the level of the business unit where competitive strategies
become crucial (see Kaplan and Norton, 1996a, p. 300; Malmi, 2001, p. 211).
Organizational communication literature emphasizes that the ability of management information sys-
tems to communicate effectively may be itself a source of competitive advantage (Grant, 1991; Daft
and Lewin, 1993; Tucker et al., 1996) because communication failure is an important cause of poor
organizational performance (Merchant, 1998). Hence, if the Balanced Scorecard really articulates and
communicates organizational strategy in a superior manner, then it may be a source of competitive ad-
vantage (see, e.g. Tucker et al., 1996). Malina and Selto (2001, p. 3) note that effectively communicating
the links between lagging (financial) and leading (non-financial) performance measures throughout the
organization may be crucial to implementing strategy successfully.
Typically communication is not enough to change organizational behavior. Somehow high level strate-
gic objectives and measures must be transformed into objectives, action plans, measures and targets for
operating units and managers. At various levels, relevant strategic measures, action plans and targets
have to be introduced to enable coordinating decisions and actions at the desired organizational levels
(see Kaplan and Norton, 1996a, p. 80). Managers must be held accountable for achieving targets. This is
Table 1
Responding rates
Country Approached companies Responding companies Responding rate (%)
Austria 51 43 84
Switzerland 50 42 84
Germany 100 89 89
Total 201 174 87
similar to the idea of management by objectives (MBO) introduced by Peter Drucker (1954). However,
Kaplan and Norton (2001b, p. 151) point out: “But Drucker’s excellent concept was implemented poorly
in practice, leading to MBO in most organizations focusing on a myriad of local measures and initiatives
not linked to high-level organizational objectives coordinated with each other. The BSC enables personal
objectives setting to be integrated across the organization and linked to high-level strategic objectives”.
Whereas positive motivation can induce managers to work hard to achieve targets and organizational
goals, positive motivation requires that organizational goals and incentives be tied together. Otherwise
Kerr’s principle “On the folly of rewarding A, while hoping for B” applies, i.e. the performance mea-
surement system rewards a behavior different from the one the designer of the system, typically central
management, hoped to obtain (see Kerr, 1975; Academy of Management Executive, 1995; Epstein and
Manzoni, 1998, p. 190). Kaplan and Norton (1996a, p. 217) are also aware of this problem and sug-
gest that reward systems should sooner or later be linked to BSC measures. According to Malmi (2001,
p. 212), it seems reasonable to assume that companies are able to steer the organization according to
the strategy (described by BSC measures and cause–effect chains) if they reward managers on the basis
of BSC measures. If rewards are based on criteria other than BSC measures, however, we may at least
question the ability to implement strategies by adopting BSCs.
Thus, we define a Type III BSC as a Type II BSC that additionally implements the organization’s
strategy by defining objectives, action plans and results, and by linking incentives to BSC measures.
3. Research method
The present state of the BSC concept in German-speaking countries was the subject of a survey that
we made in 2000/01 among all DAX100 companies in Germany, all listed ATX and Midcap companies
in Austria, and the 50 largest companies quoted on the stock exchange of Switzerland. Table 1 shows the
responding rates in the individual countries. (The Appendices A and B lists all the 201 companies that
were included in our survey.)
Since we have selected a clearly defined segment of the 200 most important publicly traded firms
and got an extremely high response rate from actively selected, highly competent respondents,10 we are
able to provide a more objective analysis with respect to the present state of BSC implementation than
in earlier studies in the literature. In some of these studies, for example, companies were approached
after being recommended by consulting companies (Malmi, 2001), other studies have insufficient feed-
10
In a first step, the departments of management control/strategic planning of the companies were contacted by telephone to
find out the most competent person for answering a questionnaire on the BSC (36 respondents are members of the board, 82
respondents are heads of departments, mainly department of management control).
back (Hoque and James, 2000; Rigby, 2001) or only estimate findings (Silk, 1998; Paulsen, 2001;
Marr, 2001; Williams, 2001). Such procedures are obviously in danger of distorting the findings. In
particular no reliable statement can be made about the degree to which BSC has been implemented.
4. Findings
4.1. General findings
4.1.1. First contact and promoters

Most companies first came in contact with the BSC concept between 1996 and 1999 (10 in 1996, 16 in
1997, 34 in 1998 and 18 in 1999). Only seven “pioneers”, of which four were in chemicals/pharmaceuticals,
had already started their BSC projects in 1992 (one company), 1993 and 1995 (three companies each). In
1996 and 1997, a few companies (four in 1996 and five in 1997) started BSC projects, but the first time
that Balanced Scorecards were introduced in a larger number of firms was between 1998 and 2000 (15
in 1998, 12 in 1999, 10 in 2000). Interestingly, one company (in chemicals) had already developed and
implemented a Balanced Scorecard in 1993.
4.1.2. State of implementation

Approximately one-fourth of the companies have not yet come in contact with the BSC concept (see
Table 2). Eighteen percent know it, but have not studied it more closely. Seventeen percent have studied
BSC, but have not undertaken any concrete steps. This means that more than 60% of the companies have
not gone beyond the stage of first considerations. Six percent of the companies have undertaken first
steps to introduce the BSC concept (e.g. creating a project team), and 6% already have started a first
BSC project. Finally, 17% of the companies have implemented the BSC concept in individual parts and
9% in the entire company. To sum up, only 45 companies, approximately one-fourth of the companies
questioned, actually have experience using the BSC concept.
4.1.3. Content
In this section we will study the companies that have implemented a Balanced Scorecard at either the
company or the business unit level in more detail. Three of the 45 companies with BSC experience did
Table 2
State of BSC implementation
Number of companies Percentage
No contact with BSC thus far 44 25

