The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0025-1747.htm

MD
44,5

Balanced scorecard and causal

model development:
preliminary findings

690

Rozhan Othman
Faculty of Economics and Management Sciences, IIUM,
Kuala Lumpur, Malaysia

Received July 2005

Revised December 2005
Accepted January 2006

Abstract
Purpose The purpose of this research is to show a preliminary examination of the effects of the
development of the causal model of the strategy in the implementation of the Balanced Scorecard.
Studies on the Balanced Scorecard adoption show that many organizations that adopted the Balanced
Scorecard did not develop a causal model of their strategy. The study seeks to examine the differences
in Balanced Scorecard implementation of adopters who developed a causal model of their strategy and
those who did not.
Design/methodology/approach Mailed survey was used to collect the data.
Findings It was found that Balanced Scorecard adopters who did not develop a causal model of
their strategy experienced specific problems more than those who developed a causal model of their
strategy. It affected the outcomes and ease of implementation of the Balanced Scorecard.
Research limitations/implications The small number of responses obtained in this study due to
the relatively recent adoption of the Balanced Scorecard in Malaysia limits the generalizability of this
study. However, it does provide insights on the hypotheses to be examined in future studies.
Practical implications The findings of this survey suggest that the successful implementation of
the Balanced Scorecard requires that organizations develop and articulate a causal model of their
strategy.
Originality/value This study is probably the first attempt to examine the role of causal model
development in effective implementation of the Balanced Scorecard.
Keywords Balanced scorecard, Performance levels, Strategic planning, Malaysia
Paper type Research paper

Management Decision
Vol. 44 No. 5, 2006
pp. 690-702
q Emerald Group Publishing Limited
0025-1747
DOI 10.1108/00251740610668923

Introduction
One of the key ideas in the Balanced Scorecard (BSC) is the development of a causal
model of the strategy (Norreklit, 2003). This model is supposed to describe the
cause-effect relationship of an organizations strategy (Bourguignon et al., 2004). The
development of the strategy map and subsequently the scorecard is supposed to be
based on this causal model. This model represents the business hypothesis of the
strategy. Yet, evidence indicates that many organizations that adopted the BSC did not
develop a causal model of their strategy. There is the need to understand whether this
has any impact on the implementation of their BSC program. This study is an
examination of the impact of the development of the causal model on the effectiveness
of BSC programs.

BSC and causal model

The development of the causal model of strategy is a key concept in the BSC. The
strategy map, one of the tools in the BSC method, is essentially a graphical depiction of
the causal model of an organizations strategy (Kaplan and Norton, 1996; Mooraj et al.,
1999; Norreklit, 2000) It essentially tells the story of the organizations strategy
(Amarangtunga et al., 2001). The relationship depicted in the strategy map then
becomes the basis for the developing the scorecard. The scorecard spells out the
short-tem and long-term objectives of the strategy. Some researchers argue that in spite
of the importance of the causal model in the BSC, no specific method is available to help
organizations develop it (Malmi, 2001; Speckbacher et al., 2003).
Even though the BSC is not presented as a strategy formulation technique, the
emphasis on developing a causal model of the strategy indicates the necessity of
having a properly developed strategy before the tools of the BSC are used to map out
the implementation of the strategy. Whatever techniques an organization uses, the end
product should be a plan that describes the strategic outcomes and how these outcomes
are to be achieved. This relationship needs to be presented in the form of a business
hypothesis of the organization.
Causal model of strategy
Kaplan and Nortons (1996, p. 30-1) discussion about the causal model indicates that it
is the basis upon which the management system envisioned in the BSC method is
supposed to be developed. This causal model is supposed to depict the cause-effect
relationship across all four perspectives.
The development of the performance measures in the BSC should be derived from
an understanding of the sequence of cause-effect relationship of the strategy. It should
describe the relationship between the outcomes sought by the organization and the
performance drivers of the strategy. Merely specifying the outcomes or key
performance indicators is not sufficient. It will not help members of the organization
understand how an objective is to be achieved (Kaplan and Norton, 1996, pp. 149-50). A
clear understanding of the performance driver-outcome relationship is crucial in
communicating the strategy.
Developing the causal model of the strategy is also important because it provide the
milestones for the development of the scorecard. The scorecard describes the temporal
relationship of the strategy. Thus, it has to be based on an understanding of how the
strategy is to be implemented over time. This means that the causal model of the
strategy is supposed to help organizations understand how decisions made today will
affect future outcomes (Kaplan and Norton, 1996, p. 160).
Evidence on BSC implementation
Various studies on the adoption of the BSC show that one problem encountered by
many organizations is their inability to develop a causal model of their strategy. Malmi
(2001) found that the adopters of the BSC in Finland experienced difficulty in
developing the causal model of their strategy. Even though the respondents claimed to
have developed their performance measures from the cause-effect model their strategy,
they were not able to describe their model very well. Malmi concluded that claimed link
appeared to be weak.

