The Link between Perception of BSC Implementation and Corporate Strategy and Its Impact on Performance: A Contingency Approach

Majidul Islam, Ph.D., CGA* Associate Professor Department of Accountancy John Molson School of Business Concordia University Montreal, Canada H3G 1M8 514-848-2424/Ext: 2235 Email: mislam@jmsb.concordia.ca

• • •

I acknowledge gratefully the funding from the SAP-CAAA Research Grant program I appreciate very much the comments by Emilio Boulianne of Concordia University and Zahirul Hoque of La Trobe University on an earlier draft of the paper. This is a preliminary version of the paper. Please do not quote or reproduce without permission of the author.

1

The Link between Perception of BSC Implementation and Corporate Strategy and Its Impact on Performance: A Contingency Approach
ABSTRACT: Behavioral aspects and positive attitudes toward the balanced scorecard (BSC) could be a determinant factor in the success of BSC implementation. In the study we use the contingency theory framework to examine whether adopting a planned strategy improves employees’ buying into the BSC and helps to maximize the benefits of BSC implementation by enhancing corporate performance. We hypothesize that employees’ attitudes and perceptions towards the implementation of the BSC is contingent upon the type of strategy the firm is employing and the suitability of deploying the BSC with this strategy in place. We use a path model that draws an association between the firm’s strategy and employee attitudes towards BSC implementation and employs OLS regression to test the association between the variables. We also examine whether employees’ positive attitudes help to improve a firm’s performance as proxied by the customer, internal processes, learning and innovation, and financial perspectives of the BSC. We sent a mail survey to Canadian and US firms to collect the necessary data in order to conduct this study. Conforming to our expectations, we found that firms that carefully planned their strategic objectives were more likely to have a positive impact on their employees’ perception of the BSC. A deliberate strategy—or planned strategy—as defined by is associated with higher levels of BSC awareness, perceptions of BSC ease of use, perceptions of BSC usefulness, and intentions to use the BSC. We also found that higher perceptions of BSC ease of use were positively associated with aspects of a firm’s performance, such as from the customer, internal processes, and learning and innovation perspectives. Hence, we conclude that firms implementing the BSC need to take into consideration that the successful implementation of the BSC requires careful planning to ensure

2

that the firm’s strategic objectives are well formulated, in agreement with BSC measures, and effectively communicated to BSC users.

3

1. INTRODUCTION Since Kaplan and Norton (1992) developed the balanced scorecard (BSC) for performance and strategic management, the tool has gained prominence in industry and academic research. The BSC relies on the interaction and the complementarities between four aspects of the firm— financial, customer, internal business, and innovation and learning perspectives—in order to drive the firm’s future financial success in a sustainable manner. There is some empirical evidence that firms who have implemented the BSC have achieved some form of success and enhanced financial performance . Nevertheless, the difficulty in implementing the BSC has impeded companies, on numerous occasions, from achieving the desired results . Also, it has been claimed that the widespread adoption of nonfinancial measures is generally based on the idea that financial measures are characterized by being narrow in focus and historical is nature and may be aggregated and too unidimensional to be useful (e.g., Ittner et al., 2003; Lau and Sholihin, 2005; DeBusk et al., Budde, 2007). Van der Stede et al. (2006) emphasized that performance measures play a very important role in translating an organization’s strategy into desired organizational behaviours and consequent results, as well as in helping to communicate expectations, monitor progress, provide feedback, and on the other hand, motivate employees who would be under the BSC control system through performance-based rewards. The normative approach advocates that a blend of measures drawn from the four scorecard perspectives would contribute towards organizational performance (Kaplan and Norton, 1992, 1996). The technology acceptance model (TAM) (Davis, 1989; Davis et al., 1989) examines employees’ behavioural issues and shows that positive perceptions of the technology’s ease of use and usefulness increases employees’ liking of the technology and the likelihood that employees would use that technology. However, there is a lack of evidence that shows that overcoming these behavioural issues would have a positive impact

4

internal business. the mapping between the BSC and strategy does not guarantee enhanced performance. In this study. To the best of our knowledge. such as competition or cost structure . we first examine the effect of mapping between the firm’s strategy and the balanced scorecard on employees’ acceptance of the BSC as a management control system. which is contingent upon the type of strategy the firm is employing and the suitability of deploying the BSC while this type of strategy is in place. since it ensures that BSC objectives are well communicated to employees and guarantees their “buy into” the system. This means that a planned strategy that incorporates BSC measures—customer. A critical issue is whether score-based measures linked to the four perspectives can contribute to performance when there is a corporate strategy that acclimatizes organizational performance. we believe that the success of deploying the BSC relies on the firm’s ability to positively affect employees’ attitudes towards the BSC. In other words. the firm also needs to manage a fit between BSC usage and other internal and external variables. This study would like to contribute to the literature by examining the link between BSC implementation and corporate strategy and its impact on performance. 2003). in order to ensure a successful implementation. this has not been examined in the management accounting literature. Therefore. since other variables might also affect the usage of the BSC. Therefore. We 5 . emphasized the linkage between the different measurements of the BSC and the firm’s strategy to promote the non-financial measures from a strategic operational point of view. and learning and innovation perspectives—is fundamental.on performance (Chenhall. the mapping between the BSC and the firm’s strategy is fundamental for a successful implementation. However. This study aims at filling that gap in the literature by examining the link between employee acceptance of the BSC and firm performance.