Know BSC 32 18
Studied BSC, but no concrete steps taken 30 17
First steps already taken 11 6
BSC project exists/has existed 12 7
BSC implemented in individual business units 30 17
BSC implemented for entire company 15 9
Total 174 100
Table 3
Perspectives
Financial 40 95
Customer 39 93
Internal business process 41 98
Learning and growth 24 57
Other perspectives 7 17
Respondents 42 100
not answer the more detailed questions in the questionnaire, so only 42 companies were actually involved
in the following part of the study.
4.1.3.1. Perspectives. An essential core element of BSC is the number and nature of the used per-
spectives shown in Table 3. Almost all of the companies questioned use the three proposed perspectives
“Financial”, “Customer”, and “Internal Business Process”. It was astonishing to note that fewer than
two-thirds of the companies use the perspective “Learning and Growth”. One transportation company,
for example, argued that the name of “Learning and Growth” had been changed to “Personnel” for reasons
of a better internal communication of the perspective’s scope. Only 17% of the companies feel a need
to employ additional perspectives reflecting a specific strategic focus not covered by the traditional four
perspectives. For example, an automobile manufacturer has a perspective “Supplier” and a chemicals
company a perspective “Environment”.
This result is in line with Malmi’s (2001, p. 210) observations, but not with those of Kaplan and Norton
(1996a, p. 34) who report that they had not come across a firm that uses less than the proposed four
perspectives on the scorecard, while sometimes additional perspectives were employed. Our analysis
shows that 7% (20, 68 and 5%, respectively) use two (three, four and five, respectively) perspectives.
4.1.3.2. Components. To analyze the state of implementation of the BSC concept more closely, we
asked the companies about the components of their most advanced Balanced Scorecard. Table 4 shows
our findings.
All analyzed Balanced Scorecards contain either strategic measures or strategic objectives. About
four-fifths of the employed scorecards contain strategic objectives. Interestingly, 3 of the 42 companies
use a scorecard with strategic objectives, but without strategic measures. Obviously, these companies find
it easier to agree on strategic objectives than on specific measures. One reason for this could be that they
are not able to specify their strategies clearly enough to derive adequate measures (see also Epstein and
Table 4
Components
Strategic objectives or strategic measures 42 100
Targets or action plans 31 74
Cause-and-effect relationships 21 50
Respondents 42 100
Table 5
Incentives linked to BSC
None 11 29
Yes 27 71
Of these: indirectly linked 7 18
Of these: directly linked 20 53
Respondents 38 100
Manzoni, 1998). Moreover, we found that 31 of the 42 companies already use action plans or targets for
strategy implementation.
Interestingly, only half of the companies were actually able to formulate cause-and-effect relationships
among the different objectives and measures—even though this is one of the main features of the BSC
approach according to Kaplan and Norton (1996a, 2001a) and the recent BSC literature (Hoque and
James, 2000; Norreklit, 2000; Malmi, 2001). The formulation of such a causal business model is one
specific approach to describing strategy and aims at improving the alignment between a firm’s strategic
objectives and its performance measures (Kaplan and Norton, 1992, 1996a).
4.1.3.3. Linked incentives. It is widely held that the “real power” of the BSC concept can only be used,
if BSC measures are linked to the reward system (Kaplan and Norton, 1996a, p. 217; Otley, 1999, p. 367;
Ittner and Larcker, 1998;Malmi, 2001, p. 211). Table 5 shows the number of companies that have already
linked their incentive system to the Balanced Scorecard.11
As can be seen from Table 5, 27 of 38 companies—more than 70%—have linked incentives to the
Balanced Scorecard. Most of these companies tie their reward system directly to BSC measures. This
result shows the practical relevance of linking incentives to BSC. Obviously, there is a great demand for
research on the proper construction of BSC bonus plans (see Ittner et al., 2003; Malmi, 2001). Advocates
of a critical view on budgeting systems challenge the centralized way of thinking, the inflexibility and the
rigidity of budgeting systems with fixed targets and fixed incentives (see Hope and Fraser, 1999, 2003).
According to this view, a close link of strategic measures with the centrally designed reward system
may undermine the self-motivation of managers and prevent them from using their own knowledge and
creativity to respond quickly to new market developments and strategic opportunities (Hope and Fraser,
1999, 2003).
Malmi’s (2001) study of 17 Finnish companies which adopt BSC indicates that the relevant question for
BSC users does not seem to be whether or not a performance measurement system should be introduced but
whether the existing incentive system is compatible with the Balanced Scorecard and how compatibility
can be improved. Thirteen out of the seventeen interviewed companies had some sort of bonus program;
six companies of these thirteen companies used a mixture of BSC measures and other measures outside
the BSC in their incentive system while three companies used BSC measures only and four companies
used only measures outside the BSC (Malmi, 2001, p. 211). With respect to the discussion on “beyond
budgeting”, Malmi (2001, p. 212) notes that most interviewed companies have developed their BSC
11
Incentives should be understood in the widest possible sense, and not be restricted to just (short-term) financial rewards. For
a study on subjective evaluations and the different weights of performance measures in a BSC bonus plan see Ittner et al. (2003).
independently of the budgeting process. However, two interviewed companies claimed that they do no
yearly budgeting any more but use a Balanced Scorecard instead.
We did not actively ask BSC users about their reasons for linking incentives to BSC and their expe-
riences. However, the CEO of a company which is a Type III BSC user made the following illustrating
comment with respect to incentives and BSC: “The introduction of the BSC concept was an opportunity
to review our incentive system and to make it more compatible with our strategy. In my view, the most
important practical reason for linking the BSC to the incentive system is that you simply need to do that
if you want all managers to get really involved into the process of developing BSC. Most of our managers
did not challenge the adequacy of our strategic BSC measures and they did not intensively think about
our cause-and-effect relationships until we linked BSC to their monetary reward”.
4.2. Different BSC types: a second look
4.2.1. BSC types in practice

