HOW DOES BALANCE SCORE CARD (BSC) AFFECT FIRM PERFORMANCE?
The Balanced Scorecard (BSC) is a popular strategy management tool used by many businesses to boost productivity and efficiency. Kaplan and Norton (1992) argue that the BSC is a useful tool for transforming an organization’s strategic goals into tangible end results. This enables businesses to track their efforts and determine whether or not they are on track to meet their strategic objectives.
The BSC’s effect on productivity in businesses has been studied extensively. Ittner and Larcker (2003), for instance, discovered that businesses who adopted the BSC outperformed their peers financially by a wide margin. In a similar vein, Hoque and James (2000) discovered that the BSC increased customer satisfaction, morale inside the firm, and productivity.
Using the BSC as a method of internal communication and collaboration has been lauded by other scholars. Speckbacher et al. (2003), for instance, observed that the BSC aided in aligning the aims and objectives of different departments within a company and facilitated communication and collaboration between them.
Research shows that the BSC can help businesses boost productivity and better coordinate their efforts to achieve their long-term objectives. It’s worth noting, nevertheless, that the BSC’s efficacy may hinge on a number of elements, including as the nature of the environment in which it’s implemented and how well it’s adapted to the organization’s unique circumstances.
The BSC also facilitates the dissemination of corporate strategy and objectives to all employees. The BSC helps businesses ensure that their operations are aligned with their strategic goals and that their employees are all working toward the same ends by offering a transparent and easily understood framework for monitoring performance.
The BSC can also aid in the identification and prioritization of projects that will lead to enhanced performance. The BSC helps businesses find places where they are falling short and determine which initiatives will have the most impact on their bottom line by monitoring performance across various dimensions.
Last but not least, the BSC may assist institutions in enhancing their decision-making procedures. The BSC helps businesses decide where to put their resources and what to prioritize by offering actionable insights into performance based on hard facts.
As a result of its complete framework for assessing performance, aligning operations with strategic objectives, and making decisions based on data-driven insights, the Balanced Scorecard is an effective instrument that may help businesses accomplish their goals and objectives.
REFERENCES:
Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71-79.
Ittner, C. D., & Larcker, D. F. (2003). Coming up short on nonfinancial performance measurement. Harvard Business Review, 81(11), 88-95.
Hoque, Z., & James, W. (2000). Linking balanced scorecard measures to size and market factors: Impact on organizational performance. Journal of Management Accounting Research, 12(1), 1-17.
Speckbacher, G., Bischof, J., & Pfeiffer, T. (2003). A descriptive analysis on the implementation of balanced scorecards in German-speaking countries. Management Accounting Research, 14(4), 361-388.