school of accounting€¦ · school’s professor robert kaplan and his practitioner associate...

School of Accounting

Seminar – Session 1, 2012

Celebrating the 20th

Anniversary of the Balanced Scorecard: Relevance Lost or Relevance Gained

and Sustained?

Zahirul Hoque

La Trobe University Date: Friday 30th

Time: 3:00 to 4:30 pm March

Venue: Webster256

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Celebrating the 20th anniversary of the Balanced Scorecard: Relevance lost or relevance gained and sustained?*

Zahirul Hoque La Trobe Business School

La Trobe University, Melbourne

Corresponding author: Zahirul Hoque, Professor of Accounting, La Trobe Business School, Faculty of Business, Economics and Law, La Trobe University, Melbourne, Victoria 3086, Australia; Tel (613) 9479 3433; Fax (613) 9479 3047; E-mail: [email protected] *An earlier version of this paper was presented as a keynote speech at the New Zealand Management Accounting Conference in Wellington, New Zealand, 17-18 November, 2011. I am gratefully appreciative of Professor Shahid Ansari and Professor Jan Bell for providing logistic support when developing the earlier draft of this paper during my visit at Babson College, Boston as an Exchange Scholar in July-August 2010.

mailto:[email protected]�

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Celebrating the 20th anniversary of the Balanced Scorecard: Relevance lost or relevance gained and sustained?

A B S T R A C T

2012 marks 20 years since the first publication of the article on the balanced scorecard, which was written by Robert Kaplan and David Norton. This paper critically reviews the research on the balanced scorecard over the past 20 years. My intention is to contribute to the thinking about the achievements and the relevance of the balanced scorecard in the 21st century’s complex business environment. Following this, I attempt to identify future research opportunities. The review used 114 articles published in 27 accounting academic journals and 67 articles published in 34 business and management academic journals in the twenty-year period, 1992-2011. The reviewed articles have been categorized by each article’s topic(s), setting(s), theoretical framework, research method, and data analysis techniques. My analysis reveals much diversity in existing balanced scorecard research in terms of topics, settings, methods and data analysis techniques. I conclude that the application of the balanced scorecard worldwide is on the rise and, more importantly, industries and practitioners in the public and private sectors find the balanced scorecard concept is still relevant to their organizations in the 21st century’s rapidly changing environment. Further, my review suggests that there lacks theory-driven in-depth studies in the balanced scorecard. As such, several theory-driven ideas and practical issues are developed and recommended for future research. _____________________________________________________________________

1. Introduction The purpose of this article is to foster research for an improved understanding of performance management practices by critically reviewing 20 years of achievements of the balanced scorecard, an approach invented in 1992 by Harvard Business School’s professor Robert Kaplan and his practitioner associate David Norton. The outcomes of this review are of significant interest to both academics and businesses. The review will enable businesses to make strategic decisions when designing and implementing a balanced scorecard type performance management practice as insights from this review will demonstrate how the balanced scorecard concept has been used in organizations around the world over the past 20 years. By bringing insights from the accounting and management research literatures, the review will deliver to the academic community a range of “new” ideas for future research. 2012 marks 20 years since the first publication of the article on the balanced scorecard in the Harvard Business Review (HBR) in 1992. Based on a year-long research project within 12 companies, Kaplan and Norton disseminated their findings through a performance measurement framework, which they developed and called a Balanced Scorecard. The balanced scorecard expands on mere financial performance measures and incorporates operational performance measures categorized by three perspectives: customer satisfaction; internal business processes; and employee learning and growth. Kaplan and Norton (1992) suggest that a balanced scorecard allows an organization at all levels of the business to assess its progress towards achieving its targets and to take corrective actions, where needed. After their 1992 seminal article, and later based on their investigations into more than 300 organizations, Kaplan and Norton wrote a series of articles (Kaplan & Norton, 1993,

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1996a, 1996b, 2000a, 2001a, 2001b, 2004a, 2005a, 2005b, 2006a and 2008a) and several books (Kaplan & Norton, 1996c, 2001c, 2004b and 2006b) to advance the knowledge base of the balanced scorecard. Kaplan and Norton remarked about their balanced scorecard innovation1

Workshops and seminars have been devoted to the balanced scorecard and many books have been published by other scholars containing case studies of the implementations of balanced scorecards and practical guides for adopting the balanced scorecard in both the private and public sectors (see, for example, Hannabarger, Buchman, & Economy, 2007; Niven, 2002, 2008; Olve, Roy, & Wetter, 1998; Person, 2009). The popularity of the balanced scorecard as a research topic is also evident in a number of inter-country studies that demonstrate the wide implementation of the balanced scorecard in organizations across various settings (for example, see Ax & Bjornenak, 2005; Braam & Nijssen, 2004; Hoque & Adams, 2011; Hoque & James, 2000; Pere, 1999; Shiu & O’Connor, 2011; Silk, 1998). Thousands of companies across the world have adopted the philosophy of the balanced scorecard not just as a measurement system, but also as a strategic management system (Kaplan & Norton, 2004b). Academic and professional studies illustrate the ways in which the balanced scorecard is able to help organizations to be more effective.

: “just as you can’t manage what you can’t measure, you can’t measure what you can’t describe’ (Kaplan & Norton, 2004b, Preface). About fifteen years ago, in a review essay Atkinson and his associates (Atkinson, et al., 1997, p. 94) note that ‘the balanced scorecard is among the most significant developments in management accounting and thus, deserves intense research attention.’ Since then balanced scorecard has been receiving increasing attention in accounting research and in business and management research.

While several prior reviews of the management accounting research (e.g., Chenhall, 2010; Chenhall & Smith, 2011; Hesford et al., 2007; Hopper et al., 2001; Ittner & Larker, 1998; Malmi & Brown, 2008; Otley et al., 1995; Scapens & Bromwich, 2001; Selto & Widener, 2004; Shields, 1997; Shields & Shields, 1998; Wagenhofer, 2006) have provided useful insight on the role of performance measurement systems in organizations, these reviews have not taken the balanced scorecard as their primary focus. This paper expands upon these previous reviews by critically assessing the research on the balanced scorecard over the last 20 years. In doing so, first, this paper tabulates and synthesizes the balanced scorecard research literature in accounting and in management during the twenty-year period (1992-2011). Second, it discusses what is special about the balanced scorecard, what specific issues and problems have to be addressed, what the nature of balanced scorecard practices is in organizations, and what has been found in the research literature. The paper then identifies those areas where we know certain things and those where we do not – that is, we investigate the gaps in the existing balanced scorecard research literature. At the end of this review, the paper identifies lessons that can be learned by studying some specific issues in organizations. Further, this paper contributes to the generation of knowledge in the balanced scorecard research by examining whether the balanced scorecard is still relevant to practice in the 21st century as it evolved 20 years ago to meet the changing needs of organizations.

1 The term “innovation” has been defined as an ‘idea, practice, or object that is perceived as new by an individual or other unit of adoption’ (Rogers, 2003, p. 11). This implies that when a new tool or practices is adopted by an organization, it is considered as an innovation to the organization and to its people even though such tool may have been long invented. In this context, the balanced scorecard is an innovative performance management tool.

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2. Review framework A literature review is a voyage of gathering empirics or facts on issues surrounding a particular topic. A major problem confronting a literature reviewer is how to find reliable sources of data; it is a challenging task and a researcher needs to plan carefully before embarking on this journey; otherwise he/she may end up with a large volume of material that may not be relevant to the topic(s) under search. There are two primary ways of searching the literature. One is to choose particular discipline-focused journals in advance with a view to synthesize prior research on the chosen topic. Another approach is to carry out an exploratory search using web-based search engines such as Google Scholars and commercial databases such as ProQuest and Scopus. The former approach is more discipline-focused and it is easy to systematically develop and synthesize findings. The latter approach is fairly unfocused and it is appropriate for an exploratory type search on a general topic in the field. Since the current review focuses on a specific topic that is the balanced scorecard, it opted for the former approach. Figure 1 offers a general guideline or review framework to conducting a literature review.

INSERT FIGURE 1 HERE The current review was carried out primarily by consulting 27 accounting journals (see Appendix 1) and 34 business and management journals (see Appendix 2). As a standard way of making a start, the search began using the terms ‘Balanced Scorecard’, and ‘Scorecard’ and was based on articles published by an individual journal and available on its web homepage. The results revealed several papers which bore no direct connection to the precise review requirements, as it picked up all papers which had the words ‘balanced’ or ‘scorecard’. Therefore another round of searching was carried out on these papers by typing the terms ‘balanced scorecard’, or ‘scorecard’ in the search bar in the PDF version of the article, and then manually examining all articles as to what extent they carry insights and experiences on the balanced scorecard. From the outset, the focus of the review was on publications that explicitly concentrated on the balanced scorecard. A review was also carried out on publications available on the web on the balanced scorecard to provide additional insights into the topic. For this source for the review, a relevant balanced scorecard web-based publication was one that directly relates to the research topic and has been published exclusively on the web. Newspaper articles, books, magazines, conference papers, software packages, interview transcripts, and seminars and workshop material on the balanced scorecard have not been considered. Some websites were excluded because of restricted access, for reasons such as requiring login password; connection issues, such as website or server not found; and the re-direction failure of host website. As shown in Figure 1, following Chenhall and Smith (2011) and Shields (1997), the published articles were categorized by (a) topics / issues, (b) research settings, (c) theory/theories, (d) research methods, (e) data analysis techniques, and f) results. 3. Developments of the balanced scorecard concept In the late 1980s, authors filled the professional and academic publications with recommendations to rely more on non-financial measures for both evaluating and managing organizations (Berliner & Brimson, 1988; Dixon et al., 1990; Johnson & Kaplan, 1987; Nanni et al., 1988; Rappaport, 1999). Scholars and practitioners have