In Section 2, we defined the following types of BSC:
• Type I BSCs: BSC as a specific strategic performance measurement system containing financial and
non-financial strategic measures and/or objectives grouped into perspectives.
• Type II BSCs: Type I BSCs that employ a specific approach to describe the company’s strategy using
a sequential cause-and-effect logic to link tangible and intangible assets.
• Type III BSCs: Type II BSCs that additionally implement the organization’s strategy through action
plans and/or target setting and by linked incentives.
We associate the Balanced Scorecards of the surveyed companies with the defined types of Balanced
Scorecards using a catalogue of criteria which is shown in Table 6.
With respect to the 42 companies which claimed to employ a Balanced Scorecard at either the company
or the business unit level (and have answered all relevant questions) we obtained the following results:
All Balanced Scorecards at least satisfy the requirements of Type I. Accordingly, there is no company
which claims to use a BSC but does not at least satisfy the criteria of our minimum standard Type I
BSC. Only 21 firms have employed cause-and-effect relationships. One reason for this could be that
the other companies have only recently started the process of implementation and/or they may find it
difficult to obtain cause-and-effect relationships. This would correspond to the existing literature that
Table 6
Classification of BSC types
Type Criteria
Type I BSC (i) Strategic measures/objectives (only one of these must be fulfilled)
(ii) Grouped into perspectives
Type II BSC Type I
(iii) Employs cause-and-effect chains
Type III BSC Type II
(iv) Contains action plans/targets
(v) Linked to incentives
Table 7
BSC types
Number of companies Percentage of BSC users (42)a Percentage of all respondents (174)
Type I BSC 21 50 12
Type II BSC 9 21 5
Type III BSC 12 29 7
Total 42 100 24
a
Note that there are three BSC users who did not answer the more detailed questions in the questionnaire which are necessary
for defining types. Therefore, the total number of BSC users is 45, as shown in Table 2.
points out the lack of empirical evidence on how to construct cause-and-effect relationships (see, for
example, Bryant et al., 2000, and the survey of Ittner and Larcker, 2001, p. 375).12 Accordingly, some
managerial accounting articles have recently been calling for research on cause-and-effect relationships
(see Atkinson et al., 1997; Foster and Gupta, 1997; Shields, 1997; Otley, 1999; Norreklit, 2000; Bryan
et al., 2000). In summary, only 21 firms qualify as users of Type II or III.
Of the 21 companies that already have cause-and-effect relationships, only 12 have linked incentives
to BSC measures. The other companies employ a “wait while we learn” approach where no incentives
will be set until the company understands BSC better (see Epstein and Manzoni, 1998, p. 200). For
example, the chief controller of a technology firm said: “We want to know more about the variability of
the financial and non-financial measures and their interaction before we link them to responsibilities”.
Such a procedure, however, involves the risk of dysfunctional behavior (see, for example, Kerr, 1975;
Epstein and Manzoni, 1998, p. 200). Moreover, it does not consider that, in a decision-influencing context,
other performance measures and organizational structures are required than in a decision-making context
(see, for example, Antle and Demski, 1988; Feltham and Xie, 1994). Our findings are summed up in
Table 7.
In conclusion, it can be said that a little more than one-fourth of all BSC users have a Type III BSC
and one-fifth have a Type II BSC. Half of the companies, on the other hand, have a Type I BSC that
does not go beyond a structured collection of strategic objectives and performance indicators. Of all 174
companies participating in the study, only about 7% have a Type III BSC and 5% a Type II BSC. Thus
only 7% of all surveyed companies are in a position to enjoy the full benefits of the Balanced Scorecard
as a performance management system that bridges the gap between strategic plans and real activities (see
Section 2.3).
4.2.2. Organizational size and industry
4.2.2.1. Organizational size. The contingency theory literature suggests that the size of organizations
is related to the design of organizational structure and the use of management control systems. It has been
shown that management control systems tend to be more specialized and sophisticated in larger firms
(Bruns and Waterhouse, 1975; Merchant, 1981; Ezzamel, 1990; Libby and Waterhouse, 1996). Larger
12
Earlier studies, like, for example, Foster and Gupta (1997), focused on single revenue drivers, like the effect of customer
satisfaction on financial performance, and not on multiple indicators as must be done to examine cause-and-effect relations. Even
for the single indicator case, the study of Foster and Gupta (1997) shows that customer satisfaction and financial performance
is positively, negatively or insignificantly correlated, depending on the questions included in the satisfaction measures.
Table 8
Organizational size (number of employees) and BSC types
Number Mean Standard deviation Average of ranks
No BSC 133 17458 39509 72.54

