Factors influencing Balanced Scorecard adoption
The Balanced Scorecard (BSC), designed by Robert Kaplan and David Norton in 1992 to provide managers with a way of translating strategy into a set of financial and non-financial measures, is undoubtedly one of the most popular methods used for a performance management system.
There have been a lot of studies on the BSC topic, starting from when the concept was introduced and until today. One particular topic that has been studied by researchers along the way is related to the factors that can influence the adoption of the BSC within organizations.
Everett M. Rogers, in his notable work “Diffusion of innovations”, talked about three sets of factors that influence a firm’s likelihood to adopt an innovation, such as the BSC:
– Leadership characteristics of the organization’s management – Top management involvement helps create commitment and generate organizational support for adopting an innovation;
-Internal organizational characteristics – The financial department’s influence impacts BSC implementation. Also, the degree of interdepartmental communication has an effect on the adoption of such innovations;
– External characteristics of the organization – For instance, a highly competitive environment can stimulate the adoption of innovations.
According to a 2008 study, conducted by Wu and his colleagues, cited by Tanyi (2011), organizational learning and IT resources availability represent internal organizational factors that also influence the adoption of BSC.
In their 2000 study, Hoque and James, as cited by Braam and Nijssen (2008), used data from Australian manufacturing companies to test the following hypothesis – BSC usage is related to the size of the organization, the life cycle stage of its products and its market position. The results from the study have shown that greater BSC usage was associated with large companies and that organizations with novel products, in an early growth stage of their life cycle, are more prone to adopt BSC.
Debates regarding factors that influence the adoption of the BSC have reflected various perspectives throughout time, but many studies outlined the importance of internal resources and leadership for initiating and supporting such a project.
- Braam, G. and Nijssen, E. (2008), Exploring the antecedents of Balanced Scorecard adoption as a performance measurement and strategic management system, Radbound University Nijmegen