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expressed concerns with traditional performance measures that focus solely on financial metrics which have little relevance to practice (Atkinson et al., 1997; Ittner et al., 1997; Johnson & Kaplan, 1987; Kaplan & Norton, 1996a, 1996b, 1996c; Luft, 1997; Lynch & Cross, 1991; Shields, 1997). Performance measures that are based solely on financial numbers such as return on investment, net earnings and ex post costs have been criticized for encouraging managers to focus on short-run financial results while sacrificing long-run prospects. In the 21st century’s global markets and digital era, traditional financial measures have been considered out-of-step as they portray misleading signals for long-term strategies and continuous improvements in organizational processes and performance. In 1992, Kaplan and Norton came up with an idea about how to combine financial measures with non-financial measures in a single performance scorecard, the ‘Balanced Scorecard.’ Following their inaugural article, Kaplan and Norton have developed the concept further. Kaplan and Norton’s 1992 version of the balanced scorecard focuses on the following four perspectives (see Figure 1 in Kaplan & Norton, 1992): Customer perspective: (How do customers see us?): Customer perspective focuses on how organizations create value for customers. Some typical measures are customer satisfaction, market share, customer response time, time to market and defect level; Internal business perspective: (What must we excel at?): Internal measures stem from business processes. Companies should identify and measure their core competencies in areas such as manufacturing excellence, design productivity, new product introduction, and technology capability; Innovation and learning perspective: (Can we continue to improve and create value?): Innovation and learning measures emphasize the ability of companies to make continual improvements to existing products and services and to introduce new products with expanded capabilities. Examples include measures of employees’ capabilities and skills, technology leadership, manufacturing learning and product focus; and Financial perspective: (How do we look to shareholders?): Financial measures indicate whether company’s strategy, implementation and execution are contributing to bottom-line improvement. Typical measures include cash flow, sales growth, return on equity, and market share. In their 1993 article, Kaplan and Norton showed how this new, state-of-the-art balanced approach to performance measurement can keep companies looking and moving forward, while reliance only on financial measures leads to a backward-looking focus. In their first book on the balanced scorecard, Kaplan and Norton (1996c) show company managers how to ensure the successful adoption of a balanced scorecard by treating the scorecard as a strategic management system that integrates financial with non-financial strategic measures. Beginning as an operational performance measurement system, the balanced scorecard concept has been developed into a strategic management system to help companies manage their strategy over the long run. Kaplan and Norton (1996c, p. 19) identify four major steps in implementing a balanced scorecard strategic framework: (1) clarifying and translating the vision and strategy, (2) communicating and linking strategic objectives and measures, (3) planning, target setting and aligning strategic initiatives, and (4) enhancing strategic feedback and learning.

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In their book Kaplan and Norton re-classified two of the four original perspectives developed in the 1992 article: Internal Business Perspective has been re-labeled as Internal Business Processes with an addition of the innovation element while the Innovation and Learning Perspective has been re-labeled as Learning and Growth, with an additional element of growth and the removal of innovation element (see Figure 1-1 in Kaplan and Norton, 1996c, p. 9). The 1996c version of the balanced scorecard is distinct from other strategic measurement systems in that it contains outcome measures and the performance drivers of outcomes, linked together in cause-and-effect relationships making the performance measurement system a feed-forward control system. Kaplan and Norton (1996c, p. 31) outlined the following causal relationship: measures of organizational learning → growth measures of internal business processes → measures of the customer perspective → financial measures, with the nature of relationship following the direction of the arrows. An effective balanced scorecard has a mix of outcome measures, lag indicators, performance drivers, and lead indicators (Kaplan & Norton, 1996a, 1996c). Kaplan and Norton next developed five leadership and management principles for successful strategy execution, which arose from their study of some balanced scorecard adopters (2003). The principles are: a) mobilize change through executive leadership; b) translate the strategy; c) align the organization to the strategy; d) motivate employees to make strategy their everyday job; and e) govern to make strategy a continual process. Subsequently, Kaplan and Norton (2006a) developed different types of balanced scorecard perspectives (financial synergies, customer synergies, internal process synergies, and learning and growth synergies), which they call The Enterprise Scorecard (see Figure 3, Kaplan and Norton, 2010, p. 26); this scorecard may help organizations to create corporate synergies. The recent concept of the balanced scorecard emphasizes the linkage of measurement to a strategy map; this tighter connection between the measurement system and the strategy map elevates the role of non-financial measures in strategy implementation (see Figure 2 in Kaplan and Norton, 2010, p. 22). Kaplan and Norton show how their recent work has focused on the link between strategy and operations (Kaplan & Norton, 2008a, 2008b). The 2010 article shows ‘the architecture of a comprehensive six stage closed-loop management system that links strategic planning with operational execution’ (p. 27; see Figure 4 Kaplan and Norton, 2010, p. 28). Kaplan and Norton’s six stages are: Develop the strategy, Translate the strategy, Align the strategy, Plan operations, Monitor and learn, and Test and adapt the strategy (Kaplan and Norton, 2010, p. 27). Table 1 provides a snapshot of the historical developments of the balanced scorecard concept.

INSERT TABLE 1 HERE Looking at the wider diffusion of the balanced scorecard concept across the globe, the balanced scorecard certainly has attracted a great deal of attention from practitioners for its several practical benefits. Traditional measurement systems only include financial measures, while the balanced scorecard is designed to improve managers’ decision making by guiding their attention to a broader vision of the company’s operations (Kaplan & Norton, 1992). The use of the balanced scorecard leads to improved managerial decision making by aligning performance measures in the firm’s business units with the goals and strategies of the firm (Kaplan & Norton, 1996c).

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The paper by Ittner et al. (2003) reinforces Kaplan and Norton’s idea of combining financial measures with non-financial measures in a scorecard by highlighting that the balanced scorecard provides causal links connecting the multiple classes of non-financial measures (“drivers of the performance”) and the financial measures (“final outcome”). Hoque and James (2000), one of the early empirical studies into the balanced scorecard, suggest that the balanced scorecard indicates which specific improvements in drivers are linked to the desired outcomes of the firm’s strategy. With the shift of the balanced scorecard from being only a performance measurement system (Kaplan & Norton, 1992) to a strategic management system (Kaplan & Norton, 1996a, 1996b, 1996c, 2001, 2004, 2006) the pattern of results on the causally linked driver and outcome measures may provide clues about the effectiveness of the strategy, which then provides companies with the capacity for strategic learning; this will then enable them to modify their strategies when necessary. The unique features of the balanced scorecard noted above, relative to less comprehensive performance measurement systems, would be expected to lead to lower rater bias in performance appraisal (Guo et al., 2007). Davis and Albright (2004) remark that an improvement in financial performance could occur after implementing a balanced scorecard. Speckbacher et al. (2003) propose three potential benefits of the application of the balanced scorecard in organizations, namely: (a) improved company results in the long term; (b) stronger consideration of non-financial drivers of performance and (c) support of the shareholder value-based management system. Banker et al.’s (2000) US study finds that the inclusion of non-financial measures in a performance measurement system is associated with improved financial performance. The review paper by Atkinson et al. (1997, pp. 93-94) suggests that “…the balanced scorecard has the potential to provide planners with a way of expressing and testing a sophisticated model of cause-and-effect in the organization, a model that provides managers with a basis to manage results.” The study by Hoque and James (2000) reported a positive impact of the use of balanced scorecard measures on firm performance. Since its introduction in the organizational world, the balanced scorecard has also received considerable criticism. For example, Butler et al. (1997) considered the concept to be too general, pointing out that it might not fit in an organization’s culture and could ignore corporate missions. In a similar vein, Laitinen (1996) considered the selection of the four basic dimensions and their interrelationships problematic, claiming that measures in practical applications appear to loosely connect to each other and unable to provide clues on which company internal factors should be developed. Atkinson et al. (1997, p. 93) expressed mixed reactions like this: ‘The name “scorecard” is misleading because the balanced scorecard is not a scorecard in the conventional accounting sense. Rather, it is a sophisticated information structure and management approach that links effects (also called organizational objectives, such as profit levels) with causes, such as customer or employee satisfaction.’ Laitinen (2003) notes that balanced scorecard in its original form may include non-critical perspectives and exclude critical ones. Other scholars (e.g. Ittner & Larcker, 1998; Otley, 1999) find that it is difficult to identify the relative importance of and the trade-offs between the balanced scorecard perspectives, as this identification is crucial when resolving the conflicts in the setting of targets on different perspectives and on the measures of the perspectives. Epstein and Manzoni (1997) question the ability of companies to agree on a strategy in such clear terms that it would enable construction of balanced scorecard and the

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maintenance of systems to be laborious. Vaivio (1995) challenges the principal idea of the balanced scorecard that a handful of quantitative measures could portray the various facets of a company’s strategy. Norrelkit (2000, 2003) has been highly critical of the causal relationship between the four perspectives of the balanced scorecard and the validity of the system to serve as a strategic management tool. Norrelkit argues that the balanced scorecard has problems with some of its key assumptions and relationships. She argues that there is not a causal but rather a logical relationship among the areas covered in the balanced scorecard. In her 2000 paper, Norrelkit asserts that the balanced scorecard makes invalid assumptions, which may lead to the anticipation of performance indicators which are faulty, resulting in sub-optimal performance. Further, Norrelkit noted that the balanced scorecard is not a valid strategic management tool as Kaplan and Norton claim it to be – because the balanced scorecard does not ensure any organizational rooting and also has difficulty ensuring environmental rooting. Above criticisms challenge some key assumptions of the balanced scorecard, the notion of causality in the relationship, and the idea that it can be a strategic tool. Despite such criticisms, Kaplan and Norton (as reported in 2000, 2001, 2003, 2004a, 2004b, 2006a, 2006b, 2010) have extended and broadened the concept into a strategic management tool for describing, communicating and implementing strategy’, thus reinforcing Kaplan and Norton’s original point that the balanced scorecard has practical relevance in organizational decisions. Kaplan and Norton further believe that balanced scorecard measures need to be broken down into financial and non-financial measures in such a way that information, communication and strategy at all levels of organizations could be aligned for an effective organization. Their stance echoed Grady’s (1999) statement that the strategic objective of a company ought to be broken down into critical success factors and critical actions. Kaplan and Norton’s idea of causal linkages among balanced scorecard objectives and measures led to the creation of a strategy map that links a firm’s intangible assets and critical processes to the value proposition and customer and financial outcomes (See Figure 2, Kaplan & Norton, 2010, p. 22). Further, Kaplan and Norton (2010, p. 21) assert that a balanced scorecard project should build a strategy map of organizational objectives first and only afterwards select metrics for each objective.2

4. Balanced scorecard research 4.1 Studies in accounting journals This section examines the 114 articles published by accounting journals that deal with the nature and practice of the balanced scorecard. In so doing, the first subsection presents the frequency distribution of publications. This is followed by the classification of publications by various categories as outlined in Figure 1. 4.1.1 Frequency distribution of publications by accounting journals Table 2 presents the frequency distribution of papers on the balanced scorecard published by journals. 114 papers were published in 27 leading accounting journals in the period 1992-2011. As can be seen from Table 2, during the two decades under study, most of the accounting papers (98 of 114) on the subject were published in the second half (2002-2011). The highest number of publications appeared in Management Accounting 2 For details about the theoretical roots and motivations of the original and subsequent development of the balanced scorecard, see Kaplan and Norton (2010).