Types I–III 41 70555 101941 114.62
All 174 30651 65077
Kruskal–Wallis: 0.001 level
Type I 20 71558 100211
Type II 9 47469 49411
Type III 12 86197 134026
All 41 70555 101941
Kruskal–Wallis (for all possible combinations): insignificant
firms are associated with more decentralized organizational structures and more specialized functions and
processes and, therefore, co-ordination and communication problems increase with size. As a broader
set of information and measurement issues arises in larger firms, more advanced and more sophisticated
management accounting systems are required. Based on this reasoning it seems plausible that larger
organizations are more likely to use BSC than smaller ones.
For the purpose of this paper it is appropriate to define and measure size as the number of employees
(Chenhall, 2003, pp. 149–150).13 Table 8 presents our results.
In a first step we analyzed the size of all companies that have implemented a Balanced Scorecard (of
Types I, II or III) versus the companies that do not use BSC. The mean number of employees of BSC
users was 70,555, while it was only 17,458 for companies without BSC. Consistent with this notable gap
between the mean numbers of employees we found a significant association of size and BSC usage; larger
companies are more likely to use the BSC concept. This finding complements a recent study of Hoque
and James (2000) who surveyed 66 Australian manufacturing companies and found that BSC usage is
positively associated with organization size.14
In a second step, we analyzed whether larger companies tend to use a BSC of a higher type. Since
higher type BSCs can be interpreted as more mature and more sophisticated BSCs, it seems plausible that
larger firms tend to employ higher types. Interestingly, we found no significant support for the hypothesis
that size discriminates between the BSC Types I–III.
4.2.2.2. Industry. Besides size, there is a myriad of other possible contextual variables that may affect the
design and the effectiveness of strategic performance measurement systems. Important contextual factors
are environment (e.g. uncertainty, turbulence or market position), technology, organizational structure
or strategy.15 For example, Hoque and James (2000, p. 11) found a “positive association between early
13
Since we use the Kruskal–Wallis rank order test, normality of “size” is not required and we do not need to use a transformation.
14
Due to the limitations of their sample size and their restriction to manufacturing firms, Hoque and James suggest to prove their
results for other samples with other industries. Hoque and James (2000) examine whether BSC usage is positively associated
with (i) larger organization size; (ii) businesses with products at the early/growth stage; and (iii) businesses with a strong market
position. This part of our analysis does not include (ii) and (iii).
15
For a recent critical review of contingency-based research in the study of management control systems see Chenhall (2003).
Table 9
Industries and BSC types
No BSC Type I Type II Type III
Automobile & Transport 10 2 1 2

Banks & Financial Services 20 2 3 2
Chemicals & Pharmacy 19 3 1 5
Construction 10 0 0 0
Consumer & Retail 22 1 0 0
Insurances 10 3 0 0
Machinery & Industry 21 6 2 0
Software & Technology 14 1 1 2
Utilities & Telecommunication 6 3 1 1
Respondents 132 21 9 12
Table 10
Level of BSC implementation
All Type I Type II Type III
Corporate level 22 (55%) 12 (63%) 3 (33%) 7 (58%)

Business unit level 39 (98%) 19 (100%) 9 (100%) 11 (92%)
Plant level 9 (23%) 3 (16%) 0 (0%) 6 (50%)
Department level 9 (23%) 4 (21%) 1 (11%) 4 (33%)
Team level 4 (10%) 2 (11%) 0 (0%) 2 (17%)
Employee level 1 (3%) 1 (5%) 0 (0%) 0 (0%)
Respondents 40 (100%) 19 (100%) 9 (100%) 12 (100%)
product life-cycle stage and a greater reliance on BSC”, but “no support for the positive association
between a strong market position and a greater reliance on BSC”.
We did not intend a detailed analysis on the influence of possible contextual factors in this study.
However, we can provide data on the association of the usage of different BSC types with industries.
This may give a first impression of the possible importance of contextual factors that are correlated with
industries. We use a highly aggregated classification system which is standard in Germany. Table 9 shows
the results.
Using a Chi-square test, we compared the companies which have adopted a BSC of Types I, II or III
and the companies which have not. We found that firms belonging to the “consumer & retail” industry
are associated with a significantly lower usage of BSC (Types I, II and III); but we found no significant
association for other industries. With respect to the three BSC types our data did not support any significant
difference in the usage of BSC Types I, II or III across industries (Table 10).
4.2.3. Level of organizational implementation and strategy communication16

According to Kaplan and Norton (1996a, p. 300) scorecards should be primarily applied at business
unit level, since it is usually at the level of the business unit where competitive strategies become crucial.
16
Note that two of the 42 BSC users did not answer these questions.
Our study supports this view. It is, however, interesting to note that, in Switzerland, Balanced Score-
cards are mainly implemented at the corporate level. An obvious reason is the size of Swiss companies.
Moreover, Type III BSCs tend to be implemented on various organizational levels, in particular also
at lower hierarchical levels, like the plant, department or team level. Type I and II BSCs, however, are
often implemented solely at the business unit level (12 companies) or at the business-unit and corporate
levels (10 companies). Only one of the companies implemented a BSC (Type I) at the employee level.
Appendix B shows the levels of implementation for all 40 responding firms in detail.
Since BSCs are primarily implemented on higher organizational levels, it is interesting to see to what
extent BSCs are used as an instrument for communicating the strategy to lower organizational levels.
According to Kaplan and Norton (1996a, 2001a) BSCs can be used to communicate strategy to all members
of the organization and Norreklit (2000, p. 81) writes: “A key objective of the balanced scorecard is to
communicate strategy to all parts of the organization”. Our question with respect to the communication
of strategy revealed that most companies want to use the Balanced Scorecard to communicate strategy
at the top management level (34 of 40 responding companies) and at the middle management level
(33 companies). Only relatively few companies are interested in applying the Balanced Scorecard for
communicating the strategy at the employee level. Interestingly, there are differences with respect to BSC
types. While only 3 (of 28) companies which use a Type I or II BSC are interested in applying this BSC
for communicating the strategy at the employee level, half of Type III users are doing so.
4.2.4. Purposes of BSC use and expected benefits