Balanced
scorecard

691

MD
44,5

692

A study of BSC adoption in Austria and Germany also found that about half of the
companies that adopted the BSC did not develop a causal model of their strategy
(Speckbacher et al., 2003). Davis and Albrights (2004) survey of the literature on the
BSC shows that 77 percent of companies that adopt the BSC in the USA fail to develop
a causal model of their strategy.
These findings raises the question of how does the absence of a causal model of the
strategy affect the level of effectiveness of the BSC program. There is the risk that the
failure to develop a causal model of the strategy will cause organizations to develop
performance measures that is not tied to how the organization intends to compete. The
outcome is a collection of measures that is fragmented and has little value add to the
organization. The BSC ends up becoming an exercise in developing more paper work
and information collection that does not have a strategic impact.
Research agenda
The objective of this research is to examine the BSC adoption experience among
Malaysian companies. It will seek to examine whether the development of a causal
model of the strategy makes a difference in the effectiveness of the BSC program. This
survey is intended to be a preliminary survey given that the adoption of the BSC is
relatively recent in Malaysia and the number of companies that have done so are not
many. It is expected that the number of response available will be small. However, this
is not uncommon in studies on the adoption of new management techniques. Braam
and Nijssens (2004) study of BSC implementation in Dutch companies involved 41
companies. Davis and Albrights (2004) study of the BSC in the USA involved 14
branches of a bank. Malmis (2001) study of BSC use in Finland involved only 17
companies. Speckbacher et al. (2003) relied on data from 43 companies in Austria and
42 companies in Switzerland. The expected small number of responses makes the
nature of this study an exploratory one. The purpose is not to seek generalizable
findings but to understand better the context of effective BSC use among the
respondents and unearth issues needing further attention.
The basic issue that will be examined in this study is to what extent adopters of the
BSC among Malaysian companies also developed a causal model of their strategy.
Based on the findings in other countries, it is expected that not all BSC adopters
developed a causal model of their strategy. The second issue to be examined is whether
there is any difference in the outcome of the BSC program between adopters who
developed a causal model of their strategy and those who did not. Given the
importance of developing the causal model, it is expected that there will be differences
in the outcomes of the BSC program.
This study is also a follow up to an earlier case study conducted by this author. This
case study had, among other things, found that the absence of a causal model in the
implementation of the BSC had created certain problems (Othman et al., 2006). This
included the lack of buy-in and the lack of clarity of the actions needed to achieve the
performance measures set by management. While the case study provided in-depth
understanding of the problems faced by a company, there is the need to assess the
extent these problems are shared by other BSC adopters. It is hoped that this survey
will shed more light on the extent such problems are encountered by other BSC
adopters in Malaysia.