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Research (MAR), one of the premier journals in management accounting, followed by Financial Accountability & Management (FAM). A sizeable number of papers appeared in other journals: experimental research and surveys in Accounting, Organizations and Society (AOS), interview studies and descriptive papers in Critical Perspectives on Accounting (CPA), descriptive and literature reviews in Journal of Accounting Education (JAEd) and interview studies in Journal of Accounting & Organizational Change (JAOC). No papers were published in other leading journals including Accounting & Finance (A&F), Accounting & Business Research (ABR), Journal of Accounting and Economics (JAE), Accounting Horizon (AH), Journal of Accounting Auditing and Finance (JAAF), Journal of Business Finance and Accounting (JBFA), Review of Accounting Studies (RAS), and International Journal of Accounting (IJA).

INSERT TABLE 2 HERE 4.1.2 Distribution of topics/issues Table 3 provides the frequency distribution of balanced scorecard papers by topics/issues studied. As presented in Table 3, most of the papers were published in the areas of performance measurement (27), implementation (24), designs (20), and system outcomes encompassing its use effectiveness and benefits (11), respectively. 12 papers were of review/analytical nature, while some others focused on the balanced scorecard in general (8), behavioral effects (4), incentive plans (3), and diffusion (3). While future research might continue exploring these issues further in different contexts, there might also be increasing interest in linking these topics with other organizational strategies or processes such as total quality management (Hoque, 2003), supply-chain relationships, business-process-management, and value chain analysis.

INSERT TABLE 3 HERE 4.1.3 Distribution of settings Table 4 presents the frequency distribution of balanced scorecard publications by research settings. Table 4 shows that the popular choice for balanced scorecard studies was services, manufacturing, retail, and publicly traded firms. A further noteworthy observation was that nearly one-third of the papers did not explicitly mention the research settings. This group mainly included review and descriptive papers. Balanced scorecard is also widely diffused in the public sector. Table 4 shows that 21 papers focusing on the public sector were published in the period 1992-2011. To deal with financial constraints and increasing demand on accountability, government administrators have begun implementing modern management tools in their organizations. In addition to adopting reporting guidelines, municipal administrators have tried to enhance accountability through refinement of their organization’s own performance measurement system (Poister & Streib, 1999). Poister and Streib (1999) reported that most of the US municipalities studied in their survey were working from organizational missions, goals and objectives, a result consistent with the prescribed use of the balanced scorecard. However, the municipal managers' efforts also tended to rely on available data, a problem which, if persistent in the longer run, may lead to low validity and hence low decision relevance.

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Results of a survey of municipal governments in the US and Canada (Chan, 2004) revealed limited use of the balanced scorecard in organizational decision making. Most municipal governments have measures developed for various performance perspectives, with greater emphasis on financial performance and least on innovation and change. Anecdotal reports on the balanced scorecard have been concentrated on the not-for-profit sector and many firms have found the balanced scorecard a useful tool for focusing and sustaining their continuous improvement efforts (e.g. Brewer, 2002, Kershaw and Kershaw, 2001). Yet, there have been limited studies on the balanced scorecard in the public sector context (for example, see Modell, 2008). Hoque and Adams (2011) investigated balanced scorecard practices in a sample of Australian government departments. They found that the implementation of balanced scorecard performance measurement systems within the subject departments was not high (Mean adoption is 3.03 out of a maximum possible mean of 7.00). Their findings support their prediction that greater balanced scorecard system implementation is associated with greater benefits for the department(s).

INSERT TABLE 4 HERE 4.1.4 Distribution of theories Table 5 provides the distribution of the theories underlying the balanced scorecard papers. As shown in Table 5, the 71 articles used a wide range of theories. Forty-one articles were silent about their theoretical orientation and 18 articles claimed to use various strands of management accounting literature, models and frameworks without recognizing any explicit theoretical lens. This finding is consistent with two prior reviews of management accounting research. In his review of management accounting research in the North America, Shields (1997) found that 152 articles used a variety of theories in management accounting research by North American academics in the 1990s. In a review of the state of Australian management accounting research, Chenhall and Smith (2011) found that 32 articles used theories during 1980-1990, 78 articles used theories in the period 1990-1999 and 121 articles used theories in the period 2000-2009. With regard to the use of theory in the balanced scorecard research, economic theories, mainly principal-agent3 (9), behavioral/psychological theories (8), contingency theory (7), institutional theory (7), and multiple theories (7)4

Hoque and James (2000) used a contingency theory to examine the effects of the relations between balanced scorecard usage and contextual variables on performance. Davis and Albright (2004) also used contingencies theories to propose that the balanced scorecard can be used to improve financial performance. Furthermore, in considering economic models and psychological perspectives, Ittner et al. (2003)

gained significant attention. Interestingly, the articles published in the period 1992-1996 did not use any theories; most of these articles were descriptive in nature. However, since 1997 there has been an increasing trend in using theories in the balanced scorecard research.

3 This finding is consistent with Shields’ (1997) review of management accounting research by North Americans in the 1990s and Chenhall and Smith’s (2011) review of management accounting research by Australian academics. 4 Most frequently used multiple theories are a) contingency theory with institutional theory, b) old institutional economics (OIE) with neo-institutional sociology (NIS), and c) rational choice models, NIS, and cultural (organizational and national) perspectives.

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postulate that psychological-based explanations may be better for understanding measurement practices. Behavioral theories have also been significant in balanced scorecard research (for example, see Banker et al. 2004; Lipe & Salterio, 2000, 2002).

INSERT TABLE 5 HERE 4.1.5 Research methods The data presented in Table 6 reveal that case/interview methods with 35 papers was the most frequently used option. This was followed by experimental methods and the survey method, which accounted for 17 papers each. However, 33 papers did not mention the research method used.

INSERT TABLE 6 HERE A large portion of the studies used quantitative research methods. The most common method is a mailed-out survey of questionnaires, as seen in studies by Hoque and James (2000), Maiga and Jacobs (2003), Ittner and Larcker (1998) and Speckbacher et al. (2003). Speckbacher et al.’s (2003) survey using questionnaires examined the state of balanced scorecard implementation in German-speaking countries. Maiga and Jacobs (2003) collected survey data from 83 U.S. manufacturing business units to examine the complementary effects of the balanced scorecard and ABC on organizational performance. To obtain an in-depth understanding of the adoption of the balanced scorecard in the organizational context, studies have also chosen qualitative approaches such as interviews and content analysis. For instance, Kasurinen (2002) used a longitudinal case study approach that focuses on the introduction of the balanced scorecard in one organization. Akkermans and Oorschot (2005) utilized a case study approach of qualitative causal loop diagramming followed by quantitative simulation to understand the doubts regarding the quality of balanced scorecards. Malina and Selto (2001) investigated the effectiveness of the balanced scorecard using semi-structured interviews along with archival data. Malmi (2001) also utilized semi-structured interviews to explore how Finnish companies apply the balanced scorecard concept. Martinsons et al. (1999) reported case study evidence highlighting that a balanced scorecard can be the foundation for a strategic management system. Quite a number of studies used behavioral experiments to test their hypotheses. A very early study by Lipe and Salterio (2000) conducted an experiment with 58 participants (1st-year M.B.A students) to test whether performance evaluators rely more on common or unique measures. Banker et al. (2004) replicated the design of Lipe and Salterio’s (2000) experiment to maximize results comparability. Roberts et al. (2004) examined whether disaggregating the balanced scorecard results in evaluations consistent with the intent of the balanced scorecard approach using an experimental study of 81 M.B.A students as participants. The analytical approach is aimed at increasing the level of clarity and precision in the meaning of the concepts used in the model (Shields, 1997). This is necessary not only for the purpose of evaluating the model but also in order to make the model useful and to develop it. Norreklit (2000) investigated the research questions raised, analyzing some of the key assumptions and relationships of the balanced scorecard, adopting the methodology of an analytical approach developed by Wilson (1969). The aim of the Norreklit’s (2000) paper is to contribute to increasing the level of clarity and precision in the concepts used in the balanced scorecard and, in addition, to

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suggest more valid concepts. Later Norrelkit (2003) investigated the research questions employing methods from stylistic text analysis and argumentation theory to perform a rhetorical analysis of the balanced scorecard. 4.1.6 Data analytical techniques Table 7 shows that in keeping with the high use of case/ interview methods, verbatim analysis of interview data became the most widely used data analysis method. Quantitative analysis encompassing descriptive statistics, multiple regressions, ANOVA and SEM, PLS, and path model, was the choice of another group of researchers. Also a significant number of research papers (32), which were primarily of a review or commentary nature, made no mention of the data analysis method.