it could also provide guidance to firms on how they could make the most of BSC usage and maximize its expected benefits. which will consequently have a positive impact on firm performance. the conclusion and research limitation are presented in section 5. which positively affects their attitudes towards the BSC. since a planned strategy insures that BSC objectives are well communicated to employees. We also examine whether employee acceptance of the BSC would lead to improved performance. since it has an impact on performance. We also believe that this study provides a validation to the TAM. Section 2 provides a review of the literature and hypothesis development.hypothesize that firms that employ a planned strategy are more suitable to deploy the BSC. The findings of this study would help explain and predict the likelihood that BSC implementation would lead to improved performance. Further. as it shows that the behavioural aspect is an important factor in BSC implementation. We hypothesize that a deliberate strategy that ensures proper implementation of the BSC will positively influence employees’ attitudes towards BSC implementation. We study a sample of firms who implemented the BSC and assess the impact of having a deliberate strategy on employee attitudes and behaviours towards the implementation of the BSC. Finally. The ability of the BSC to respond to the firm’s level of uncertainty determines the success of the BSC as a management control system. since different firms operate under different levels of uncertainty. Section 4 is a discussion of the research findings. 2. In order to respond to uncertainty. Section 3 includes the sample description and the methodology used for our analysis. the contingency theory framework predicts that control systems 6 . a model is presented in Figure 1. THEORY AND HYPOHESES The use of the BSC as a management control system is not a blueprint for success.

1988). Hirst. Govindarajan. and academic research has attempted to explore the factors behind failures . highlighted the importance of employee “buy-into” the BSC in order for the firm to derive the expected benefits from implementation. In brief. In a survey of 96 MBA students. 7 . They have found that the disengagement between employees’ goals and those of the BSC—in other words. 1977. 1984. Therefore. mapping between the firm’s strategy—as well as other internal and external factors—and the control system used by the firm is essential for a successful deployment of the control system. human resources factors have been cited as a major factor in the failure to deploy management control systems (Chen and Jones. For one thing. 1983. using a sample of firms who implemented the BSC as a tool for management control. employee attitudes towards BSC implementation. Govindarajan. Employees’ attitudes towards balanced scorecard implementation and the firm’s performance There have been many cases where firms have failed to put the BSC into operation. Govindarajan (1988) found that firms that employed a differentiation strategy achieved more success when they put less emphasis on meeting budgetary conditions in comparison with firms that employed a low-cost strategy. The disengagement between the firm’s strategy and the BSC might lead to lower levels of acceptance of the control system. In this paper. 2009.. and performance. goals set by their managers—is the reason for employee dissatisfaction. Further.would lead to improved performance if they acted in concurrence with other factors of the firm’s internal and external environment (Hayes. 2006). Johanson et al. which harms rather than benefits performance. criticize companies for employing a top-down approach in BSC implementation that does not allow employee participation in the process. they also found that BSC measures and benefits are not well communicated to employees. we study this relationship between the firm’s strategy. Further.

H1a: Perception of BSC ease of use is positively associated with firm performance. H1: Awareness of BSC capabilities is positively associated with firm performance. Islam and Kellermanns (2006) examined an individual-level model similar to the TAM developed by Davies (1989) that embraced behavioural issues that could enhance or impede BSC usage inside the firm.employee involvement and attitude towards the BSC are major success factors of BSC implementation. Chenhall (2003) predicted that positive perceptions about the ease of use and usefulness of a management control system would lead to better usage of the system. perception about the BSC’s ease of use was also associated with positive perception of the BSC’s usefulness. the firm’s strategy helps to define the type 8 . Whether the findings of have an impact on firm performance remains unknown. H1c: Intention to use the BSC is positively associated with firm performance. Based on contingency theory framework. we hypothesize that the four behavioural issues examined by would influence firm performance following the implementation of the BSC. perception of the BSC’s usefulness among employees led to greater intention to use the BSC as a management control tool. Further. They examined the association between four different factors and found that employee awareness of the BSC capabilities led to a better perception of the BSC’s ease of use and usefulness. In this reciprocal relationship. Hence. Finally. which would accordingly improve performance. H1b: Perception of BSC usefulness is positively associated with firm performance. Strategy and employees attitudes towards balanced scorecard implementation The association of management control systems with the company’s strategy is well documented in literature .

a defender strategy and a cost leadership strategy require a high level of planning with structured and detailed control systems in order to achieve results. Similarly. In return. He suggested that not every formulated strategy ends up being implemented. strategy goes through two phases: formulation and realization. prospector.” defined three types of firm strategies: a firm could use a defender. Strategy is quite an abstruse term that many scholars have attempted to define. This draws a parallel with Mintzberg’s (1978) definition of “deliberate strategy.” a strategy that goes from a careful phase of formulation into the implementation phase. claimed that prospector and differentiation adopter firms prefer more flexibility and less formal control systems. Despite the differences. which he called “emergent strategy. differentiation. These types of firms may adopt an “emergent strategy” as defined by . These firms would carefully plan the has also defined three types of strategies: cost 9 . A defender strategy is based on maintaining stability through continuous improvement of current products or services. and focus. According to . Meanwhile. where the realized strategy is a result of the decisions made in response the changes in the environment rather than a pre-planned process. including one such as the BSC. leadership. there is common ground between these definitions. a prospector strategy is built around a dynamic environment that favours innovation. On the other hand. or analyzer strategy. as mandated by the dynamic environment in which they operate.of control system required by the firm . We suggest that firms adopting a deliberate strategy are more inclined to adopt a structured management control system. the control system provides the company’s management team with the necessary support for strategy realization. Alternatively. According to . a firm might realize a strategy that results from regular daily operating decisions that end up building the firm’s strategy. The analyzer strategy falls halfway on the defender-prospector spectrum.