Methodology
This study used mailed survey to collect data on BSC adoption among Malaysian
companies. A questionnaire addressing the issues identified in the extant literature on
the BSC was developed. It consisted of items:
(1) features of the BSC program, including whether a causal model of the strategy
was developed in the BSC program;
(2) the outcomes of the BSC program; and
(3) problems encountered in their BSC program.
Respondents were asked to provide their responses using 5 point Likert scales that
measured the extent they agree or the extent an item describes the situation in their
organization. The sections seeking information on the features of the BSC program
sought simple yes or no responses to whether a specific element was developed in
the BSC program. The questionnaires were sent to the Chief Executive Officers of the
companies.
The sample consisted of randomly selected public listed companies. Where the
listed company is a holding company, its subsidiaries were chosen for this study. This
is because the BSC method is most suited for business units having activities covering
the whole value chain of a business (Kaplan and Norton, 1996, p. 300). The total
number of companies chosen was 311 firms. Thirty eight companies responded to the
survey, giving a response rate of 12.2 percent. The mean sales of the respondent firms
is RM534 million (USD1 RM 3.80 in 2005).
Findings
As mentioned earlier, the relatively recent adoption of the BSC among Malaysian
companies limits the number of responses expected from this survey. The small
number of responses obtained renders the use of statistical tests, parametric or
non-parametric, meaningless since it is unlikely to result in statistically significant
findings. This limitation simply means that the finding of this survey should be
considered as indicative of the experience of the respondents only. Furthermore, the
purpose of this study is to explore issues related to causal model development in BSC
adoption. The theory on the role of causal model development in the BSC is
underdeveloped and has not been subjected to empirical examination. The role of an
exploratory study is to gain insights and information and to break broad and imprecise
problem statements into more precise problems (Ahmad and Ali, 2003). It is hoped that
this study will provide a basis for proposing hypotheses for more rigorous examination
in future studies.
Respondents characteristics
Seventeen (44.7 percent) of the respondent firms have adopted the BSC. The earliest
adopter of the BSC did so in 2000. More than eighty percent of the adopters did so after
2001. Table I provides data on when the BSC was adopted by the respondents.
An examination of the mean sales of the adopters of the BSC shows that they have a
mean of RM819 million. The non-adopters have a lower mean sales of RM371 million.
This indicates that the BSC adopters tend to be larger companies, as measured by 2004
sales.

Balanced
scorecard

693

MD
44,5

694

Outcome of BSC adoption

The finding on the effects of BSC adoption is shown in Table II. The most important
benefit from the use of the BSC is its role in helping communicate the organizations
strategy. This is followed by its role in helping organizations align their activities. The
items with mean scores of more than 3.0 indicate that many of benefits attributed to the
BSC were realized by the responding organizations. These include clearer
accountability, developing the link between short-term and long-term goals, better
performance management, improvement in financial performance and competitiveness
and improved strategy implementation.
The respondents were also asked to indicate the elements that were a part of the
BSC program that their organization developed. Table III shows the percentage of the
BSC adopters using the various the elements in their BSC program. It shows that
almost all of BSC adopters developed financial and non-financial measures as well as
used perspectives to link them, a smaller percentage (88.2 percent) developed the
strategy map. An even smaller percentage (52.9 percent) developed a causal model of
the strategy.
Effects of developing causal model
The data was examined to determine whether the presence of a causal model of the
strategy made any difference in the outcome of BSC adoption. Table IV shows that
comparison of mean score of items measuring the effect of the BSC. The data shows
that BSC adopters who developed causal models of their strategy had a higher mean
score for 5 out of 9 items measuring the impact of BSC adoption. However, the
difference in mean scores for items 5 and 6 are small. Only item 2 (improved
organizational competitiveness), item 8 (see more clearly the link between short-term
and long-term goals) and item 9 (the ability of the BSC to help reduce conflict) show
quite a substantial difference in the mean score. Items 3, 4 and 7 in Table IV show that
those companies that developed a causal model of their strategy had lower mean scores
than those that did not develop a causal model. There is no difference in the perception
of improvement in financial performance between those who developed a causal model
and those who did not.
Table V presents the mean score and ranking of the problems encountered in the
BSC program. The two issues attaining a mean score of 4 or more indicates the
importance of developing internal expertise in BSC implementation and the value of
participation. It also shows that developing participation among managers helped the

Year of adoption

Table I.
Year the BSC was
adopted

2000
2001
2002
2003
2004
2005
Not reported
Total

Companies

Percentage

2
1
2
5
4
2
1
17

12.5
6.3
12.5
31.3
25.0
12.5
100

Rank
1
2
3
3
4
5
5
6
7
8
9
10
11
12
13
13
14

Outcome
The BSC makes it easier to communicate your
organizations strategy
The activities of different parts of the organization
are better aligned to the strategy
Managers in your organization are now clearer of the
results they are accountable for
You will keep on attempting to implement the BSC
even though youve not seen the benefits yet
It is now easier to manage performance in your
organization
The BSC enabled your managers to see more clearly
the link between short-term and long-term goals
Your organization is now able to overcome the
weaknesses in strategy implementation it
experienced in the past
The BSC program has significantly improved your
organizations competitiveness
There was noticeable improvement in financial
performance after introducing the BSC
The use of the BSC had reduced conflict in your
organization
It is too early to say what the effect of the BSC
program is
It is not possible to conclude that whatever
improvement your organization had experienced
was mainly due to the BSC initiative
You have not been able to see substantial benefit
from implementing the BSC
The BSC program is not worth the trouble
There were more negative than positive effects from
the BSC program
You will not recommend others to attempt the BSC
method
Your organization has decided to stop the BSC
program