INSERT TABLE 7 HERE 4.2 Studies in business and management journals This section presents a review of balanced scorecard studies published by business and management journals. As above, the first part provides the frequency distribution of publications and the second part presents a classification of publications by categories outlined in Figure 1. 4.2.1 Frequency distribution of publications by journal Table 8 lists the number of papers on the balanced scorecard published in various business and management journals in the period 1992-2011. As can be seen in Table 8, I have reviewed 67 papers published in leading business and management journals; among them the highest number of papers was found in Harvard Business Review (HBR), the journal which pioneered the balanced scorecard during its early days. HBR published 11 of the 12 articles that appeared in business and management journals in the first five years (1992-1996). The next popular journal was Long Range Planning (LRP), which carried 10 balanced scorecard papers over the past 20 years. Certain other journals such as California Management Review (CMR), Human Resource Management (HRM), Human Resource Management Journal (HRMJ), and International Journal of Operations and Production Management (IJOPM) also featured papers on the balanced scorecard. However other journals such as Academy of Management Journal (AMJ), Academy of Management Review (AMR), Administrative Science Quarterly (ASQ), Decision Sciences (DS), Industrial Relations (IR), Journal of Applied Psychology (JAP), Journal of Business Venturing (JBV), Journal of International Business Studies (JIBS), Journal of Management (JOM), Journal of Production Management (JOPM), Journal of Organizational Behavior (JOB), Journal of Product Innovation Management (JPIM), Leadership Quarterly (LQ), Management Science (MSC), Operations Research (OR), Organization Science (OS), Organization Studies (OST), Research in Organizational Behavior (ROB), Strategic Management Journal (SMJ), The Journal of Business (TJB), MIS Quarterly Executive (MISQE), Operations Research Letters (ORL), Strategic Organization (SO), and The Academy of Management Perspectives (TAMP) did not carry any articles on the balanced scorecard. Some journals such as the JOPM and SMJ referred to the balanced scorecard; although reported no empirical evidence on it. Some papers in other journals, e.g. two

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papers in SO, merely mentioned the balanced scorecard in their literature reviews. Still another group of studies referred to the concept of balanced scorecard and included some well-known papers by Kaplan and Norton in the reference list. These papers viewed balanced scorecard from a positive lens and strived to raise awareness of the concept, and did not carry any critical analysis. Aforestated papers have not been included in the tables presented.

INSERT TABLE 8 HERE 4.2.2 Topics As apparent from Table 9, over half of the papers published in business and management journals (27) were of a descriptive nature, followed by 10 papers published in the area of performance evaluation, 8 in the area of the implementation of the balanced scorecard, and 7 in the area of performance effects or system outcomes.

Insert Table 9 here

4.2.3 Settings Table 10 shows that 42 out of 67 articles did not specify their research settings. The service sector was widely studied (11 articles), followed by 10 studies in publicly traded companies.

Insert Table 10 here

4.2.4 Theories As shown in Table 11, a significant number of articles (58) did not have any explicit theory; these studies were mainly descriptive account of balanced scorecard practices in organizations. Those articles that used theories (8) mainly applied economic theory, agency theory, stakeholder theory, cultural perspective and institutional theory. One study used grounded theory approach.


4.2.5 Methods Table 12 indicates that 49 studies did not discuss the research method adopted. Further analysis of these articles reveals that they are mainly descriptive in nature. Eight studies used mixed methods combining qualitative methods (e.g., interviews and documents) and quantitative methods (survey). Five studies used stand-alone questionnaire survey techniques, 4 used a case study approach, and 1 used experimental tool.


4.2.6 Data analysis techniques Table 13 shows that 54 studies did not specify the techniques used in their data analysis techniques. Six studies used interview quotes to substantiate their findings and 5 used both interview quotes and survey responses.


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4.3 Web publications The search on web publications on the balanced scorecard was conducted in two stages. First, the researcher utilized the Google search engine (www.google.com) to search for websites with balanced scorecard publications. The search for publications was broken down in two parts, utilizing the search terms “Balanced Scorecard” and “Balanced Scorecard Commentary”, under the condition of ‘Matching of Exact Phrase’. Following the search of publications, I browsed the respective publications briefly, determining its relevance, and then downloaded the relevant ones. Under the search term “Balanced Scorecard”, as on 30 June 2011 I found 2.5 million results, browsed 690 results and collected a total of 73 articles. Under the search term “Balanced Scorecard Commentary”, I found 52,800 results, browsed 200 results and collected a total of 55 articles. At this first stage of research, I found a few websites which presented multiple publications on the balanced scorecard that were relevant; thus I collected publications that had not been listed in the search results, but were linked to a website I had accessed in regards to another publication. The second stage of this research was to summarize the collected publications and to set out the material in a tabular format. I read through every single collected publication thoroughly, then summarized and presented it in a table. During this process, I weeded out several publications that were initially thought to be relevant, but that turned out to be either irrelevant to the topic or did not conform to the guidelines of a web-based publication. This culling reduced the number of publications from 128 to 87.5

Among the 87 web-based publications collected and summarized, 19 (21.8%) were considered to have criticized the balanced scorecard while 68 (78.2%) were considered to be positive about the balanced scorecard.

Looking upon the research evidence presented, it is apparent that the majority of web-based publications are generally positive in nature, celebrating the success of the balanced scorecard. In general, the main common claimed advantages are that the use of the balanced scorecard:

a) enables organizations to benefit from performance improvement, b) creates a customer-centric culture and promotes improved customer

relationships, c) is vital to finding the best course to success when competing in a dynamic and

complex environment, d) provides a revolutionary tool that motivates staff to make organization’s vision

happen, e) when combined with another performance management system e.g. SCOR;

Six Sigma, creates the ultimate ‘management cockpit,’ and f) can be adapted for government and non-profit organizations.

A number of publications had criticized the balanced scorecard because:

a) it had implementation issues, b) it was difficult to integrate with budgets, c) it too often lost its strategic focus and turned into merely reporting, d) it was for long-term strategic synchronization but could not to fix present

pressing issues,

5 For reasons of space, a snapshot summary of these publications is not reproduced in the article. However, a copy of it is available from the author upon request.

http://www.google.com/�

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e) while the number of metrics was appropriate, it had too many measurements, and measured the wrong things,

f) it could be unbalanced, g) it did not driving action or change in business needs, h) it required multiple sets of business definitions embedded in multiple systems

that held the data needed, and i) it required expensive measurement and analysis of vast quantities of data.

5. Lessons learned, research gaps and future research Shields and Shields (1998, p. 65) note that ‘… future research should be informed by what has been learned from past research.’ Therefore, based upon reviews of prior studies in balanced scorecards above, this section focuses on two areas: What are the implications of the balanced scorecard studies for practice and for research on present-day management accounting? Where can balanced scorecard research go from here? As presented in this review, most balanced scorecard research has focused on three demands for the balanced scorecard approach to performance management: a) efficiency choice or static equilibrium analysis (Luft, 1997), b) strategy choice and strategy map, and c) institutional pressures. Following Kaplan and Norton’s early work on the balanced scorecard, researchers sought to quantify the economic benefits of the use of the balanced scorecard in organizational activities. According to Luft (1997, p. 191), ‘Both contingency theories in organizational behavior and static equilibrium analysis in economics assume that observed practice is determined by a “best fit” between available practices and current conditions’. This section focuses on lessons learned from an influential body of accounting research which has concentrated on the balanced scorecard. The selected studies are chosen as they are published in top-tier journals and widely cited6. The studies7

Appendix 3 shows that researchers have used a mix of theories and methods in describing and explaining their findings on the balanced scorecard. For instance, as noted earlier, taking a contingency-theoretical perspective, Hoque and James (2000) examined the effect of organizational size, product life-cycle stage, and market position on balanced scorecard usage and performance. They administered a questionnaire survey to 66 Australian manufacturing companies. Their study revealed a positive and significant association between organizational size and balanced scorecard usage, pointing out that larger organizations are more likely to make greater use of the balanced scorecard in organizational performance evaluation. Hoque and James’ work also indicated that firms with a higher proportion of new products have a greater tendency to use measures related to new products. While Hoque and James found a positive association between balanced scorecard usage and organizational performance, this relationship was not significantly dependent on organizational size, product life-cycle or market position. Subsequent balanced scorecard studies have

are by Banker et al. (2004), cited by 129; Lipe and Salterio (2000), cited by 135; Ittner et al. (2003), cited by 62 (the latter two both published in The Accounting Review), Malina and Selto (2001), cited by 74; and Hoque and James (2000), cited by 378 (the latter two both published in the Journal of Management Accounting Research); and lastly, Malmi (2001), cited by 54, published in Management Accounting Research. Appendix 3 summarizes the key issues addressed in each of these studies.

6 Source: Google Scholars. 7 This list of studies is merely illustrative, not exhaustive.

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frequently cited8

We also learn from the work by Lipe and Salterio (2000) who examined observable characteristics of the balanced scorecard that may limit managers’ ability to fully exploit the information found in a diverse set of performance measures. Utilizing prior judgement and decision-making studies, they conducted an experiment with 58 first-year MBA students who proxied for the role of senior executives of a firm specializing in women’s apparel. The experimental participants had to act as a superior, making the judgement for each unit manager in order to compare how subjects respond to common (financial) vs. unique (non-financial) measures. Lipe and Salterio (2000) also found that unique measures in a business unit’s balanced scorecard may be underweighted in performance evaluation. Further we can learn from this study that common (financial) measures that drive the unit managers’ evaluations will have more effect on unit managers’ decisions than unique (non-financial) measures that are not used in evaluations. This study is the first to document a cognitive difficulty in using the balanced scorecard as the superior managers disregarding unique measures has implication for managers and firms.

Hoque and James’ study in developing their arguments. In their review of management accounting studies by Australian academics, Chenhall and Smith (2011, p. 180) remarked about the Hoque and James study: ‘Research in the area of balanced scorecards was advanced by Hoque and James (2000), which was one of the first publications to examine the performance effects of balanced scorecards….’