The literature on Balanced Scorecards mentions a variety of purposes of BSC implementation and
benefits for users (see Kaplan and Norton, 1996a, p. 19; Norreklit, 2000, p. 68; Malmi, 2001, p. 213).
Our questionnaire contained a list of purposes and benefits mentioned in the BSC literature. Respondents
were asked (i) to select all relevant benefits expected and (ii) to tick the three most important benefits
expected. In addition, we offered the option to name additional benefits not contained in our list. Only
two companies made use of this.
Table 11 shows a mixed picture on the expected benefits of BSC use. The benefit of improving the
alignment of strategic objectives with the actions actually undertaken was ticked most often. This fact
should not, however, be overestimated since the subtitle of the book by Kaplan and Norton (1996a) is
“Translating Strategy into Action” and has become the advertising slogan of the BSC. The following three
expected benefits of the BSC concept are considered to be particularly important: “Improved company
results in the long term”, “Stronger consideration of non-financial drivers of performance” and “Sup-
porting the shareholder value-based management system”. Interestingly, none of the companies chose
“Better consideration of stakeholders” and “Enhancing the investment in intangibles” when marking
the three most important expected benefits. Obviously, the users of the Balanced Scorecard in everyday
company practice dismiss the view repeatedly found in the literature that the BSC supports stakeholder
management and/or investments in intangible assets (Atkinson et al., 1997; Epstein and Manzoni, 1998;
Otley, 1999, and also Kaplan and Norton, 1996a, 2001a).
In practice the Balanced Scorecard is used in particular as an instrument for increasing financial
performance within the framework of a shareholder value concept. This is exactly in line with Kaplan
and Norton’s (1992) original intention.
With respect to German corporations, it has been argued that the BSC is more compatible with the tradi-
tionally stakeholder-oriented German corporate governance system than strictly shareholder value-based
management concepts (see e.g. Horváth and Kaufmann, 1998). In fact, the consideration of stakeholders
Table 11
Expected benefits of BSC use
Type I Type II Type III
(i) (ii) (i) (ii) (i) (ii)
(a) Developing strategy (further) 4 1 0 0 5 1

(b) Clarifying and communicating strategy 9 1 5 1 10 6
(c) Improved alignment of strategic objectives with actions 20 10 7 6 11 7
(d) Focusing resources on strategy 12 4 6 2 8 2
(e) Developing a consistent system of objectives in the company 14 4 6 4 9 3
(f) Improved understanding of cause-and-effect relationships in the company 7 1 6 2 8 2
(g) Stronger consideration of non-financial drivers of performance 17 7 5 1 9 2
(h) Improved company results in the long term 11 9 5 4 8 5
(i) Aligning strategic initiatives 9 1 4 0 6 0
(j) Improving strategic learning (control and feedback) 6 1 2 0 7 2
(k) Supporting the shareholder value-based management system 13 10 6 2 8 4
(l) Building up a base for an incentive system 7 3 3 1 5 1
(m) Better consideration of stakeholders 2 0 1 0 4 0
(n) Improved customer focus 7 3 3 1 8 0
(o) Identifying business process reengineering opportunities 8 2 5 0 7 1
(p) Supporting a strategy of growth 7 1 2 0 5 0
(q) Enhancing the investment in intangibles 3 0 0 0 3 0
Respondents 21 21 9 9 12 12
Number of ticks made by users of Types I, II, and III BSC, respectively. Questions: (i) What benefits does your company expect
from using BSC? (ii) Which of these are the three most important benefits? (Additional tick).
in the Balanced Scorecard is not very far-reaching and, in particular, does not go beyond the traditional
stakeholder-oriented view encountered in Germany or Austria. Our findings, however, show that at least
the large publicly traded firms view the BSC concept primarily as a means for enhanced shareholder
value management and not as a means for a better stakeholder orientation.
Using the Mann–Whitney test, we checked whether there are significant differences of expected benefits
with respect to the different BSC types. We did not find a significant difference across types excepted the
fact that for Type III users “clarifying and communicating strategy” has a significantly higher importance
than for Type I users.
4.2.5. Experiences, and the importance of BSC projects

One of the primary research questions concerning the BSC concept is the economic performance of
the Balanced Scorecard (see Ittner and Larcker, 1998, 2001; Otley, 1999; Malmi, 2001; Rigby, 2001).17
In our study we did not analyze the financial performance of companies using a scorecard (see, for such
an analysis, Davis and Albright, 2002). Instead, we asked several questions about experiences they had
and about the future importance of the BSC approach for the company (for comparable approaches see
also Chenhall and Langfield-Smith, 1998; Ittner and Larcker, 1998; Rigby, 2001; Malmi, 2001). Using
17
A study by Rigby (2001) shows that BSC has a mean satisfaction of 3.85 which does not vary essentially from the average
of 3.76 satisfaction of all management tools studied (p. 145). It is interesting to note that there is not a great difference with a
mean satisfaction of 3.95 (or 3.31, respectively) at successful or unsuccessful firms, respectively (p. 151).
Table 12
Statements on BSC
BSC types Agree strongly Disagree strongly
I II III I II III I II III I II III I II III
(a) Implementing the BSC 0 1 3 9 3