H3a: An emergent strategy is negatively associated with perception of BSC ease of use. If these firms adopted the BSC. firms would not be able to rely on pre-defined measures of financial. firms following emergent strategies might have their objectives changing constantly. they would find that they had difficulty in embedding the four perspectives of the BSC into their strategy. Alternatively. H2c: A deliberate strategy is positively associated with the intention to use the BSC. H2b: A deliberate strategy is positively associated with perception of BSC usefulness. since the strategy is continuously evolving. learning and innovation. since their emergent strategies would require these measures to evolve continually. H3b: An emergent strategy is negatively associated with perception of BSC usefulness. we hypothesize that a deliberate strategy is positively associated with the four factors of BSC implementation. we hypothesize that an emergent strategy is negatively associated with the four factors of BSC implementation. Therefore. 10 . Hence. Consequently. H2: A deliberate strategy is positively associated with awareness of BSC capabilities.implementation of the balanced scorecard and ensure that the four elements—customer. confusion could be created among the users of the BSC and negatively affect their perception about the tool. they would ensure that objectives were carefully communicated to employees. internal business. H2a: A deliberate strategy is positively associated with perception of BSC ease of use. and internal processes. customer. Further. Therefore. financial. H3: An emergent strategy is negatively associated with awareness of BSC capabilities. learning and innovation—were well embedded into the firm’s strategy.

the adoption process was facilitated. and its choice of control system would result in better corporate performance. Some internal characteristics of firms play a significant role in BSC implementation. the firm’s strategy. and an association between BSC objectives and strategy means that the firm’s information system could be also a determinant of the firm’s strategy. we believe that external variables would affect the firm’s strategy as well as the choice and implementation of the management control system. found that operating in a market characterized by strong competition increased the need for formal control systems. furthermore. since they might play a role in determining the firm’s strategic choices and BSC implementation factors. It is well documented that external variables are determinants of the firm’s strategy. thus. Therefore. Control variables Govindarajan and Gupta (1985) suggested that a good mapping between the elements of the firm’s external environment. 3. there is also evidence that external variables would affect the choice of the management control system. METHOD Sample selection 11 . it is necessary to control for some of the firm’s internal characteristics.H3c: An emergent strategy is negatively associated with the intention to use the BSC. information capital is part of the learning and growth perspective as defined by Kaplan and Norton (1992). Therefore. They claimed that BSC adopters had more developed information systems that enabled firms to process information in real time. For example. Further. found that differences existed between BSC adopters and non-adopters in terms of information capital.

We followed up with phone calls two weeks after the mailing date. The survey ensured that all respondents were kept anonymous.We collected data for this study by surveying individuals in management teams in American and Canadian companies. we adopted the four measures developed by to proxy for the different behavioural factors affecting the implementation of the 12 . we employed factor analysis to reduce the number of indicators for performance. BSC implementation factors: As was previously mentioned. the respondent showed his level of agreement with the subject by using a seven-point Likert-scale. Of the responses. We sent the survey questionnaires to 800 companies by mail in November 2008.4% response rate. The study examined the four dimensions of performance as described by : financial. representing an 11. We received 91 responses. In most of the questions. external environment. Other reasons for not answering the survey included company policy on not responding to surveys and the unavailability of the contact person. The list of companies was obtained using the Dunn and Bradstreet database. 63 indicated that they had used the balanced scorecard. and corporate performance. See Table 1 for details. internal business. customer. Measures of firm performance are presented in Table 1. Corporate performance: We used a large number of indicators to proxy for firm performance. Since these indicators could be linked together. Definition of variables Table 1 shows the measures that we used to proxy for the different variables employed in this study. strategy. and innovation and learning. balanced scorecard perceptions. The main reason for the low response rate was that the firms’ management was busy managing the economic depression at the end of 2008. The survey consisted of questions about the firm’s internal processes.

Measures of BSC implementation factors are presented in Table 1. and intentions to use the BSC. Table 1 shows the definition we 13 . intention to use BSC. customer perspective. we examined the level of competition in the firm’s market. employee retention.BSC. and innovation and learning perspective.e. perception of BSC ease of use. product development.. These factors were awareness of BSC capabilities. RESULTS Table 2 summarizes the results of the factor analysis that was performed to define the different constructs of BSC awareness. productivity. perceptions of BSC usefulness. Firm strategy: We examined one characteristic of firm strategy as defined by Mintzberg (1978): whether the firm’s realized strategy was a result of a pre-formulated strategy (i. and product life cycle. Internal factors: We examined the firm’s capabilities and characteristics such as the extent of use of information systems. strategy. Tests We performed OLS regression to test the relation between the variables. External factors: In terms of external factors. deliberate strategy) or whether it was an outcome of a management decision-making process in response to a changing environment (emergent strategy). financial perspective. legal environment. Measures of the firm’s strategy are presented in Table 1. changes in consumer demands. as indicated in Figure 1. perception of BSC usefulness. and market performance. 4. perceptions of BSC ease of use. The survey asked the respondents to describe whether the firm’s strategy was planned in advance or whether it was formulated over time. internal business perspective.