Mean

Standard deviation

4.294

0.588

4.117

0.600

4.000

1.000

4.000

0.935

3.823

0.882

3.765

0.831

3.765

0.831

3.588

0.795

3.250

0.775

3.176

0.951

2.882

1.536

2.823

0.951

2.250
1.294

1.125
0.686

1.235

0.664

1.235

0.562

1.235

0.562

Elements
Develop financial and non-financial measures
Used perspectives that linked financial and non-financial issues of the strategy
Develop a strategy map
Develop a management system based on the BSC
Assessment of competitive scenario
Examine relative position of competitors
Formulate a cause-effect model of the strategy
Formulate a profit model of the business
Identify future trends in the environment

Balanced
scorecard

695

Table II.
Ranking and mean scores
of effects of BSC adoption

Percentage
94.1
94.1
88.2
70.6
58.8
58.8
52.9
52.9
41.2

Table III.
Elements included in BSC
program

MD
44,5

Effect
1
2

696

3
4
5
6

Table IV.
Differences in mean score
of effects of BSC adoption
between respondents that
develop a causal model
and those that did not

7
8
9

There was noticeable improvement in financial performance

after introducing the BSC
The BSC program has significantly improved your
organizations competitiveness
It is now easier to manage performance in your organization
The activities of different parts of the organization are better
aligned to the strategy
Managers in your organization are now clearer of the results
they are accountable for
Your organization is now able to overcome the weaknesses in
strategy implementation it experienced in the past
The BSC makes it easier to communicate your organizations
strategy
The BSC enabled your managers to see more clearly the link
between short-term and long-term goals
The use of the BSC had reduced conflict in your organization

Causal model

Mean

With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without

3.250
3.250
3.778
3.325
3.667
4.000
4.000
4.250
4.111
3.857
3.778
3.750
4.111
4.500
4.000
3.500
3.444
2.875

organization gain insight into issues top management had not been aware of. This
seems to be consistent with the expected benefit of developing participation as
discussed by Kaplan and Norton (1996, p. 252). The finding also shows that
developing, monitoring and rewarding the non-financial aspects of performance was a
challenge. This can be seen in the mean scores of the items ranked in the 3, 5, 6 and 8th
positions. The items relating to the development of a causal model of the strategy
indicates that developing the model was not easy and required many assumptions to
be made. However, the item ranked in the 25th position shows that the respondents did
not feel that developing the causal model was simply guess work.
The mean score for these problems was compared between those who developed a
causal model of their strategy and those who did not. Table VI presents this
comparison. Items where the mean score for both categories is less than 3 are excluded
from this table since these are not rated as important problem by the respondents. The
mean scores in the table shows that BSC adopters who did not develop a causal model
of their strategy had more difficulty in developing non-financial measures (item 5) and
in cascading their scorecard to lower levels (item 7), faced a lack of the enthusiasm for
the BSC program (item 18), developed performance monitoring that was more focused
on financial measures (item 20) and tend to see the development of a causal model of
the strategy as more of a guesswork (item 21) who BSC adopters that developed a
causal model of their strategy.
Those who did not develop a causal model also perceived that they were better able
to resolve all contradictions in the performance measures develop (item 12) but found
that doing so was not easy (item 14) compared to those who developed a causal model.
Those who did not develop a causal model consider the inability to track non-financial
measures (item 6) more of a problem than those who developed a causal model. The
data also indicates that organizations that developed a causal model of their strategy
were better able to gain consensus among their managers when translating their