Kaplan and Norton (1996c) note that common measures tend to be financial indicators of performance and tend to lag, while unique measures are non-financial measures and tend more to lead. Results of the Lipe and Salterio study then imply that managers do not pay sufficient attention to the leading and non-financial indicators, which might hamper them from reaping the benefits of balanced scorecard. Kaplan and Norton (1996c) further assert that as the purpose of implementing the balanced scorecard is to expand the set of measures managers use in decision-making, the disregard for unique measures would defeat the purpose. However, Lipe and Salterio’s (2000) study has limitations. One is that the experimental participants were not involved in the development of the unit’s scorecards, so the study was unable to capture the effect of the participants’ involvement on balanced scorecard metrics; another limitation is that the experimental participants do not have business experience in the sector – case materials were developed and there is the possibility that perceived performance relative to the targets differed for the different groups of performance measures. Malina and Selto (2001) recognized the relationships among communication and management-control attributes and the organizational effectiveness of the balanced scorecard. Malina and Selto have used literature on organizational communication and management-control linkage to develop their two hypotheses that assess the perceived attributes of the balanced scorecard as a strategic communication and control device. Their study investigated the research question using qualitative interview data from individuals directly involved with a company’s balanced scorecard. The research evidence is perceptual in nature, while ideally reflecting “reality” of impact of the balanced scorecard. One lesson that can be learned from Malina and Selto’s findings that the balanced scorecard presents significant opportunities to develop, communicate, and implement strategy which affirms Kaplan and Norton’s arguments for linking balanced scorecard measures to the organizational strategy map. Malina

8 Cited by 378 researchers as on 20 January 2012 (source: Google Scholars).

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and Selto’s results further demonstrate the causal relations between effective management control, motivation, strategic alignment and beneficial effects of the balanced scorecard. The study further found several unexpected causal relations and associations between strategic alignment, ineffective management control, ineffective communication, and positive outcomes. Malina and Selto have identified the factors that impacts positively (value-added activities) on balanced scorecard success and factors that impede (non-value-added activities) the balanced scorecard success. Their study indicates that to successfully design, implement and use the balanced scorecard, organizations should enhance the positive factors, and eliminate or correct the negative ones. With negative factors predominating, there are many opportunities to improve both communication and the control of strategy. A study by Malmi (2001) aimed to find out how the balanced scorecard was applied in some Finnish companies and the reasons why companies adopted it. Their study investigated whether the balanced scorecard was adopted as a performance evaluation tool or as a strategic management system. Their study comprised of semi-structured interviews with people in 17 organizations who adopted the balanced scorecard. Their findings revealed five reasons behind the balanced scorecard adoption decisions, namely the translation of strategy into action, managing quality programs, supporting change agendas, managerial fads and fashion, and abandonment of traditional budgeting. Ittner et al. (2003) make significant contributions to the performance evaluation and compensation literatures by extending cross-sectional studies on the use of subjectivity and discretion in bonus plans (e.g. Gibbs et al., 2002; Murphy & Oyer 2001) and they provide further evidence on the influence of informativeness of performance measure weighting. Being one of the first detailed studies of scorecard-based compensation plans, this research complements psychological-based experimental work in importance placed on performance measures. The work carried out by Banker and his associates (Banker et al., 2004) indicates that performance evaluators are influenced by strategically linked measures when provided strategy information and they rely more on strategically linked measures than common measures when provided information on strategy linkages. Their results also confirm Lipe and Salterio’s (2000) findings that evaluators rely more on common measures than on unique measures. The results of this study is reassuring to balanced scorecard adopters as the tendency of evaluators to rely more on common measures does not necessarily undermine the role of the balanced scorecard in reinforcing business strategy. This is because evaluators also rely on strategically linked performance measures, especially when they understand the business unit’s strategy. We have learned from Banker et al.’s study that an important precondition for a successful balanced scorecard implementation is that organizational managers understand the linkages between the performance measures and the business unit’s strategy. Another stream of studies in the balanced scorecard are probes into how “external” institutions such as funding agencies, government regulation, professional bodies, and socio-political contexts could play a significant role in the implementation choice of the balanced scorecard (Model, 2001). In summary, this discussion shows how studies above have added significantly to the richness of the debate regarding the balanced scorecard. The rise of the balanced scorecard in the 21st century is revealed in the overwhelming popularity of the balanced scorecard among academics, practitioners and consultants across the globe. As also discussed above, several researchers have pointed out some limitations of the

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balanced scorecard concept and of the research in the field. This debate opens up some opportunities for future research, as outlined below. Future research An area that has been identified as having potential for further research in many previous studies is the causal relationship between different perspectives or measures in the balanced scorecard. As the causal relationship is fundamental to the balanced scorecard achieving the desired outcomes (Kaplan & Norton (1996c), it is crucial to clear the misunderstandings or any ambiguity regarding this issue. Future studies could look at whether and how the casual relationship could be the effect of facilitating strategic organizational and employee learning, and the impact on organizational strategic outcomes. Drawing on economics theories, several studies investigated the incidence of balanced scorecard practices. For example, Ittner et al. (2003) remark that psychological explanations may be equally or more relevant than economic models. Within this context, future research may use psychological perspectives when researching balanced scorecard related behavior. Further research could also focus on technical attributes of the balanced scorecard implementation process. Future research may also be undertaken to move beyond the technical issues by addressing the entire implementation process from behavioral, cultural, socio-political, and institutional contexts. Using neo-institutional sociology (NIS) perspective originally put forwarded by Meyer and Rowan (1977) and DiMaggio and Powell (1983), a significant number of prior management accounting articles explored how a host of institutional pressures (such as government mandates, regulations, professional associations, and professional expertise) exerted pressure on organizations to adopt innovative or new accounting practices. Studies (for example, see Carpenter & Feroz, 1992, 2001; Covaleski & Dirsmith, 1988) have viewed an organization’s adoption of a particular accounting policy as a symbol of external legitimacy, especially for public sector entities. DiMaggio and Powell (1983) illustrate how institutional ‘isomorphism’ such as coercive isomorphism (government policy, regulation, competitive forces, resource providers, etc.), mimic isomorphism (copying other organizations’ best practices) and normative isomorphism (dominant professions, professional bodies, etc.) exerts force on organizations to adopt specific organizational procedures. Building on DiMaggio and Powell’s (1983) coercive isomorphism concepts of resource dependence, Carpenter and Feroz (2001) in their study of accounting choice in four US state governments find that state governments, like firms, require resources from the environment to survive (p. 571). Oliver (1991, 1997) expands on the notion of resource dependency. She proposes that resource dependency theory complements institutional theory in explaining organizational resistance and conformity to institutional pressures. Resource dependency theory focuses more on the task environment than the institutional environment. It states that organizations adapt to environmental uncertainty to actively manage or control resource flows (Oliver, 1991). Greenwood and Hinings (1996) illustrate homogenization of management accounting processes within Finnish companies, which, they argue, are very different to other western world companies. They argue that each organization must be examined in an objective manner and that the underlying theory needs to be carefully selected so as to map changes according to the individual organization and how it fits into its environment. Seen in such a context, Dillard et al. (2004) note that NIS theory considers the links between the organizational practices, the organizational field and

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the possible influences of society and other influential actors. They argue that the development of a formal organizational structure is influenced by its inter-organizational context. With this extended view Dillard et al. (2004) develop a multilevel representation of the dynamics associated with the institutionalized process. They see a hierarchy of institutional influence, with the top level representing the overarching societal level of political, economic and social systems. The second level consists of organizational fields such as industry and professional groups, with the third level being the individual organization. Following these arguments, a future research may be undertaken to explore whether institutional pressures may work in concert with resource dependency in shaping organizations’ decision to implement the balanced scorecard. Whitley (1999) proposes that at least six institutional contexts may affect how organizations shape their management control systems. These include: a) the trust in formal institutions and procedures; b) the paternalist authority relations; c) the business dependence on the state; d) the extent of formal regulation of markets and economic coordination; e) the strength of the public training systems and employer–union elaboration; and f) the strengths of unions and other interest groups. It would be interesting to explore how these institutional contexts shape balanced scorecard practices in various settings. NIS has been criticized for its failure to capture internal dynamics and power issues (Lounsbury, 2008). Lounsbury asserted that the popular understanding of institutional theory as a theory of isomorphism needed to be extended to accommodate organizational heterogeneity. Lounsbury (2008, p. 349) argues that ‘given recent efforts by institutionalists to account for actors and practice diversity, there is an important opportunity for dialogue with practice theorists, such as those drawing on Actor Network Theory (ANT), and the creation of a more comprehensive approach to the study of practice that attends to both institutional and micro-processual dynamics.’ Future balanced scorecard research may attempt to use this idea of analyzing practice through a combination of NIS and ANT (Callon, 1986; Callon, Law, & Rip, 1986; Latour, 1987) to cover internal individual and organizational dynamics and external socio-political and institutional circumstances. Such effort may find alternative explanations or new observations surrounding networks in balanced scorecard practices in organizations. As ANT entails the idea of close engagement of actors and their world views, it captures possible multiple interpretations or different views of reality from a wide range of actors involved in balanced scorecard practice. Seen from the purview of ANT, future research can explore the extent to which organizational actors develop a network in translating the balanced scorecard to the day-to-day activities of the organization. Within this broader theme, the study can address several questions: Who are the key actors in the network? How do they form and shape the development of the balanced scorecard? Who supported the balanced scorecard practices and who opposed them? What was the nature of relational networks built? What consequences resulted from control practices (such as improving relationships, leading to rivalries), given that actors gain their identities through relations with others (Law, 1999)? Studies by Nørreklit (2003) and Busco and Quattrone (2009) have drawn upon rhetorical perspectives to understand the rationales behind the adoption of the balanced scorecard. In seeking the reason for the amount of attention the model has attracted, Nørreklit (2003) claimed it was because the notion of the balanced scorecard is presented as “persuasive rhetoric” rather than a “convincing theory” (p.