We also assessed the firm’s information system capabilities and controlled for firm size. and employee retention. As for the external environment in which the firm was operating. hence. We also asked them to assess the threats made by changes in customer preferences and the legal. For the internal characteristics we asked the respondents to report on the emphasis placed by their firm on the introduction of new products. 14 . the more the firm was inclined towards the adoption of a “Deliberate Strategy. The higher the values of the strategy construct. and social environment.” The second component loaded on one measure of “Emergent Strategy. It should be mentioned that the customer perspective reported in Table 2 had two components. manufacturing. Discussion of the correlation matrix Regarding the correlation between the different variables. productivity. and information technologies and product life cycle. Table 3 shows that there is a positive correlation between a firm’s strategy and the four factors affecting BSC implementation. political. called “Customer Satisfaction. gain of market share. it is called “New Products. we asked the respondents to assess changes in product. since it provides an explanation for 43% of the variation in strategy measures and since the interpretation of that component is in agreement with our expectations.employed for the internal and external characteristics of the firm. The first component was associated with the introduction of new products.” was related to customer satisfaction measures and product quality. The first component reported in Table 2 loads positively on measures of “Deliberate Strategy” and loads negatively on measures of “Emergent Strategy. Table 3 presents the Pearson Correlation between the different variables.” and the lower value of that construct meant that the firm tended to adopt an emergent strategy. The strategy construct also had two components. The second component is not reported on in this study.” The second factor.” We retained the first component.

However. it is the higher awareness of the BSC capabilities that results in higher financial performance. On the other hand. an examination of the firm’s outside environment shows that firms that face increased market competition. users who have a positive BSC experience might be willing to provide a high evaluation regarding their level of BSC awareness. Regression Analysis Results show that the firm’s internal characteristics do tie in with our definition of firm strategy. perception of usefulness. In other words. and intention to use the BSC. perception of ease of use. higher changes in manufacturing technology. there is a positive association between the type of strategy used and the BSC implementation factors—awareness.This suggests that a deliberate strategy is associated with higher levels of BSC awareness. perception of BSC usefulness. and intention to use (refer to Table 5). A positive correlation between BSC ease of use and internal processes and innovation and learning shows that BSC ease of use is essential to engage employees in using the BSC and improving some aspects of a firm’s performance. and higher legal and political threats are more likely to adopt a deliberate strategy. perception of BSC usefulness. This means that firms that adopt a deliberate 15 . perception of BSC ease of use. meaning that these firms plan their strategic actions more carefully and ensure that their plans are implemented accordingly. and intention to use it. and intention to use the BSC and vice versa. The high levels of correlation between the four BSC implementation factors may raise questions about the co-linearity between the measurements. It might be possible that the user’s overall experience with the BSC biases their assessment of the level of awareness of BSC capabilities. as shown by the positive correlation between the two variables. As predicted in H2 and H3. perceptions about the BSC. perception of BSC ease of use. refer to Table 8.

The models for BSC Awareness. Finally. However. The results show that firms that experience large changes in their social environment are more likely to be associated with higher awareness of BSC capabilities. firms that experience continuous changes in consumer demands will be more likely to see the BSC as a useful management control tool.” Table 7 shows the association between the BSC implementation factors and the external variables of the firm’s environment. Further. overall. changes in the legal and political environment will likely promote employees’ intentions to use the BSC. and BSC Intention to Use are all significant. Intuitively. firms that focus on the development of their information systems are associated with higher levels of BSC Awareness. a developed information system does not ensure that the employees would perceive the BSC as being easy to use or useful. these variables help explain the variation in BSC implementation factors. therefore. meaning that. Perception of BSC Usefulness. such as increasing 16 . firms associated with cost reduction activities. A possible explanation for this finding is that the implementation of the BSC requires a lot of preparation on behalf of the firm. Firms with a focus on revenue-side activities. A focus on market share is also associated with higher BSC awareness but is not associated with BSC perception of ease of use. would find the BSC more useful and would be much more willing to use it.strategy will likely positively influence the BSC implementation. Interestingly. such as increase in market share. and firms that adopt an emergent strategy will be less likely to do so. Table 6 shows the association between the internal characteristics of the firm and the BSC implementation factors. Neither will it ensure that employees will use the balanced scorecard. anticipation and early resolve on objectives facilitate the communication of the BSC capabilities to the employees and ensure their “buy-in. A probable explanation is that the development of information systems helps communicate the BSC capabilities effectively to employees.

awareness of BSC capabilities is negatively associated with the internal processes perspective. We also controlled for the firm’s internal characteristics and external environment 17 . A focus on increasing productivity means that employees are less aware of BSC capabilities. A possible explanation is that the implementation of formal control systems requires a lot of time and could be seen as being counterproductive. which could lead to better results. BSC perception of ease of use and BSC perception of usefulness are associated with BSC awareness. and internal processes perspectives. Figure 2 summarizes our findings. awareness of the BSC capabilities is associated with higher levels of financial performance. We hypothesized that a fit between strategy and the BSC would have an impact on the behaviour of BSC users. BSC perception of ease of use positively affects BSC perception of usefulness. Similar to the results of the study by (results are not reported).productivity. Finally. Inexplicably. as predicted by H1. customer. 5. the behavioural aspect of the employees towards BSC implementation is associated with improved levels of performance. It is positively associated with improved performance in the learning and innovation. BSC perception of ease of use and BSC perception of usefulness positively affect BSC intention to use. Furthermore. It seems that ease of use is the most important factor that leads to improved performance. As shown in Table 4. We focused on behavioural issues affecting the implementation of the BSC in companies. They are less likely to perceive of it as a useful tool and less likely to use it. CONCLUSION In this study we examined whether mapping between the firm’s strategy and management control using the BSC had a positive impact on corporate performance. are not in favour of implementing the BSC.