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Problems encountered
Developing internal expertise on the BSC was an
important element of your BSC program
Top management learned a lot of new things as a
result of getting managers involved implementing
the BSC
Developing reward and incentives for managers who
were responsible mainly for non-financial measures
was more difficult
The consultant engaged by your organization
greatly helped the BSC initiative
It was more difficult to develop non-financial than
financial measures
The information system of your organization could
not be developed to track the performance of many of
the non-financial measures
Cascading the scorecard to lower levels encountered
a lot of difficulties
You found that it was not possible to track the
performance of all the non-financial measures
The cause-effect model of the strategy that was
developed had to be based on a lot of assumptions
The ease of implementing the BSC was enhanced as
more people were involved in the process
The information system of your organization could
not capture all the performance measures
Your organization was able to resolve all
contradictions between the performance measures
developed
The time taken to implement the BSC was too long
It was not easy to resolve the contradictions in the
performance measures developed
The BSC method your organization used did not help
you anticipate the behavioural problems you
encountered
Developing the strategy map was more difficult than
expected
It was easy to attain consensus among your
managers when translating the intent of your
strategy into an action plan
Even though there was no opposition to the BSC
initiative, there was, however, a lack of enthusiasm
for it
The performance targets set for your managers were
well accepted by them
In the end, the performance monitoring in your BSC
system was more focused on financial measures
There was considerable difficulty monitoring the
performance measures because too many was
developed

Mean

Standard deviation

4.250

0.856

4.000

0.790

3.765

0.970

3.667

0.985

3.529

1.280

3.500

1.155

3.467

1.125

3.375

1.147

3.333

0.651

3.312

1.014

3.294

1.263

3.235
3.176

0.831
1.074

3.176

1.236

3.000

1.134

3.000

1.265

2.937

0.998

2.889

1.114

2.875

0.885

2.823

1.237

Balanced
scorecard

697

2.647

1.222
(continued)

Table V.
Ranking and mean score
of issues and problems
faced by BSC adopters

MD
44,5

Rank

Problems encountered

22

Getting key managers to attend BSC meetings that

required their involvement was a problem
Reaching consensus on the performance measures
was easy
Your organization began encountering problems in
managing the BSC system once the consultants
engaged finished their job
Developing the cause-effect model of the strategy
was more a guess work than a systematic process
Winning over support from your managers was
difficult
The time taken to implement the BSC was
distracting people from their job

23

698

24
25
26
27

Table V.

Mean

Standard deviation

2.588

1.064

2.471

1.124

2.454

1.036

2.333

1.155

2.312

1.014

2.294

1.046

strategy into action (item 17) compared to those that did not develop a causal model.
However, they found developing the strategy map more difficult than expected (item
16). Those who develop a causal model also found implementing the BSC easier as
more people were involved in the process (item 10). This is not the case with those who
did not develop a causal model of their strategy.
Discussion
The findings of this study seem to suggest that the development of the causal of the
strategy appears to make a difference in some of the outcomes. For those items where
those who did not develop a causal model had higher mean scores, there are a number
of possible of explanations. For item 3 easier to manage performance, one possible
reason those who did not develop a causal model had a higher mean score is that they
have a simpler conceptualization of their strategy and thus see the process of
managing performance as much easier. These organizations may simply focus on
developing key performance measures and consider managing performance as the
process of monitoring these measures. They do not see managing strategy as
managing the set of cause-effect relationship in the strategy.
The same explanation may also apply for the higher mean score for items 4
(different parts of the organization are better aligned) and 7 (easier to communicate
the strategy). Those who did not develop a causal model of their strategy may
have a simpler understanding of what constitutes aligning the organizations
activities to the strategy. They probably perceive the ability to develop key
performance measures at the organizational level and cascading these measures
downwards as all that is needed in attaining alignment. And given their simpler
understanding and expectation, they would also find communicating the strategy
to be much easier than those who have to describe their strategy in terms of a
causal model.
It is interesting to note however, that in spite of the fact that those who did not
develop a causal model perceiving the BSC as enabling them to communicate their
strategy, the data in Table VI shows that they encountered more problems in
cascading the scorecard, developing non-financial measures, had more difficulties

