Balanced Scorecard and Financial Perspective

Topics: Balanced scorecard, Causality, Strategy map Pages: 44 (5465 words) Published: March 22, 2013
African Journal of Business Management Vol. 5(32), pp. 12520-12530, 14 December, 2011 Available online at
DOI: 10.5897/AJBM11.928
ISSN 1993-8233 ©2011 Academic Journals

Full Length Research Paper

An investigation into the interrelation between balanced
score card factors: A case study in the automotive
Jalalpoor Mahdieh1 and Tolouei Pedram2*

Department of Management, University of Isfahan, Isfahan, Iran. Department of Management, University of Tehran, Tehran, Iran.


Accepted 14 June, 2011

Since 1990s, when Kaplan and Norton introduced balanced scorecard (BSC) model, this model has been considerably popular amongst managers all over the world. Although BSC is known as a successful performance measurement tool amongst managers, there have been criticisms of that including: How financial and non-financial measures are linked together? Are relationships in a direct way or there is bi-directional casualty? To overcome the limitations to current BSC theory, this paper aims to describe main factors of each balanced scorecard BSC perspectives and investigate interrelation between them with consideration to automotive parts sector in Iran. For this aim, we analyze the relationship between various perspectives in structure of balanced scorecard and measure causal relationships between various perspectives and their role in improving financial perspective. This research was conducted through a set of monthly reports of Balances scorecard factors in Tosnco - company of auto industry - during a three-year period. Case study evidence verified the underlying theoretical hypothesis of BSC. It is verified that perspectives are positively correlated with each other and new interrelation between internal process perspectives factor and financial perspective evidence was also found. The innovative dimension of this research is that we actually applied BSC in Iran and investigated factors related to auto industry and interrelation between factors with each other. Key words: Performance, process, customer, finance, factors. INTRODUCTION

Performance measurement is considered a part of a
performance management system. This process includes
a series of activities to eminently and spiritually achieve
organizational excellence in the competitive field and
focus the efficiency and effectiveness of these activities.
Martinson (1999) offer several descriptions of organizational performance, and present a variety of models and methods to performance measurement at the same
time. Traditional performance measurement methods

*Corresponding author. E-mail:

Abbreviations: BSC, Balanced scorecard;
statistical package for the social sciences.


that were based on financial measures- not only reflected
the complete success or failure of companies that did not
have the necessary abilities, but also failed to establish
a logical relation between the company’s success factors and was unable to support management programs (Kaplan and Norton, 2001).Environmental management
issues have received an increased amount of attention in
recent years, as have various performance measurement
systems (PMS) such as the balanced scorecard (BSC).At
this time, BSC was presented as the most practical and
comprehensive performance measurement model. In
recent years, BSC has been a comprehensive model
when looking at management issues for financial and
non-financial purposes and has been very popular as it
has attracted a lot of attention (Nørreklit, 2000). This
model offers a variety of performance factors in four

Mahdieh and Pedram

perspectives: The Financial perspective; the customer
perspective; the internal business process perspective
and the organizational learning and growth perspective.
The BSC is a multi-criteria evaluation concept that
highlights the importance of performance measurement
(Tseng, 2010).
Based on BSC, the cause...
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