perception of usefulness.that could affect the choice of the firm’s strategy and the implementation of the balanced scorecard as a management control tool. thus. as it fostered employee buy-in of the control system. Islam and Kellermanns (2006) showed that these factors were interrelated and that awareness about BSC capabilities was the first step that drove employees’ perception of ease of use and usefulness. Employees of firms with deliberate strategies were more likely to be aware of BSC capabilities. have better perceptions about its ease of use and usefulness. it could lead to advancing a firm’s performance. We argue that the link between these factors and the firm’s strategy would enhance employees’ understanding of BSC capabilities and strengthen their view that the BSC could help the firm to improve. we expect those firms with clear and planned strategies—deliberate strategies. and thorough understanding. BSC implementation is a complex task that requires careful planning. Our study has confirmed these findings. and BSC implementation might cause confusion among the users if they experienced continuously changing objectives. we found that a planned strategy facilitated BSC implementation. perception of ease of use. We also found that the perception of BSC ease of use was the most important factor from which different performance measures were derived. and were more willing to use the tool. preparation. firms with emergent strategies do not have a clear strategic vision. which in return increased the likelihood that employees would buy into the BSC and become more willing to use it. and intention to use. We examined four behavioural factors that affect BSC implementation. It is employees’ perception that the 18 . which are BSC awareness. as defined by —to be more successful in communicating BSC capabilities and selling the BSC to their employees. Hence. Our explanation is that employees’ awareness of BSC capabilities and usefulness is essential but not enough to drive performance. Alternatively. In agreement with our expectations.

However. during the period when the survey was conducted. These findings could be interesting to firms implementing. The study result shows aggregate inferences for industries in general rather than for a particular type of industry. The result of the use and implementation of the BSC could be different depending on a type of industry. and the results are encouraging. which could have caused the sample size to be small. Understandably. the BSC. or planning to implement. in 2008.BSC is easy to use that drives effectiveness. as it helped to increase awareness of BSC capabilities. We propose that firms provide employees with planned objectives that embrace the different BSC measures and clear guidelines on handling the BSC in order to eliminate possible frustrations that could occur during implementation and ensure employee buy-in. and further investigation is needed. was undergoing an economic depression. the results cannot be generalized. Limitation of the study This is one of the studies exploring the survey data of the manufacturing companies who are using the BSC. the world economy. The current study mailed out the survey questionnaires to all types of companies at random. This study has tested some hypotheses. 19 . Future study for BSC implementation and its implications on performance is required based on the industry-specific data of the companies. including that of the USA and Canada. We recognize that. Finally. because there are some limitations of the study. it may be argued that the survey period was not a normal one. based on sales and industry description criteria. we found that the development of strong communication and information systems was vital for BSC implementation. which requires further investigation. which leads to improvement in performance. as it provides them with a perspective on how to maximize their benefits from using the BSC as a management control system.

20 .

Figure 1: Balanced scorecard implementation model Internal Factors Strategy BSC Implementation Factors Performance External Factors 21 .

Figure 2: Summary of Results 22 .

Performance Internal CharacteristicsSizeSales from New ProductsMarket Share*Productivity*Informatio n SystemsEmployee Retention Financial BSC Implementation Factors Perception Ease of Use Strategy Awareness Intention to Use Perception Usefulness Customer Internal Processes Internal CharacteristicsCompetition*Pr oduct TechnologyManufacturing Technology*Information TechnologyLegal Environment*Customer PreferencesProduct Life CycleSocial Environment* Learning and Innovation 23 .

4. the formal plan precedes the action).Table 1: Measures of strategy. Strongly Strongly Disagree Agree 1. BSC implementation factors: Measures of BSC Awareness I know the feature of the balanced scorecard approach I am aware of the cost of deploying balanced scorecard I know the extent of benefits that can be derived by deploying the balanced scorecard I don’t know the type of business activities in which balanced scorecard information can be deployed Perceptions of BSC Ease of Use The balanced scorecard approach is easy to learn The balanced scorecard approach is clear and understandable The balanced scorecard approach is easy to use The balanced scorecard approach is flexible The balanced scorecard approach is hard to follow Perceptions of BSC Usefulness Using balanced scorecard would improve company performance Using balanced scorecard in the company would increase productivity Using balanced scorecard would enhance effectiveness in the company I find balanced scorecard would be useful in my company. We typically don't know what the strategic priorities of our business strategy should be until we engage in some trial and error actions. internal and external factors Strategy: Please indicate your opinion about the following statements. Formal strategic plans serve as the basis for our competitive actions.e. rather. My Organisation's strategic priorities are typically not planned in advance but. My Organisation's strategic priorities is carefully planned and well understood before any significant competitive actions are taken. Intentions to use BSC 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 24 . 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 5. 3. 2. Competitive strategy for my Organisation typically results from a formal business planning 1 2 3 4 5 6 7 process (i. emerge over time as the best means for achieving our objectives become clearer.. performance. BSC implementation factors.

If any of the following performance indicators is NOT currently used in evaluating your Organization’s performance. I intend to use it Given that I had access to BSC.Assuming I had access to BSC. Significantly Below Not Average used Significantly Above Average Financial Perspective Rate of return on investment (ROI) Percentage of market share Sales growth Cash flow from operations Customer Perspective Product (or service) quality Customer satisfaction with product/service delivery process Percentage of sales from new products Development of markets for new or existing products Internal Processes Perspective Comparative costs with similar unit of competitors (or service provider) Decrease in percentage of waste and rework (or error correction) Decrease in percentage of total cost to net sales (services or products) Decrease in percentage of sales returns Your company’s budget for waste management Learning and Innovation Perspective Employee satisfaction Investment in information technology/E-commerce 0 0 1 1 2 3 4 5 6 7 2 3 4 5 6 7 0 0 0 0 0 1 1 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 0 0 0 0 1 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 0 0 0 0 1 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 25 . please indicate by selecting zero (0) beside those specific performance indicators. please indicate your Organization’s overall performance over the past 3 years in the following areas by rating it on a scale below ranging from one (significantly below average) to seven (significantly above average). I predict that I would use it 1 1 2 2 3 3 4 4 5 5 6 6 7 7 Performance: With four (4) representing the industry average.