Problems encountered
1
2
3
4
5
6
7
8
9
10
11
12.
13
14
15
16
17
18
19
20
21

Developing internal expertise on the BSC was an important element

of your BSC program
Top management learned a lot of new things as a result of getting
managers involved implementing the BSC
Developing reward and incentives for managers who were
responsible mainly for non-financial measures was more difficult
The consultant engaged by your organization greatly helped the
BSC initiative
It was more difficult to develop non-financial than financial
measures
The information system of your organization could not be
developed to track the performance of many of the non-financial
measures
Cascading the scorecard to lower levels encountered a lot of
difficulties
You found that it was not possible to track the performance of all
the non-financial measures
The cause-effect model of the strategy that was developed had to be
based on a lot of assumptions
The ease of implementing the BSC was enhanced as more people
were involved in the process
The information system of your organization could not capture alls
the performance measure
Your organization was able to resolve all contradictions between
the performance measures developed
The time taken to implement the BSC was too long
It was not easy to resolve the contradictions in the performance
measures developed
The BSC method your organization used did not help you anticipate
the behavioural problems you encountered
Developing the strategy map was more difficult than expected
It was easy to attain consensus among your managers when
translating the intent of your strategy into an action plan
Even though, there was no opposition to the BSC initiative, there
was however, a lack of enthusiasm for it
The performance targets set for your managers were well accepted
by them
In the end, the performance monitoring in your BSC system was
more focused on financial measures
Developing the cause-effect model of the strategy was more
guesswork than a systematic process

Causal model

Mean

With
Without
With
Without
With
Without
With
Without
With
Without
With
Without

4.125
4.375
3.889
4.125
3.889
3.625
3.667
3.667
3.222
3.875
3.125
3.875

With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without
With
Without

3.000
3.875
3.250
3.500
3.333
3.333
3.750
2.875
2.889
3.125
3.111
3.250
3.333
3.000
3.000
3.500
3.143
2.875
3.222
2.714
3.000
2.875
2.667
3.125
2.778
3.125
2.556
3.125
1.889
3.667

resolving contradictions in their performance measures, encountered a lack of

enthusiasm among their employees and were less able to attain consensus in
developing an action plan than those who developed a causal model. A possible
interpretation of this data is that while the respondents felt that they were able to use
the BSC to communicate their strategy, their subordinates who were the recipients of
the message did not necessarily understand the message or simply did not develop

Balanced
scorecard

699

Table VI.
Comparison of problems
encountered by
organizations that
developed a causal model
of their strategy and
those that did not

MD
44,5

700

much interest and commitment to the program. Likewise those who did not develop a
causal model perceived that they were able to use the BSC to achieve organizational
alignment. However, the data in Table VI indicates that they faced more difficulties
achieving this than those who did develop a causal model.
It also appears that the absence of a causal model also created problems in
developing the non-financial measures of the strategy and in formulating an action
plan. Those who did develop a causal model were able to use the model as a shared
strategic framework in thinking about the issues in implementing the BSC. This may
explain why the data in Table IV shows that those who developed a causal model saw
the BSC program as helping them reducing conflict. The causal model helped reduce
ambiguities about the strategy and helped foster a common understanding.
Conclusion
This preliminary study found evidence to suggest that developing a causal model of a
strategy affects the implementation of the BSC. It shows that those who did not
develop a causal model encountered considerable problem in implementing the BSC.
Among other things, the absence of a causal model created difficulties in developing
the non-financial measures, developing an action plan of the strategy and the process
of cascading the scorecard to lower levels of the organization.
The absence of a causal model of the strategy may lead organizations to develop
performance measures that are unconnected to the strategic issues of the organization.
While these measures may help make it clear to members of the organization what are
the outcomes expected from them, it does not necessarily help to integrate their
activities in a coherent and synergistic manner.
Performance measures are essentially information needed to enable control and
monitoring of organizational performance. Braam and Nijssen (2004) argue that
performance will be harmed if the measures are seen as an end instead of a mean.
Developing measures is not a substitute for developing a sound strategy. Developing a
sound strategy requires that the strategy be articulated in the form of a cause-effect
model. The absence of causal model of the strategy is akin to a person driving a car in
an unfamiliar place without a map. He may be clear of this final destination but he
hasnt got a clue how to get to the destination.
As mentioned earlier, a limitation of this study is the small number of respondents
available. This is largely due to the relatively recent diffusion of the BSC among
Malaysian organizations. While this limits the ability to conduct statistical test to
assess the generalizability of the findings, its does inform us on the importance of
developing a causal model of the strategy in BSC adoption. Some of the findings are
consistent with that made by BSC researchers in other countries. More studies will be
needed to scrutinize further the findings of this study. The findings of this study can
serve as hypotheses for future studies.Specifically, future studies should test the
following hypotheses:
H1. The perceived effectiveness of a BSC program is positively related to:
developing internal expertise on the BSC; and extent of participation of
managers in the initiative.
H2. BSC adopters who develop a causal model of their strategy tend to perceive
the BSC program as enhancing their organizations competitiveness.