requires a lot of effort, but 1 0 1 4 2
brings hardly any benefit 0 0 1 4 7
(b) Working with the BSC 2 4 6 4 2
reworks strategy, making it 0 4 2 0 2
more concrete 2 3 4 2 1
(c) The BSC cannot really be 0 4 1 6 6
implemented because the 0 0 1 4 3
required data is not available 0 0 0 3 9
(d) It was the BSC that first made 0 2 5 7 4
strategy understandable for 0 4 0 3 1
the staff 2 3 2 1 4
(e) The initial euphoria about the 1 4 7 2 1
new idea has already 1 0 3 3 1
decreased noticeably 0 0 3 5 4
(f) BSC has even surpassed 0 0 1 1 5 5 4 1 5 1
expectations 0 2 6 1 1
this method to get information about the performance of the BSC concept involves obvious problems,
since it provides only indirect and highly subjective information. However, revealing users’ evaluations
is clearly interesting in itself.18 Since the (perceived) success of BSC implementation can be expected to
vary with the way the BSC concept is applied, we evaluated our findings again separately according to
types.19
4.2.5.1. Statements on the BSC concept. The following positive and negative statements were proposed
on BSC: (a) “Implementing the BSC requires a lot of effort, but brings hardly any benefit”, (b) “Working
with the BSC reworks strategy, making it more concrete”, (c) “The BSC can not really be implemented
because the required data is not available”, (d) “It was the BSC that first made strategy understandable for
the staff”, (e) “The initial euphoria about the new idea has already decreased noticeably”, and (f) “BSC
has even surpassed expectations”.
We came up with the following findings (see Table 12): The Type III companies disagree more strongly
with negative statements than companies using other types, in particular with statement (e) “The initial
18
It should be noted that a large part of the literature argues that there is a relationship between the degree of satisfaction and
the performance of a management system (McGowan and Klammer, 1997; Ittner and Larcker, 1998).
19
Malmi (2001, p. 217) argues in line with this: “It could be that one way to use BSCs leads to success, whereas considerably
fewer benefits should be expected from the other . . . In other words, it is not meaningful to study economic benefits obtained
from adopting BSCs without considering how they are used. Further research should study economic benefits from applying the
BSCs in a certain way”.
Table 13
Importance of BSC
Tremendously important 1 (2%) 1 (5%) 0 (0%) 0 (0%)

Very important 8 (20%) 2 (10%) 1 (11%) 5 (42%)
Of greater importance 19 (46%) 9 (45%) 4 (44%) 6 (50%)
Of average importance 11 (27%) 7 (35%) 3 (33%) 1 (8%)
Not very important 1 (2%) 0 (0%) 1 (11%) 0 (0%)
Of negligible importance 1 (2%) 1 (5%) 0 (0%) 0 (0%)
Total 41 (100%) 20 (100%) 9 (100%) 12 (100%)
euphoria about the new idea has already decreased considerably”. Type I companies disagree, however,
with the positive theories more than companies of other types (in particular (d) and (f)) and support the
negative theories more than other companies (in particular (c) and (e)).
4.2.5.2. Importance of BSC. How important is the BSC concept to the companies? Table 13 shows our
findings.
Only one company assessed the Balanced Scorecard as “strategically tremendously important” and
only one company assessed it as being “of negligible importance”. Most companies (46%) believed the
BSC concept to be “of greater importance”; around 20% “very important”, and approximately 27% “of
average importance”. The study showed an interesting difference in the assessment between BSCs of
Type I and II compared to Type III. Users of Type III BSCs attribute to their scorecard a significantly
greater importance than Type I and II users.
4.2.5.3. Future priority of the BSC project. Furthermore, we asked companies about the future priority
of their BSC projects (see Table 14). Half of the companies plan to continue BSC with high priority and
one-third with medium priority. Though, one-fifth have not yet decided whether the BSC approach will
be pursued further, or not. It is interesting to note that none of the companies with BSC of the Types I,
II or III intends to discontinue using the BSC. As for the different BSC types, there is a strong tendency
that higher-level BSC users want to continue using it with higher priority. This corresponds to the fact
that Type III BSC users rank the concept as being more important than other companies.
Table 14
Priority of BSC project
The BSC approach will be pursued with high(est) priority 20 (48%) 7 (33%) 4 (44%) 9 (75%)
The BSC approach will be pursued with medium priority 14 (33%) 8 (38%) 4 (44%) 2 (17%)
Whether the BSC approach will be pursued is still open 8 (19%) 6 (29%) 1 (11%) 1 (8%)
The BSC approach will not be pursued any further 0 (0%) 0 (0%) 0 (0%) 0 (0%)
Total 42 (100%) 21 (100%) 9 (100%) 12 (100%)
Table 15
Reasons for not implementing/discontinuing BSC
Number of companies Percentage of all respondents (174)
Other comparable tools already in use 8 5

No essential advantages expected 4 2
Effort needed to introduce it is too big 5 3
Expected benefit is too unsure 3 2
Contradicts basic controlling principles 0 0
Additional reasons 5 3
Respondents 14 8
4.2.6. Reasons for not implementing or for discontinuing BSC