Percentage of sales from new products or services 3. the tastes and preferences of your customers have become: 6.000 to $ 499. 3. Remained about the 1 same 2 3 4 5 6 7 Have greatly proliferated During the past 5 years. 4. Information systems capabilities 6. Much easier to predict 1 2 3 4 5 6 7 Much harder to predict The expected life cycle of the products in your industry is: 26 . the legal and/ or political compliance requirements for product or service provision by your organisation have: 5. Product technology (made or used) Manufacturing technology (to make products or to provide services) Information processing technology 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 6 6 6 Very dynamic rapidly) 7 7 7 (changing During the past 5 years.000 to $ 999. Firm size: Annual Sales (Please check the relevant box) Less than $ 100. Other factors: Not used 0 0 0 0 0 Low usage 1 1 1 1 1 High usage 6 7 6 7 6 7 6 7 6 7 2. Increase/change in market share 4.999 $ 1 million or more $ 500 million or more 2. How intense is competition for market share 1 2 3 4 5 6 7 Extremely intense How stable is the technological environment facing your organisation? Very stable (changing slowly) 2.000 $ 500.Workplace relations Employee health and safety Employee training and development 0 0 0 1 1 1 2 3 4 5 6 7 2 3 4 5 6 7 2 3 4 5 6 7 Internal Variables: 1. Employee productivity 5.999 $ 100 million or more $ 100. Employee retention 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5 External Variables: Negligibly intense 1.

7. Very stable (changing 1 slowly) 2 3 4 5 6 7 Very dynamic rapidly) Very dynamic rapidly) (changing How stable is the social environment (such as conservation. green movement) facing your firm? 2 3 4 5 6 7 (changing 27 . Very stable (changing 1 slowly) 8.

Factor Analysis for the Attributes of BSC Awareness I know the feature of the balanced scorecard approach I am aware of the cost of deploying balanced scorecard Component Loading .658 balanced scorecard information can be deployed Factor Analysis for the Attributes of Perception of Component Loading BSC Ease of Use The balanced scorecard approach is easy to learn The balanced understandable scorecard approach is clear .760 Variance Explained (%) The balanced scorecard approach is easy to use The balanced scorecard approach is flexible The balanced scorecard approach is hard to follow 75.931 ..672 plan precedes the action). rather. My Organisation's strategic priorities is carefully planned and well understood before any significant competitive . Competitive strategy for my Organization typically results from a formal business planning process (i.893 74.Table 2: Results of Factor Analysis Factor Analysis for the Attributes of Strategy Component Loading Variance Explained (%) We typically don't know what the strategic priorities of our business strategy should be until we engage in some trial -.931 deploying the balanced scorecard I don’t know the type of business activities in which -.841 actions.878 -.903 and .1 Factor Analysis for the Attributes of Perception of Component Loading BSC Usefulness Variance Explained (%) 28 . the formal . My Organisation's strategic priorities are typically not planned in advance but.1 Variance Explained (%) 42.622 means for achieving our objectives become clearer.606 actions are taken. Formal strategic plans serve as the basis for our competitive . emerge over time as the best -.e.863 .480 and error actions.9 I know the extent of benefits that can be derived by .919 .

Factor Analysis for the Attributes of BSC Intention to Component Loading Use Assuming I had access to BSC.3 Given that I had access to BSC.838 .574 service provider) Decrease in percentage of waste and rework (or error .838 57.137 Rate of return on investment (ROI) Percentage of market share Sales growth Cash flow from operations Factor Analysis Perspective for 48.232 Percentage of sales from new products Development of markets for new or existing products .2 Variance Explained (%) 86.138 Customer Satisfactio n .9 Variance Explained (%) Customer satisfaction with product/service delivery process -.95 Factor Analysis Perspective for the Attributes Financial Component Loading .823 .8 Factor Analysis for the Attributes of Internal Processes Component Loading Perspective Comparative costs with similar unit of competitors (or .896 productivity Using balanced scorecard would enhance effectiveness in .553 -.95 Variance Explained (%) 90.561 .329 .737 the Attributes Customer Component Loading New Product s Product (or service) quality .737 or products) Variance Explained (%) 41.944 I find balanced scorecard would be useful in my company.632 .Using balanced scorecard would improve company . I intend to use it .648 .949 performance Using balanced scorecard in the company would increase .4 29 .770 correction) Decrease in percentage of total cost to net sales (services .926 the company . I predict that I would use it .

786 .810 .568 .560 .593 .857 54.617 .593 Variance Explained (%) Factor Analysis for the Attributes of Learning and Component Loading Innovation Perspective Employee satisfaction Investment in information technology/E-commerce Workplace relations Employee health and safety Employee training and development .2 30 .Decrease in percentage of sales returns Time to market (make available to public) new products Your company’s budget for waste management .