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291). From a different angle, the rhetorical aspect of the balanced scorecard was examined by Busco and Quattrone (2009), who explain that the functionality of the balanced scorecard is allied with rhetorical characteristics that appeal to many users. A future study could draw on the technical rationality perspective to explain the adoption and use of the balanced scorecard. Using Abrahamson’s (1991) framework, researchers may also consider the notions of institutional legitimacy and fads and fashions in management when analysing the reasons for the balanced scorecard adoption. The efficient-choice perspective indicates that an organization adopts an innovation when it expects that the innovative system would be useful for attaining its goals under resource constraints. The implementation of the system to improve organizational efficiency and effectiveness is also found in a number of public sector studies (e.g. Ansari & Euske, 1987; Hoque, Arends, & Alexander, 2004; Lapsley & Wright, 2004; Moll & Hoque, 2011; Perera, McKinnon, & Harrison, 2003). Future research may seek to explore the potential linkage between organizational change and the balanced scorecard implementation. Such an attempt can explore the questions like, ‘What were the changes in the organizational structure and management processes?’ and ‘What was the impact of the organizational change on the design and operation of the balanced scorecard?’ The implementation of the balanced scorecard can have significant social and behavioral implications on organizations, especially when senior management has not made adequate plans for it. A new system like the balanced scorecard affects both management and their employees. For instance, because of the adoption of the balanced scorecard, managers are now required to adopt a more conscious managerial approach, adjust to new systems and processes, new relationships, new remuneration policies, organizational restructuring; adopt new quality systems, become more customer focused, and also manage that change throughout all levels of the organization. The increasing demands of the balanced scorecard that are placed on organizational managers also have consequences for employees. Change to any number of factors such as the size or structure of the firm, the complexity of the firm, management leadership styles, authority responsibility relationships and even group norms can significantly influence employee behavior (Siegal and Ramanauskas-Marconi, 1989). A future study could investigate how the balanced scorecard can compel individuals to behave in a manner that will contribute to the overall success of the balanced scorecard. These issues can be investigated in the private sector and in the public and not-for-profit sectors. People react to change in many ways. Some view change as positive, others view change as negative. Either way, individuals’ perceptions about the change or how they are managed determine the level of their reactions to that change. Greenberg (1996) contends that individuals resist change at both an individual and an organizational level. At an individual level, employees tend to resist change because of economic insecurity, fear of the unknown, threats to social relationships, habits, lack of trust, and failure to recognize the need for change (Greenberg, 1996). Drafke and Kossen (1998) claim that individuals’ responses to change depend on their personal attitudes; their response depends on whether they view change as positive or negative. At an organizational level, employees resist change because of a change in the balance of power, previously unsuccessful change attempts, work group inertia and structural inertia (Greenberg, 1996). Resistance to change is projected by employees through absenteeism, decreased productivity, and regression in behavior, resignations, transfers and sabotage (Drafke and Kossen, 1998). A future research can

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explore how organizations manage such behavioral issues due to the introduction of the balanced scorecard. There is shortage of positive stories in the research literature about the application of the balanced scorecard in organizations. In the organizational development field, researchers use appreciative inquiry as a research framework (for a review, see Reed, 2007). Using this approach, future researchers can include in their research interview protocol positive open-ended questions to explore organizational members’ views about the functioning of the balanced scorecard. Positive questions help people to focus on what works in their organizations. Reed (2007) suggests that an appreciative inquiry approach allowed participants to feel more connected with what goes on in their organizations. Researchers can also use appreciative focus group workshops with people involved in practice. An appreciative inquiry approach encourages participants to think of solutions to issues in the balanced scorecard approach. Reed explains the basic principle of appreciative inquiry (AI): ‘one idea behind AI …exploring what had worked could be a more helpful way of thinking about an issue than examining ways in which things had gone wrong. According to this principle, then we would achieve more by collecting data about strategies that had worked, or were “successful,” so that they could be analyzed and presented to audiences who might want to try them out’ (Reed, 2007 p. 7). However, AI has limitations. One is that ‘…by focusing on positive strategies one would be painting a picture of practice that would hide problems and difficulties’ (Reed 2007, p. 7) in the process. Another limitation is that ‘…by asking about what went well, we will be biasing the study toward success stories and away from negative ones’ (Reed, 2007, p. 7). Nevertheless, we do need research that notes achievements rather than only failures in order to advance our knowledge about the developments of the balanced scorecard. 6. Concluding remarks – relevance lost or relevance found and sustained? This review indicates that balanced scorecard is a successful concept, receiving much attention by researchers as well as huge interest in organizations. Although some articles point out limitations of the balanced scorecard concept, relatively more articles point out its usefulness. Some conclude that balanced scorecard is a simple, systematic, and easy-to-understand approach to performance measurement, review, evaluation, and management; it has also been regarded as a convenient mechanism to communicate strategy and strategic objectives to all levels of management in an organization. Scholars note that the success of the balanced scorecard depends on the clear identification of non-financial and financial variables and their accurate and objective measurement, and linking these measures with rewards and penalties. Reviewing the significant number of adoptions of the balanced scorecard in organizations world-wide, it appears that balanced scorecard concept has been a triumphant and winning system since its introduction. Although not the first in combing financial and non-financial performance measurement, the balanced scorecard is a useful, effective performance measurement and strategic management tool in the organizational world. Further, it became apparent from this review that business and management journals such as Harvard Business Review and Long Range Planning were instrumental in introducing the concept of the balanced scorecard. While 17 balanced scorecard papers were published in business and management journals in the first 5 years (1992-1996), no articles appeared in accounting journals during this period. An upsurge of interest occurred thereafter in the accounting arena, with 14 papers in the next 5 years (1997-2001) and 38 papers in the following 5 years (2002-2006). More

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importantly, the last five years (2007-2011) have seen a significant number of balanced scorecard papers (60) published in accounting journals. Thus it can be concluded that balanced scorecard is an under-studied concept in management area as compared to the accounting area. This implies that in the management area there is a relatively large space for growth and development in balanced scorecard research, while in the accounting area, the topic has already been widely researched. Has the balanced scorecard lost its relevance to practice in this 21st century or has it found relevance and sustained its position in the extant field? In this review, available evidence presented above shows that over the past 20 years, the balanced scorecard concept has been successfully diffused all over the world. In today’s rapidly changing and hyper-competitive world, research has shown that traditional performance measures that focus on exclusively on financial measures is not sufficient to guide effective organizational decision making. The key survival skills for organizations in the modern world are the ability to innovate and their learning capacity, which cannot be captured by conventional financial performance measures. Another key issue is providing value to today’s customers, who are very different from those in the past, as they are now more demanding and harder to please; customers’ tastes and preferences should also be measured in the balanced scorecard of an organization. Combining the four key perspectives, the balanced scorecard has provided organizational decision makers and managers with a way of expressing and testing a sophisticated model of cause-and-effect in the organization. The model provides managers with a foundation on which to manage the drivers of desired outcomes (Atkinson et al., 1997). While the balanced scorecard was originally designed for multidimensional performance measurement, the concept has now evolved into an organizing framework for a strategic management system. In addition to linking measures to vision and strategy, as demonstrated in existing research, measures can be linked to each other, on the basis of a series of cause-and-effect relationships. The balanced scorecard concept emphasizes the linkage of measurement to strategy map and this tighter connection between the measurement system and strategy map elevates the role of non-financial measures in strategy implementation and strategy evaluation (Kaplan & Norton, 2001a, 2001b). Until we discover another accounting and management innovation, Kaplan and Norton’s balanced scorecard will continue to provide a useful option as a strategy map and an enabler of policy implementation, and an organizational control and accountability tool, especially when organizations are faced with widespread management problems. References

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Decide search vehicle [Electronic online, manual or both?]

Topics Research settings Theory Research method

Critical assessment of past research

Identify lessons learned from reviewed research

Conclude and outline limitations of the current review

Identify knowledge gap(s) and set future research agenda

Data analytical techniques Results

Figure 1 Literature Review Framework

Review Aim(s) • Synthesizing and assessing past research; • Spotting or constructing gaps in existing research; • Formulating research questions • Discussing directions for future research

Identify review source(s): Academic journals Professional journals Databases Web sites

Classifications of prior research by:

Start with a general topic

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Table 1 Developments of the balanced scorecard concept

Year/type of publication

Publication title Key areas covered

1992/Article The balanced scorecard-Measures that drive performance

An introduction of balanced scorecard as a foundation for development Balanced scorecard is superior performance measurement that uses both financial and non-financial measures Identify the four perspectives: Financial, Customer, Internal Business Perspective & Innovation and Learning Balanced scorecard is forward-looking (Long-term performance)

1993/Article

Putting the balanced scorecard to work

Balanced scorecard is not only a measurement exercise, also a management system to motivate breakthrough improvement

Balanced scorecard has greatest impact when used to drive a change process Identify that: Transparency is critical to successful balanced scorecard Measures on balanced scorecard have to be specifically designed to fit firm’s mission, strategy, technology and culture

1996/Book The Balanced Scorecard: Translating Strategy into Action

Balanced scorecard has evolved from measurement system to strategic management system Identify four major steps in successful balanced scorecard implementation Reclassify Internal Business Process & Learning and Growth, shifting innovation to Internal business processes, and

adding growth element to employee learning Measures are linked to each other in a causal relationship, unlike before, linked to strategy and vision

2001/Book The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Competitive Environment

Translating the strategy to operational terms: Building strategy maps Aligning the organization to create synergies: Creating business unit synergy Making strategy everyone’s everyday job: Creating strategic awareness; defining personal and team objectives; the

balanced paycheck Making strategy a continual process: planning and budgeting; feedback and learning Mobilizing change through executive leadership

2004/Book Strategy Maps: Converting Intangible Assets into Tangible Outcomes

Visually map your strategy A visual cause-and-effect explanation of what's working and what doesn't in a way that everyone in the company can

understand. Helps get the entire organization involved in strategy

2006/Book Alignment: Using the Balanced Scorecard to Create Corporate Synergies

Alignment: A source of economic value Corporate strategy and structure Aligning financial and customer strategies Aligning internal process and learning and growth strategies: integrated strategic themes Cascading: the process Aligning boards and investors Aligning external partners Managing the alignment process Total strategic alignment