Of the 174 companies in our survey, 18 companies (10%) said they had decided not to pursue the BSC
approach any further. As already mentioned, none of the companies actually using a BSC (Types I, II, or
III) belongs to this group. Fourteen companies answered the question about the reasons for their negative
decision (see Table 15).
Eight of the 14 companies answering the question do not completely reject the BSC concept, but see no
advantage in implementing it because they feel that their existing management system already contains
similar tools. There is a discussion in the literature about how unique and new the BSC concept really is.
For example, the French have had a somewhat similar system called “tableau de bord” for decades (see,
for example, Lebas, 1994; Epstein and Manzoni, 1998). Other similar concepts on integrating financial
and non-financial measures have also been proposed (see, for example, Nanni et al., 1992; Lych and
Cross, 1991).
Five companies consider the effort of introducing BSC to be too great and three find the expected
benefit to be too unsure. Five companies give other reasons. Interestingly enough, one company rejects
the BSC concept because of problems occurring when qualitative measures from different divisions are
aggregated at the corporate level. The chief-controller of the company puts it as follows: “The problem
of aggregating different divisions (with different markets, diverse production processes and customer
structures) to sub-groups and groups at the corporate level almost inevitably leads to purely financial
measures”. A similar statement is made by a business unit manager who claims to be convinced of the
value of the BSC approach but concedes: “BSC at the entire company level does not make any sense
because the aggregation of diverse areas does not produce interesting information”.
5. Concluding remarks
Our study provides systematic new evidence on the application of the BSC concept. We have classi-
fied BSC types (1) to enable a more structured and concrete theoretical discussion of the BSC concept
and (2) to get a systematic and more specific empirical overview of how the BSC concept is used in
companies.
Since we have chosen a clearly defined segment of the most important publicly traded firms in the
German-speaking countries, we have had an extremely high respond rate (87%) from competent re-
spondents. We have been able to provide reliable and unbiased data on the practical application of the
BSC concept. Our study shows that only a minority of firms (26%) use BSCs, and most of these appear
to use only a limited or incomplete version. In particular, a third of BSC users has no “learning and
growth” (or comparable) perspective and only every second BSC applicant uses cause-and-effect chains.
Interestingly, more than two-thirds of the users linked their reward system to the BSC, which proves
that many firms do not see cause-and-effect chains as a prerequisite for a BSC-based reward system.
Many BSC users explicitly argue that highly aggregated corporate scorecard measures do not provide
useful information and, accordingly, most firms (except smaller Swiss firms) employ BSCs only at the
level of the business unit. All in all, less than 7% of all firms have a fully developed Type III BSC in
use (at the company level or level of the business unit). Contingency theories of organizations suggest
that as firm size increases, accounting information and control processes tend to become more special-
ized and sophisticated (see, for example, Ezzamel, 1990; Libby and Waterhouse, 1996). We, therefore,
expect that smaller organizations are likely to have less experience with BSCs (see, also on this point
the study of Hoque and James, 2000). Thus, the above percentage of BSC users in the segment of large
publicly traded firms is likely to be the upper limit for the share of BSC using firms in German speaking
countries.
For our sample of publicly traded firms we found a significant association of size (measured as the
number of employees) and BSC usage; larger companies are more likely to have implemented a BSC (of
Types I, II or III). However, we found no significant support that size discriminates between the different
BSC Types I–III.
Moreover, we provided data on the association of the usage of different BSC types with industries. We
compared the companies which have adopted a BSC of Types I, II or III and the companies which have
not. We found that firms belonging to the “consumer & retail” industry are associated with a significantly
lower usage of BSC (Types I–III); but we found no significant association for other industries. With
respect to the three BSC types our data did not support any significant difference in the usage of BSC
Types I, II or III across industries.
The literature on the BSC concept suggests that economic benefits that come from adopting BSCs
are a key topic for future research (Ittner and Larcker, 1998; Malmi, 2001). According to Malmi (2001,
p. 217), the benefits and success of BSC can be expected to vary depending on how BSCs are applied and,
therefore, he suggests that future research should evaluate benefits with respect to how this is done. Our
study shows the expected benefits of BSC use and it provides data about users’ satisfaction with respect to
BSC types. Interestingly, the analysis of the relationship between the types and the companies’ perceived
benefits and satisfaction shows that companies implementing a more developed BSC (particularly Type
III) rely more on the BSC approach and are more satisfied with their BSC than those with a less developed
BSC.
Only 8% of the firms expect the benefits of BSC to be less than its costs and discontinued BSC. By
far the most important reason for stopping was that these firms felt that the BSC could not offer benefits
beyond the existing performance management system.
With respect to the expected benefits of companies using BSC, it is also interesting to note that in our
study corporations in German-speaking countries view BSC as a concept for improved shareholder value
management. They do not view it as a tool for integrating stakeholders and their intangible investments
into the existing management processes in a better way. Whereas the BSC is sometimes interpreted as the
“managerial equivalent of stakeholder theory” and blamed for lacking shareholder orientation (Jensen,
2001), corporations in traditionally more stakeholder-oriented German-speaking countries express exactly
the opposite view and try to improve their shareholder orientation with the help of the BSC concept.
Acknowledgements
We thank Astrid Reichel, Daniel Glaser, Alexander Langwieser, Melanie Schellhammer and Doris
Stockhammer for research assistance. Thanks also to Robert Scapens (editor) and two anonymous referees
for constructive comments and suggestions.
Appendix A. Approached companies
Austria Switzerland
Austria Haustechnik ABB