303 -0.24 0.181 . 465** .143 -0.182 0.340* 0. 827** 0.235 0. 477** .275 0.125 0.181 0.04 0.021 0.105 0.274 -0.027 .036 0. 777** .092 1 0. 562** .295 0.078 0. 698** 0.043 .123 0.006 0.157 0.036 0.252 0.338* -0.Table 3: Pearson Correlation Strategy BSC_Awarness BSC_Ease_of_Use BSC_Usefulness BSC_Intention_to_Use Financial Customer_New_Product Customer_Satisfaction Internal_Processes Learning_Innovation Strategy BSC_Awarness BSC_Ease_of_Use BSC_Usefulness BSC_Intention_to_Use Financial Customer_New_Product Customer_Satisfaction Internal_Processes Learning_Innovation Size Sales from New Products Market Share Productivity Information Systems Employee Retention 1 .064 0.047 0.185 0.037 0.016 1 . 599** .237 1 0 .392* -0.041 -0.101 1 .241 -0. 451** .129 0.252 0. 466** .155 0. 399** 0.153 0.117 0.026 0. 610** .023 0.223 -0.116 -0.182 0.013 .183 0.013 0. 895** .309* -0.203 0.207 1 .064 0.266 -0. 693** -0. 418** 0.097 -0.166 -0.05 -0.06 .012 -0.083 0.232 -0.107 -0.267 .148 . 605** -0.066 1 0.209 0. 680** .098 0.204 0.022 0.02 0.05 0.106 0.107 -0.141 31 .135 1 0. 414** -0.039 0.095 1 0.068 -0.071 -0.073 0.141 1 .176 0.334* -0.094 0. 477** 0. 404** .276 0.

178 0.483** .008 0.106 .213 0.1 Manufacturing Technology Sales from New Products Information Technology Customer Preferences Information Systems Employee Retention Product Technology Social Environment Legal Environment Product Life Cycle Market Share Competition Productivity Size Size Sales from New Products Market Share Productivity Information Systems Employee Retention 1 -0.201 0.11 0.148 .043 -0.12 .300* 0.024 0.198 .314* 0.108 0.274* 0.138 -0.Competition Product Technology Manufacturing Technology Information Technology Legal Environment Customer Preferences Product Life Cycle Social Environment .231 1 32 .005 0.119 .082 -0.281 0.206 -.039 -0.233 -0.459** 1 0.292* 1 .152 0. 536** . 488** .193 0.042 .007 0. 480** .257 .181 .066 0.27 .205 0.106 0.031 .411** 1 0.318* 0.219 .084 . 413** . 422** .299* 0.036 0.144 0.043 0. 471** 0.021 -0.199 -0. 477** 0.11 .082 .046 0. 471** .068 -0.056 .366* 0. 413** .332* -0.096 -0.310* 0.637** .283* 0.127 0.238 0. 509** . 480** -0.097 0. 393** .065 0.077 1 -0.291* 0.015 0.153 -0.167 0. 455** -0. 396** 0. 448** .21 .046 -0.047 -0.138 0.122 -0.285 0.063 -0.032 0.313* 0.107 0. 408** .

199 0.344* 0.348** .279 0.248 0.169 0.019 0.466** 0.257 1 . ** p < .16 0.009 0.146 .1 level (2-tailed) 33 .677** .004 1 .330* 1 -0.011 0.257 0.307* 0.395** .385** 1 *** p < .204 .351* 0.068 0.043 -0.037 0. * p < .044 0.165 0.027 0.044 0.391* 0.614** .379* 0.122 .463** 1 -0.331* .415** .159 -0.Competition Product Technology Manufacturing Technology Information Technology Legal Environment Customer Preferences Product Life Cycle Social Environment -0.158 0.084 0.241 .05 level (2-tailed).288 0.311* .158 .293 1 .036 -0.015 .23 .314* .421** .063 0.414** 1 .700** .471** -0.01 (2-tailed).19 .309* .293 .119 0.004 .26 -0.357* 0. 420** .394** .12 0.081 0.021 0.047 -0.395** 0.433** .118 0. 358** 1 .034 -0.415** 0.056 -0.135 0.103 0.414** .

180 -.380 .032 Customer Perspective New Products Customer Satisfaction β -.218 12.096 .01 (2-tailed).312 3.79** * .278 .081 .173 .526*** .147* .05 level (2-tailed).39*** .216 12.406* .225** -. * p < . ** p < .05 level (2-tailed).1 level (2-tailed) Table 5: Results factors affecting BSC implementation on Strategy BSC Awareness R2 β F Perception of BSC Ease of Use R2 F β Perception of BSC Usefulness R2 F β BSC Intention to Use R2 F β Strategy .228 13.231 .153 R2 .529 . * p < .01 (2-tailed).983 .848** *** p < .1 level (2-tailed) 34 .430 R2 Learning Innovation Perspective R2 β -.719** and F 3.044 F .030 2.808* .6*** .731* .845*** *** p < . ** p < .296 .338*** .327 -.12** * .282 Processes F R2 F R2 F BSC Awareness Perception of BSC Ease of Use Perception of BSC Usefulness BSC Intention to Use β -.375 .269 Internal Perspective β -.275 .697*** .Table 4: Results of Performance regression on factors affecting BSC implementation Financial Perspective β .394*** .140 .316 22.

226 -.036 .407** -.032 .775 *** p < .099 .1 level (2-tailed) 35 .018 .124 .063 .405** -.275 1.05 level (2-tailed).297** -.Table 6: Results factors affecting BSC implementation regression on Internal Factors BSC Awareness R2 β F Perception of BSC Ease of Use R2 F β Perception of BSC Usefulness R2 F β BSC Intention to Use R2 F β Size Sales from New Products Market Share Productivity Information Systems Employee Retention .096 .127 .107 .897* * .031 -.375 2.638 -.695** .466** .148 .002 -.398** . ** p < .025 .153 .164 . * p < .099 .375 2.462* .01 (2-tailed).282* -.087 .