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Table 2

Frequency distribution of articles published on the balanced scorecard by accounting journals (1992-2011)

Journal 1992-1996 1997-2001 2002-2006 2007-2011 Total AAAJ 0 0 1 1 2 AOS 0 0 5 4 9 A & F 0 0 0 0 0 ABR 0 0 0 0 0 TAR 0 1 3 1 5 BAR 0 0 2 1 3 BRIA 0 0 2 2 4 CAR 0 0 0 1 1 JAE 0 0 0 0 0 JAR 0 0 0 2 2 JMAR 0 2 0 2 4 ABACUS 0 0 0 2 2 AH 0 2 0 0 2 AdvIAc 0 0 0 3 3 CPA 0 0 6 3 9 FAM 0 1 6 10 17 IIAE 0 3 0 1 4 JAAF 0 0 0 0 0 JA&PP 0 0 0 1 1 JAEd 0 3 2 3 8 JBFA 0 0 0 0 0 MAR 0 4 9 9 22 RAS 0 0 0 0 0 EAR 0 0 0 5 5 IJA 0 0 0 0 0 QRAM 0 0 1 2 3 JAOC 0 0 1 7 8 Total 0 16 38 60 114

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Table 3: Frequency distribution of articles on the balanced scorecard published in accounting journals by topics (area) (1992-2011)

Years/Topics 1992-1996 1997-2001 2002-2006 2007-2011 Total Balanced Scorecard (BSC) (general) *

0 3 3 2 8

Design/ attributes 0 3 8 9 20 Adoption / Implementation

0 3 7 14 24

Causal effect 0 0 0 1 1 Effects / impact of the BSC on people and other stakeholders

0 0 1 3 4

Innovation / diffusion 0 0 1 2 3 Rise / fall / success / failure

0 0 0 1 1

System outcomes (use / effectiveness

0 2 2 7 11

Incentive plans / compensation effects

0 0 0 3 3

Performance measurement /evaluations

0 3 10 14 27

Review / critical analysis 0 2 6 4 12 Total 0 16 38 60 114

Notes * This includes descriptive papers on the principles and assumptions of the balanced scorecard and its links with other new techniques such as TQM.

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Table 4: Frequency distribution of articles on the balanced scorecard published in accounting journals by research settings (1992-2011)

Years/settings 1992-1996 1997-2001 2002-2006 2007-2011 Total Manufacturing 0 2 3 7 12 Service (private sector banking, insurance, airline, telecommunication etc)

0 0 8 6 14

Marketing and retailing 0 1 5 5 11 Largest / medium sized firms in general / publicly traded

0 1 3 7 11

Hospitals / healthcare 0 1 0 5 6 Accounting firms 0 1 0 1 2 Central / local government 0 1 1 8 10 Government institutions / SOEs 0 0 4 5 9 Not-for-profit / NGOs 0 2 0 0 2 None* 0 7 13 13 33 Other ** 0 0 1 3 4 Total 0 16 38 60 114

Notes * This includes descriptive papers, reviews, commentaries and papers which offer practical insights. ** This includes papers on newly privatized firms, and papers which used members of professional bodies (e.g. Institute of Management Accountants) and who followed academic courses (e.g. MBA) as the setting.

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Table 5: Frequency distribution of articles on the balanced scorecard published in accounting journals by theory (1992-2011)

Years/theories used 1992-1996 1997-2001 2002-2006 2007-2011 Total Behavioral/Psychology 0 1 4 3 8 Contingency 0 2 2 3 7 Institutional theory 0 0 0 7 7 Critical (general) 0 0 1 0 1 Agency 0 0 0 3 3 Stakeholder theory 0 0 0 3 3 Actor-network 0 0 0 2 2 Cultural (national and organizational)

0 0 0 1 1

Economics * 0 0 4 5 9 Fad and Fashion 0 0 0 1 1 Supply side perspective 0 1 1 0 2 Multiple theories ** 0 0 4 3 7 Historical 0 0 0 1 1 Constructivist approach 0 0 1 0 1 Grounded theory 0 0 0 0 0 Other *** 0 1 6 11 18 None **** 0 11 15 17 43 Total 0 16 38 60 114 Notes *This includes papers which have used balanced scorecard literature / framework and the levers of control framework as theory. ** These papers used more than one theory. The theories used include economic theory, Institutional theory, actor-network theory, narrative theory, contingency theory, resource dependency theory and technical-rational theory. *** This includes papers which have used various models / frameworks (e.g. Cobb et al. 1995) and literature sources (e.g. strategic management, value-based management, management accounting systems). ****This category mainly consists of descriptive papers, commentaries and reviews.

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Table 6: Frequency distribution of articles on the balanced scorecard published in accounting journals by research methods used

Years/methods 1992-1996 1997-2001 2002-2006 2007-2011 Total Survey 0 1 5 11 17 Case/Field study/ interviews

0 4 8 23 35

Behavioral experimentation

0 1 6 10 17

Action research 0 0 0 1 1 Archival/Historical 0 0 1 4 5 Analytical 0 4 13 3 20 Multiple methods 0 1 1 4 6 None 0 5 4 4 13 Total 0 16 38 60 114

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Table 7: Frequency distribution of articles on the balanced scorecard published in accounting journals by primary data analysis technique (1992-2011)

Years 1992-1996 1997-2001 2002-2006 2007-2011 Total Qualitative: Content analysis 0 0 1 1 2 Archival analysis 0 0 0 2 2 Interview quotes 0 4 8 22 34 Grounded (thematic) 0 0 0 0 0 Participation Observation

0 0 1 0 1

Quantitative: Descriptive statistics /correlations

0 0 5 5 10

Multiple regression/ ANOVA/MANOVA)

0 2 7 10 19

PLS/SEM / Path analysis

0 0 2 2 4

Other * 0 0 2 3 5 Mixed methods 0 1 1 3 5 None ** 0 9 11 12 32 Total 0 16 38 60 114

Notes * Other includes papers which have used econometrics models, non parameter boot strap method, matched pair design and cross-sectional data as the primary data analysis method. ** This mainly includes papers which carry analytical discussions and reviews.

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Table 8: Frequency distribution of articles on the balanced scorecard classified by Business and Management journals (1992-2011) [why is there a blank cell for 2002–06 for DS?]

Journal 1992-1996 1997-2001 2002-2006 2007-2011 Total AMJ 0 0 0 0 0 AMR 0 0 0 0 0 ASQ 0 0 0 0 0 DS 0 0 0 0 EJIS 0 0 1 0 1 IR 0 0 0 0 0 I&M 0 0 0 1 1 ISJ 0 0 0 0 0 ISR 0 0 0 0 0 JAP 0 0 0 0 0 JBV 0 0 0 0 0 JIBS 0 0 0 0 0 JOM 0 0 0 0 0 JMIS 0 1 0 0 1 JMS 0 0 1 0 1 JOPM 0 0 0 0 0 JOB 0 0 0 0 0 JPIM 0 0 0 0 0 LQ 0 0 0 0 0 MSC 0 0 0 0 0 OR 0 0 0 0 0 OS 0 0 0 0 0 OST 0 0 0 0 0 ROB 0 0 0 0 0 SMJ 0 0 0 0 0 TJB 0 0 0 0 0 AB&FH 0 0 0 0 0 AJM 0 0 1 0 1 CMR 1 1 1 0 3 HBR 11 5 7 4 27 HRM 0 3 1 0 4 HRMJ 0 0 2 2 4 HRMR 0 0 1 0 1 IJHRM 0 0 0 1 1 IJOPM 0 0 2 1 3 JBR 0 0 0 1 1 JWB 0 0 0 0 0 MIR 0 0 1 0 1 LRP 0 2 5 3 10 MISQE 0 0 0 0 0 MITSMR 0 0 0 1 1 OMEGA 0 0 0 3 3 ORL 0 0 0 0 0 SO 0 0 0 0 0 SCM 0 0 0 1 1 SDR 0 0 0 2 2 TAMP 0 0 0 0 0 Total 12 12 23 20 67

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Table 9: Frequency distribution of articles on the balanced scorecard published by topics/issues (1992-2011)

Years/topics 1992-1996 1997-2001 2002-2006 2007-2011 Total BALANCED SCORECARD (general) *

0 1 1 0 2

Design/ attributes 0 1 1 1 3 Adoption/ Implementation 0 1 2 5 8 Causal effect 0 0 0 0 0 Effects / impacts of the balanced scorecard on people and other stakeholders

0 0 1 0 1

Innovation / diffusion 0 0 0 0 0 Rise/fall/success/failure 0 2 0 1 3 System outcomes (use / effectiveness / benefits)

1 0 4 2 7

Incentive plans / compensation effects

0 0 0 0 0

Performance measurement / evaluation

0 1 4 5 10

Review / critical analysis 0 0 1 1 2 Descriptive ** 11 6 9 5 31 Total 12 12 23 20 67 Notes * This includes 2 papers which uses the balanced scorecard framework. ** This mainly includes descriptive papers published in HBR. Table 10: Frequency distribution of articles on the balanced scorecard published by research settings (1992-2011)

Years/settings 1992-1996 1997-2001 2002-2006 2007-2011 Total Manufacturing 0 2 4 1 7 Service (private sector banking, insurance, airline, telecommunication etc)

0 3 4 4 11

Retail 0 0 0 0 0 Largest / medium sized firms in general / publicly traded

0 1 3 6 10

Hospitals / healthcare 0 0 0 0 0 Accounting firms 0 0 1 0 1 Central / local government

0 0 1 1 2

Government institutions / SOEs

0 0 0 0 0

Not-for-profit / NGOs 0 0 0 0 0 Nil/not stated* 12 6 10 8 36 Total 12 12 23 20 67 Notes * This mainly includes descriptive papers published in HBR.

