Article review of “Thirty years with the balanced scorecard”

Article review of “Thirty years with the balanced scorecard”

 

How to present this article in Harvard reference format?

Tawse, A. & Tabesh, P., 2023. Thirty years with the balanced scorecard: What we have learned. Business Horizons, 66, pp.123-132. Available at: https://doi.org/10.1016/j.bushor.2022.03.005 [Accessed date].

Replace "[Accessed date]" with the date you accessed the article.

 

What are the key research issues the article wants to address?

The article identifies four key unresolved research questions regarding the balanced scorecard (BSC) and its impact on firm performance:

1.              What are the sources of ambiguity in the relationship between BSC adoption and firm performance?

2.              What is the empirical evidence regarding the relationship between BSC adoption and firm performance?

3.              What factors influence the relationship between BSC adoption and firm performance?

4.              How can practitioners maximize the benefits of BSC adoption?

These questions aim to clarify the validity and value of the BSC as a strategy implementation and performance measurement tool.

 

Describe two main theories employed in this article.

The article employs the following two main theoretical perspectives regarding the Balanced Scorecard (BSC):

1.                                  Strategic Fit and Causal Linkage Theory: Central to the BSC’s theoretical foundation is the concept of fit between strategic goals and the controllable drivers captured by BSC metrics across its four dimensions (financial, customer, internal business processes, and learning and growth). Kaplan and Norton emphasized that identifying the causal connections between these measurable drivers and long-term strategic goals is critical to BSC effectiveness. For example, aligning key process and learning metrics with a cost-leadership strategy enables effective strategy implementation by channeling organizational efforts toward desired outcomes. The establishment of a formal strategy map visually capturing these cause-and-effect relationships further strengthens this mechanism .

2.                                  Organizational Learning Theory: The BSC also operates as a platform for organizational learning, enhancing performance through feedback and the improvement of employee mental models regarding the organization's future direction. Studies cited in the article show the BSC facilitates both single-loop learning (improving information accessibility and relevance) and double-loop learning (strategy evolution), and supports vision dissemination. This learning process enables the continuous revision and improvement of organizational strategies, contributing to better alignment between strategy and operations .

These theories support the notion that the BSC improves performance by linking strategy to actionable metrics and by fostering continuous learning within organizations. However, the article also notes criticisms that question the empirical support for the causal relationships and the BSC’s flexibility in dynamic environments .

  

Highlight 2 main primary findings reported in this article.

 Two main primary findings reported in the article are:

1.              Positive but Moderate Overall Impact of BSC Adoption on Firm Performance: The meta-analysis of 11 empirical studies found that the overall relationship between Balanced Scorecard (BSC) adoption and firm performance is positive, with an aggregated effect size of 0.433. This indicates that BSC adoption contributes positively to organizational outcomes, but the impact is moderate rather than strong.

2.              The Importance of Causal Linkage and Measurement Method: The effectiveness of the BSC is significantly enhanced when causal linkage between BSC measures and strategic goals is explicitly established, typically through the use of a strategy map. The meta-analysis showed that causal linkage increases the effect size by 0.321, supporting the theoretical foundation of the BSC. Additionally, the study found that subjective measures of performance (e.g., surveys) tend to show a much higher perceived impact of the BSC (effect size = 0.747) compared to objective financial measures (effect size = 0.188), suggesting that while BSC adoption is viewed as highly beneficial internally, its direct influence on objective financial metrics may be more limited.

 

Describe 3 main claims of the article in terms of Toulmin's model of argument.

 

Using Toulmin's model of argument (which includes claim, grounds (evidence), warrant (reasoning), backing, qualifier, and rebuttal), three main claims of the article are:

Claim 1: The Balanced Scorecard (BSC) adoption positively contributes to firm performance.

·                                                Grounds: Meta-analysis of 11 empirical studies showing an aggregated effect size of 0.433 supporting a positive relationship between BSC adoption and firm performance .

·                                                Warrant: Combining multiple studies increases statistical power and reliability of results, providing a more accurate estimate than individual studies alone .

·                                                Backing: Prior literature on BSC’s role in strategy implementation and performance measurement  .

·                                                Qualifier: The impact is relevant but moderate.

·                                                Rebuttal: The effect size is moderate, and some studies show mixed results; variation exists depending on implementation details and measurement approaches .

Claim 2: The establishment of causal linkage between BSC measures and strategic goals enhances the effectiveness of BSC in improving firm performance.

·                  Grounds: Meta-analysis indicates that causal linkage increases the effect size by 0.321, showing stronger BSC effectiveness when strategy maps are used to establish causality .

·                  Warrant: Strategy maps clarify the cause-and-effect relationships, improving managerial understanding and alignment with strategic goals, which improves implementation outcomes  .

·                  Backing: Strategic management literature emphasizing the importance of linking measures to strategy for effective implementation  .

·                  Qualifier: Causal linkage significantly strengthens the BSC–performance relationship.

·                  Rebuttal: Many organizations do not implement causal linkage, potentially reducing BSC effectiveness .

Claim 3: Subjective performance measures tend to show a larger positive impact from BSC adoption than objective financial measures.

·                  Grounds: Meta-analysis results showed effect size of 0.747 for subjective performance measures versus 0.188 for objective financial data.

·                  Warrant: Subjective measures capture firm-specific strategic impacts better but may be biased due to confirmation bias of managers reporting benefits .

·                  Backing: Psychological literature on confirmation bias and methodological critiques of subjective performance measures.

·                  Qualifier: BSC is perceived to have a large impact subjectively, but direct objective effects are less pronounced.

·                  Rebuttal: Subjective assessments carry the risk of bias; objective measures may not fully capture nuanced strategic benefit.

                                                                                                                  

Describe 2 main research limitations of the study.

Two main research limitations of the study are:

1.              Small number of empirical studies included in the meta-analysis: The quantitative synthesis was based on only 11 peer-reviewed empirical studies that quantitatively measured the BSC adoption–firm performance relationship with sufficient data to calculate effect sizes. While the meta-analytic approach improves reliability by aggregating findings, the small sample size limits the generalizability and robustness of conclusions drawn from the analysis.

2.              Heterogeneity across study settings and methods: The studies included in the meta-analysis were conducted in a wide variety of industries (e.g., banking, energy, telecom) and used diverse methodological approaches (e.g., surveys and experiments). This broad diversity enhances generalizability but does not capture industry-specific nuances or contextual factors influencing BSC effectiveness, which may lead to an incomplete understanding of how different environments moderate the BSC–performance relationship.