Since the Balanced Scorecard was developed in the 1990’s by Robert Kaplan and David Norton (1992), it has gained in popularity amongst academics and practitioners. In 1990, Kaplan and Norton led a research study of a lot of companies with the purpose of exploring the new methods of performance management. The importance of the study was an increasing belief that the financial measures of performance management were not as effective as before with the development of modern business enterprise. Representatives involved in the study companies, including the researchers Kaplan and Norton, were persuaded that the reliance on financial measures of performance had an effect on their ability to create value. After deep discussions the group brainstormed on several alternatives but finally settled on the balanced scorecard, which featured performance measures, customer issues, internal business processes, employee activities, and shareholder concerns. Kaplan and Norton introduced the new tool as the Balanced Scorecard and summarized the concepts of the study in the first of three Harvard Business Review articles, “The Balanced Scorecard-Measures That Drive Performance”.
Many organizations in both the private and public sectors have embraced the concept of the balanced scorecard. Most have implemented it in an attempt to improve performance (Chan & Ho 2000; Hoque & Jamesl Ittner & Larcker 2003). However, it appears that the term balanced scorecard is subject to different interpretations. For example, a document published by CMA Canada (1999) suggests that the term “Balanced Scorecard” maybe understood differently by different individuals/organizations. They state that many organizations believe that if a performance measurement system includes both financial and nonfinancial measures, it is a balanced scorecard, whereas Kaplan & Norton claim that a BALANCED SCORECARD is much more than just a collection of performance measures.
Different interpretations of a BALANCED SCORECARD are evident in academic studies as well. Hoque & James (2000) determined BALANCED SCORECARD usage using a 20-item scale noting that their BALANCED SCORECARD measure might not pick up the strategic linkages of a real BALANCED SCORECARD. As a result, companies in their study may possibly have had varying levels of BALANCED SCORECARD implementation which could have affected their results, especially considering the fact that BALANCED SCORECARD usage was the dependent variable in their regression model. Chan & Ho (2000) stated in their limitations section that “… the respondents may have mistaken their organization’s performance measurement system to that of a true BALANCED SCORECARD (p. 167).” It is also possible that a company’s performance measurement system has all of the attributes of a balanced scorecard but they do not consider it to be one. Clearly defining a BALANCED SCORECARD would be a 4 contribution to future research by providing a basis to determine the extent of BALANCED SCORECARD adoption by an organization. This study will attempt to do this.
Although there are numerous studies on the balanced scorecard (Chan & Ho 2000; Hoque & James 2000; Lipe & Salterio 2000; Malina & Selto 2001; Lipe & Salterio 2002; Ittner & Larcker 2003; Speckbacher et al. 2003), only one study has attempted to develop a conceptual model of the scorecard and used it to examine the extent of its adoption. This was in Austrian, German and Swiss organizations (Speckbacher et al. 2003). This suggests a need for more research to examine what attributes of a Kaplan and Norton (1992, 2001, 2006) Balanced Scorecard other organizations use in their performance measurement system.
This study will not attempt to explain the reasons for any differences between organizations with different levels of Balanced Scorecard adoption, it will only report them.
In summary, while other studies have...