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Table 11: Frequency distribution of articles on the balanced scorecard published by theories (1992-2011)

Years/theory 1992-1996 1997-2001 2002-2006 2007-2011 Total Behavioral/Psychology 0 0 0 0 0 Contingency 0 0 1 0 1 Institutional theory 0 0 0 1 1 Critical (general) 0 0 0 0 0 Agency 0 0 0 1 1 Stakeholder theory 0 0 1 0 1 Actor-network 0 0 0 0 0 Cultural (national and organizational)

0 0 0 1 1

Economic * 0 0 2 1 3 Fad and Fashion 0 0 0 0 0 Supply side perspective 0 0 0 0 0 Multiple theories 0 0 0 0 0 Historical 0 0 0 0 0 Constructive approach 0 0 0 0 0 Grounded theory 0 0 0 1 1 Other 0 0 0 0 0 Nil / no mention ** 12 12 19 15 58 Total 12 12 23 20 67 Notes * This includes papers which have used balanced scorecard literature and innovation literature as the theoretical lens. ** This includes descriptive papers, which explains the features of the balanced scorecard, offer practical insights as well as reviews papers. Table 12: Frequency distribution of articles on the balanced scorecard published by research methods (1992-2011)

Years/method 1992-1996 1997-2001 2002-2006 2007-2011 Total Questionnaire survey 0 0 3 2 5 Case / interviews 0 1 1 2 4 Experiment 0 0 0 1 1 Action research 0 0 0 0 0 Documents / archival / historical

0 0 0 0 0

Mixed methods (questionnaires and interviews)

0 0 6 2 8

Nil / no mention * 12 11 13 13 49 Total 12 12 23 20 67 Notes * This includes descriptive papers on the features of the balanced scorecard and reviews.

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Table 13: Frequency distribution of articles on the balanced scorecard published by primary data analysis techniques (1992-2011)

Years/data analysis technique

1992-1996 1997-2001 2002-2006 2007-2011 Total

Qualitative: Content analysis 0 0 0 0 0 Archival analysis 0 0 0 0 0 Interview quotes 0 1 2 3 6 Grounded (thematic) 0 0 0 0 0 Participation observation

0 0 0 0 0

Quantitative: Descriptive statistics /correlations

0 0 3 0 3

Multiple regression / ANOVA

0 0 0 3 3

SEM / Path model 0 0 0 1 1 Other * 0 0 2 0 2 Mixed method 0 0 3 1 4 Nil ** 12 11 13 12 48 Total 12 12 23 20 67 Notes * This includes factor analysis and pair-wise comparisons. ** This includes descriptive papers and reviews.

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Appendix 1: Accounting journals searched for balanced scorecard research

Journal acronyms

Start year Journal name Web address

AAAJ 1988 Accounting Auditing and Accountability Journal www.emeraldinsight.com/aaaj.htm AOS 1976 Accounting, Organizations and Society http://ees.elsevier.com/aos A & F 1960 Accounting and Finance http://www.wiley.com/ ABR 1970 Accounting and Business Research http://cchweb.cch.co.uk/abr TAR 1926 The Accounting Review http://aaahq.org/pubs/acctrev.htm BAR 1988 British Accounting Review http://ees.elsevier.com/bar BRIA 1989 Behavioral Research in Accounting http://aaahq.org/abo/bria CAR 1984 Contemporary Accounting Research https://www.editorialmanager.com/car JAE 1979 Journal of Accounting and Economics http://ees.elsevier.com/jae JAR 1963 Journal of Accounting Research http://services.bepress.com/jar JMAR 1989 Journal of Management Accounting Research http://maaw.info/JMAR.htm ABACUS 1965 Abacus: a Journal of Accounting and Business Studies www.wiley.com/ AH 1987 Accounting Horizons http://aaahq.org/pubs/horizons.htm AdvIAc 1984 Advances in Accounting http://ees.elsevier.com/adiac CPA 1990 Critical Perspectives on Accounting http://ees.elsevier.com/ycpac FAM 1985 Financial Accountability and Management www.wiley.com/ IIAE 1983 Issues in Accounting Education http://aaahq.org/pubs/issues.htm JAAF 1986 Journal of Accounting Auditing and Finance http://jaf.sagepub.com JA&PP 1982 Journal of Accounting and Public Policy www.elsevier.com/japp JAEd 1982 Journal of Accounting Education http://ees.elsevier.com/accedu/ JBFA Journal of Business Finance and Accounting www.wiley.com/ MAR 1990 Management Accounting Research http://ees.elsevier.com/mar RAS 1996 Review of Accounting Studies www.springer.com/ EAR 1992 European Accounting Review www.eaa-online.org/ TIJA The International Journal of Accounting http://ees.elsevier.com/tjia QRAM 2004 Qualitative Research in Accounting and Management www.emeraldinsight.com/qram.htm JAOC 2005 Journal of Accounting and Organizational Change www.emeraldinsight.com/jaoc.htm

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Appendix 2

Business and management journals searched for balanced scorecard research

Journal acronyms

Start year Journal name Web address

AMJ 1958 Academy of Management Journal http://journals.aomonline.org/amj AMR 1976 Academy of Management Review http://www.aom.pace.edu/amr ASQ 1956 Administrative Science Quarterly www2.johnson.cornell.edu/publications/asq/ DS 2003 Decision Sciences www.decisionsciences.org/dsj/index.htm IR 1945 Industrial Relations: a journal of economy

and society www.wiley.com/

ISR 1990 Information Systems Research www.informs.org/Pubs/ISR JAP 1917 Journal of Applied Social Psychology http://www3.interscience.wiley.com/ JBV Journal of Business Venturing http://ees.elsevier.com/jbv/ JIBS 1970 Journal of International Business Studies www.palgrave-journals.com/jibs/index.html JOM 1975 Journal of Management http://jom.sagepub.com/ JMIS 1984 Journal of Management Information Systems http://jmis-web.org/ JMS 1963 Journal of Management Studies www.wiley.com/ JOPM 1980 Journal of Operations Management http://ees.elsevier.com/opeman/ JOB 1980 Journal of Organizational Behavior www.wiley.com/ JPIM 1984 Journal of Product Innovation Management www.wiley.com/ LQ Leadership Quarterly http://ees.elsevier.com/leaqua/ MSC 1954 Management Science http://mansci.journal.informs.org/ OR 1952 Operations Research http://or.journal.informs.org/ OS 1990 Organization Science http://orgsci.journal.informs.org/ OST 1980 Organization Studies http://oss.sagepub.com/ ROB 1986 Research in Organizational Behavior www.elsevier.com/rob SMJ 1980 Strategic Management Journal http://smj.strategicmanagement.net/ TJB 1928 The Journal of Business (Chicago) http://ideas.repec.org/s/ucp/jnlbus.html AB&FH 1991 Accounting, Business and Financial History http://econpapers.repec.org/article/tafacbsfi/ AJM 1976 Australian Journal of Management http://aum.sagepub.com/

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CMR 1958 California Management Review http://cmr.berkeley.edu/cmr_tributes.html HBR 1922 Harvard Business Review http://harvardbusiness.org/groups/harvard-

business-review HRM 1961 Human Resource Management http://www.wiley.com/ HRMJ 1988 Human Resource Management Journal www.wiley.com/ HRMR 1991 Human Resource Management Review http://ees.elsevier.com/humres/ IJHRM 2001 International Journal of Human Resource

Development and Management http://www.inderscience.com/

IJOPM 1980 International Journal of Operations and Production Management

http://www.emeraldinsight.com/ijopm

JBR Journal of Business Research www.elsevier.com/ LRP 1968 Long Range Planning http://ees.elsevier.com/lrp/

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Appendix 3

Summary of some notable early research articles on the balanced scorecards published in accounting journals Author/s (Year)

Key issues addressed

Theory

Research methods

Key findings

Lipe & Salterio (2000)

Examines observable characteristics of the balanced scorecard that may limit managers’ ability to fully exploit the information found in a diverse set of performance measures

Behavioral theory Experiment was carried out with 58 first-year M.B.A students & applying statistical analysis

Unique measures in a business unit’s balanced scorecard may be underweighted in performance evaluation. common measures have more effect on unit managers’ decisions

Banker, Chang & Pizzini (2004)

Assess how individual’s evaluation of performance of business unit managers depend on strategically-linked performance measures of balanced scorecard

Strategy choice Case study of clothing retailer, applying statistical analysis of means test and regression analysis

Performance evaluators more influenced by strategically linked measures when provided strategy information with more reliance on common measures than unique ones

Ittner, Larcker & Meyer (2003)

Examines how different types of performance measures weighted in subjective balanced scorecard plan

Economic models of incentive contracting and psychological perspective

Quantitative(internal documents & employee survey) and qualitative (interview & observation) data of financial service firm

Subjectivity allowed supervisors to reduce balance in bonus by placing more financial weights, change evaluation criteria & ignore measures not predictive results

Malina & Selto (2001)

Investigates the communication and management-control attributes & effectiveness of balanced scorecard model (process and impacts of non-financial performance measures management)

Organizational communication and Management-control literature to identify various attributes

Qualitative semi-structured telephone interviews with individuals directly involved with balanced scorecard along with archival data

Balanced scorecard as effective to control corporate strategy & Causal relations between effective management control, motivation, strategic alignment and beneficial effects of balanced scorecard

Malmi (2001)

Exploratory study of how Finnish-based companies apply balanced scorecard concept as performance measurement tool or strategic management system & why companies adopt balanced scorecard

Strategy choice Qualitative semi-structured interviews of 17 organizations that known to have adopted balanced scorecard

Balanced scorecard used in two ways: management objectives and information system, serving both purposes & five reasons for adopting balanced scorecard, relating to strategy & management

Hoque & James (2000)

Examine relationship between organization size, product life-cycle stage, market position and balanced scorecard usage & contingent relationship of match on organizational performance

Contingency-theoretical perspective with organizational strategy literature

Quantitative survey based on mailed questionnaires to CFO of 66 Australian manufacturing companies

Larger firms make more use of balanced scorecard, firms of new products use more new products measures & market position not associated with balanced scorecard usage & performance not dependent