71** .202 -.39 2. ** p < . * p < .147 .434*** -.197 2.129 -.049 .189 .01 (2-tailed).433 3.288* -.116 .074* .207 .151 .116 .266 -.050 .054 .042 -.Table 7: Results factors affecting BSC implementation regression on External Factors BSC Awareness R2 β F Perception of BSC Ease of Use R2 F β Perception of BSC Usefulness R2 F β BSC Intention to Use R2 F β Competition Product Technology Manufacturing Technology Information Technology Legal Environment Customer Preferences Product Life Cycle Social Environment .127 .901 .321** *** p < .001 -.043 .054 .019 .39** -.276 -.063 .009 .238 .1 level (2-tailed) 36 .081 .048 .198 .198 .023 .05 level (2-tailed).137 .108 .039 .

076 .220 -.01 (2-tailed).05 level (2-tailed).01 (2-tailed). ** p < .356* -.064*** *** p < . * p < .101 -.Table 8: Results of Strategy regression on Internal Factors Strategy β R2 F Size Sales from New Products Market Share Productivity Information Systems Employee Retention . * p < .140 .1 level (2-tailed) Table9: Results of Strategy regression on External Factors Strategy β R2 F Competition Product Technology Manufacturing Technology Information Technology Legal Environment Customer Preferences Product Life Cycle Social Environment .301* .306* .386 3.026 -.001 .1 level (2-tailed) 37 . ** p < .119 .088 .175 .012 .548 *** p < .027 .05 level (2-tailed).204 .

User acceptance of computer technology: A comparison of two. C. Jones. DeBusk. The Journal of Accounting Research. R. Brown. MIS Quarterly 13. N. 2009.. (1) (Fall): 36-44. and D. J. Oyon. De Geuser. European Accounting Review 18. Organizations and Society 28. Management Science 35. 2005. F. Performance measures congruity and the balances scorecard. Perceived usefulness. Advances in Management Accounting 14. Davis. and user accep. Bagozzi. (2. R.. F. Management control systems design within its organizational context: Findings from contingency-based research and directions for the future..3): 127-168. Davis. (3): 319-340. M. perceived ease of use. 2009. 1989. L. Accounting. Are employees buying the balanced scorecard? Management Accounting Quarterly 11. R.. S.REFERENCES Budde. 2003. Does the balanced scorecard add value? empirical evidence on its effect on performance. F. 38 .. Killough. K. (8): 982-1003. 2007. Autumn. Warshaw. and K. 1989. Mooraj. Chenhall. (1): 93-122. and P. Chen. 61-89.. 177-203. Financial Measures bias in the use of performance measures systems. G.

(4) (Dec): 828-853. Journal of Management Accounting Research 12. 1977. Hirst. David C. Kellermanns. Vijayaraghavan. Linking control systems to business unit strategy: Impact on performance. Firm.. Mark K. Canadian Accounting Perspectives 5. Reliance on accounting performance measures. Z.and individual-level determination of balanced scorecard usage. (1): 51-66. 2000. (2) (Autumn): 596-605. (2): 181-207. M.Govindarajan. : 1-17. Accounting. (1) (Jan): 22-39. 1983. Linking balanced scorecard measures to size and market factors: Impact on organizational performance. 39 . 1984. Hoque. A contingency approach to strategy implementation at the business-unit level: Integrating administrative mechanisms with strategy. Organizations and Society 9. and W. Islam. 2006. Academy of Management Journal 31. V. The Accounting Review 52.. Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable. Hayes.. 1985. James. Accounting. Govindarajan. (2): 125-135. task uncertainty. The contingency theory of managerial accounting. and F. and A. Journal of Accounting Research 21. 1988. Vijay. Gupta. and dysfunctional behavior: Some extensions. Govindarajan. Organizations and Society 10.

Balancing dilemmas of the balanced scorecard. 1972. T. U. Randall. 2005. Accounting.M. 71-79. M. 2003. Perfoance implications of starategic performance measurement in financial services firms. Transforming the balanced scorecard from performance measurement to strategic management: Part I. : 753-783. Skoog. and Norton. Handbook of Management Accounting Research 2. Harvard Business Review 74 (Jan-Feb). 1992. Accounting. (1) (Jan): 71-79. P.. and D. 2006. (2): 275-285. A.. Kaplan. Using the balances scorecard as a strategic management system. Larcker. K. M. ———.F.. 389-413.D. Harvard Business Review 70. 1996. Financial and nonfinancial performance measures: how do they affect job satisfaction? The British Accounting Review 37.. C. Sholihin. Norton.. 715-741. The effect of different types of competition on the use of management controls. D.Ittner. Khandwalla. (6): 842857. Kaplan. Almqvist. 40 . S. Journal of Accounting Research 10.. A review of quantitative research in management control systems and strategy. Lau. 2007. P. Langfield-Smith. 2001a. R. Accounting Horizons 15. Organizations and Society 28. and R. Auditing & Accountability Journal 19. Johanson.. Backlund. The balanced scorecard--measures that drive performance.. R.. C. (1) (Mar): 87-104. D.

Mintzberg. Strategy. and performance.. choice of performance measures. H. (9): 934948... Lin. 1980. W. and process. New York: NY: Free Press. Patterns in strategy formation. activity-based costing and company performance: An empirical analysis. and F. 2003.Maiga. 41 . 185-205. structure. R.. Behavioral Research in Accounting 18. and A. Balanced scorecard. 1978. T. (3): 546-562. Management Science 24. (3): 283-301. Snow.W. Journal of Managerial Issues 15. W. Organizational strategy. Chow. C. A. 2006. C. Jacobs. Academy of Management. Meyer. M. Van der Stede. Miles. Porter. Competitive strategy. 1978.the Academy of Management Review 3.

Sign up to vote on this title
UsefulNot useful