Austria Mikro Systeme Actelion
Austria Tabak Adecco
Austrian Airlines Ascom
AVW Invest Atel
Bank Austria Baloise
Bau Holding Banque Cantonale Vaudoise
Baumax Ciba SC
Betandwin.com Clariant
Böhler-Uddeholm Credit Suisse Group
Brau-Union Disetronic
Burgenland Holding Ems Chemie
BWT Givaudan
CA Immobilien Anlagen Helvetia Patria
Constantia-Iso Holderbank/Holcim
Cybertron Jomed
Die Erste Immobilien Julius Bär
DO&CO Kudelski
Erste Bank Kühne & Nagel
EVN Kuoni
Feratel Liechtensteiner Landesbank
Flughafen Wien Lonza
Generali Holding Vienna Nestle
HTA Novartis
Immofinanz Pargesa
Investkredit Bank Phonak
Jenbacher Publigroupe
JoWood Rentenanstalt/Swisslife
Lenzing Richemont
Libro Rieter
Mayr-Melnhof Karton Roche
Miba Scintilla
Oberbank Serono
Appendix A. (Continued )
Austria Switzerland
OMV SGS Surveillance

Palfinger Straumann
Porr Sulzer
RHI Sulzer Medica
Rosenbauer Swatch
Semperit Swiss Re
SW Umwelttechnik Swissair Group
Telekom Austria Swisscom
Uniqa Syngenta
Unternehmens Invest Synthes-Stratec
VA Technologie Tecan Group
VAE UBS
Verbund Unaxis
Voest Alpine Stahl Vontobel
Vogel & Noot VPB Vaduz
Wiener Städtische Xstrata
Wienerberger Zürich Finance
Wolford
Germany
Adidas-Salomon Hochtief
AGIV Hoechst
Allianz Hugo Boss
Altana IKB Deutsche Industriebank
AMB IVG
AVA IWKA
AXA Colonia Jenoptik
Babcock Borsig Jungheinrich
Bankgesellschaft Berlin Kali und Salz
BASF Karstadt
Bayer Kiekert
Bayerische Hypo- und Vereinsbank Klöckner-Werke
Beiersdorf Kolbenschmidt Pierburg
Bewag Krones
BHF-Bank KSB
BHW Linde
Bilfinger und Berger MAN
BMW Mannesmann
Brau und Brunnen Merck
Buderus Metro
Appendix A. (Continued )
Germany
Commerzbank mg technologies
Continental MLP
DaimlerChrysler Münchener Rück
DBV-Winterthur Philipp Holzmann
Degussa-Hüls Phoenix
Deutsche Bank Preussag
Deutsche Lufthansa Pro Sieben Media
Deutsche Pfandbrief- und Hypothekenbank Puma
Deutsche Telekom Rheinmetall
Deutz Rhön-Klinikum
Douglas RWE
Dr. Ing. H. c. Porsche SAP
Dresdner Bank Schering
Dürr Schmalbach-Lubeca
Dyckerhoff Schwarz-Pharma
Ergo SGL Carbon
Escada Siemens
FAG Kugelfischer Sixt
Fielmann SKW Trostberg
Fresenius SPAR
Fresenius Medical Care Südzucker
Friedrich Grohe Tarkett Sommer
Gea Thyssen Krupp
Gehe Varta
Gerrersheimer Glas VEBA
Gold-Zack VIAG AG/E.ON
Hannover Rück Volkswagen
Heidelberger Druckmaschinen Vossloh
Heidelberger Zement WCM
Henkel Wella
G. Speckbacher et al. / Management Accounting Research 14 (2003) 361–387
Appendix B. Level of BSC implementation
Company number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
BSC type 3 3 3 3 3 3 3 3 3 3 3 3 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1
Corporate level X X X X X X X X X X X X X X X X X X X
Business unit level X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
Plant level X X X X X X X X X
Department level X X X X X X X X X
Team level X X X X
Employee level X
Company number 31 32 33 34 35 36 37 38 39 40
BSC type 1 1 1 1 1 1 1 1 1 1
Corporate level X X X
Business unit level X X X X X X X X X X
Plant level
Department level
Team level
Employee level
385
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A Descriptive Analysis On The Implementation of Balanced Scorecards in German-Speaking Countries

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Management Accounting Research 14 (2003) 361–387

A descriptive analysis on the implementation of Balanced

2. BSC—defining characteristics and underlying ideas

2.1. Type I BSC: a specific strategic performance measurement system

4.1. General findings

4.1.1. First contact and promoters

4.1.2. State of implementation

No contact with BSC thus far 44 25

4.2. Different BSC types: a second look

4.2.1. BSC types in practice

4.2.2. Organizational size and industry

No BSC 133 17458 39509 72.54

Automobile & Transport 10 2 1 2

Corporate level 22 (55%) 12 (63%) 3 (33%) 7 (58%)

4.2.3. Level of organizational implementation and strategy communication16

4.2.4. Purposes of BSC use and expected benefits

(i) (ii) (i) (ii) (i) (ii)

(a) Developing strategy (further) 4 1 0 0 5 1

4.2.5. Experiences, and the importance of BSC projects

I II III I II III I II III I II III I II III

(a) Implementing the BSC 0 1 3 9 3

Tremendously important 1 (2%) 1 (5%) 0 (0%) 0 (0%)

Other comparable tools already in use 8 5

4.2.6. Reasons for not implementing or for discontinuing BSC

Appendix A. Approached companies

Austria Haustechnik ABB

OMV SGS Surveillance

Academy of Management Executive, February 1995.

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