H3. BSC adopters who develop a causal model of their strategy tend to perceive a
better linkage between their short-term and long-term goals.
H4. BSC adopters who develop a causal model of their strategy tend to perceive
their BSC implementation as having less difficulty in: developing
non-financial measures; cascading of the performance measures; the
monitoring of non-financial measures; and developing consensus in
implementing the BSC.
H5. BSC adopters who do not develop a causal model of their strategy tend to
perceive the process of implementing the BSC as more likely to create conflict
in the organization.
To test the above hypotheses, future studies need to use multiple methods. Some of the
issues in the above hypotheses need to be tested using qualitative studies to gain more
insight into the dynamics of BSC implementation. Among other things, the views of
managers affected by the BSC program should be sought. This study sought the
response from CEOs, who are also in many cases the champions of the BSC initiative.
This may create some bias in the response given that they are the owners of the
initiative. Feedback from those affected by the program will provide a more accurate
picture of the impact of the BSC programs.
Surveys using a larger sample and a higher response rate are needed. This will
enable the use of statistical tests to ascertain the generalizability of the findings of this
study. This may require a replication of this study in a few years time. It is hoped that
by then there will more BSC adopters to provide a bigger sample and generate a higher
response rate. A repeat of this study in a few years time involving the early adopters
will provide longitudinal data and would enable an assessment of the long-term impact
of their BSC initiative. This will provide a better picture of the effects of BSC adoption.
There is the need to also examine whether the use of quantitative measures of
performance as espoused by the BSC is suitable for all organizations. Is there a
possibility that the BSC is more suited for organizations competing in a stable
environment emphasizing efficiency. The emphasis on quantifiable performance
measures may reinforce variation minimization behaviour in organizations.
Organizations competing in a dynamic environment may require variation
maximization (Benner and Tushman, 2003). These organizations may find the
emphasis on explicit quantitative measures inflexible. A variable measuring
competitive approach and competitive environment should be included.

References
Ahmad, R. and Ali, N.A. (2003), The use of cognitive mapping technique in management
research: theory and practice, Management Research News, Vol. 26 No. 7, pp. 1-16.
Amaratunga, D., Baldry, D. and Sarshan, M. (2001), Process improvement through performance
measurement: the balanced scorecard methodology, Work Study, Vol. 50 No. 5, pp. 179-88.
Benner, M.J. and Tushman, M.L. (2003), Exploitation, exploration and process management:
the productivity dilemma revisited, Academy of Management Review, Vol. 28 No. 2,
pp. 238-56.

Balanced
scorecard

701

MD
44,5

702

Bourguignon, A., Malleret, V. and Norreklit, H. (2004), The American balanced scorecard versus
the French tableau de bord: the ideological dimension, Management Accounting Research,
Vol. 15, pp. 107-34.
Braam, G.J. and Nijssen, E.J. (2004), Performance effects of using the balanced scorecard: a note
on the Dutch experience, Long Range Planning, Vol. 37, pp. 335-49.
Davis, S. and Albright, T. (2004), An investigation of the effect of balanced scorecard
implementation on financial performance, Management Accounting Research, Vol. 15,
pp. 135-53.
Kaplan, R.S. and Norton, D.P. (1996), The Balanced Scorecard, Harvard Business School Press,
Boston, MA.
Malmi, T. (2001), Balanced scorecards in Finnish companies: a research note, Management
Accounting Research, Vol. 12, pp. 207-20.
Mooraj, S., Oyon, D. and Hostettler, D. (1999), The balance scorecard: a necessary good or an
unnecessary evil?, European Management Journal, Vol. 17 No. 5, pp. 481-91.
Norreklit, H. (2000), The balance on the balanced scorecard a critical analysis of some of its
assumptions, Management Accounting Research, Vol. 11, pp. 65-88.
Norreklit, H. (2003), The balanced scorecard: what is the score? A rhetorical analysis of the
balanced scorecard, Organizations and Society, Vol. 28, pp. 591-619.
Othman, R., Ahmad Domil, A.K., Che Senik, Z., Abdullah, N. and Hamzah, N. (2006), A case
study of balanced scorecard implementation in a Malaysian company, Journal of
Asia-Pacific Business, Vol. 7 No. 2, forthcoming.
Speckbacher, G., Bischof, J. and Pfeiffer, T. (2003), A descriptive analysis of the implementation
of balanced scorecard in German-speaking countries, Management Accounting Research,
Vol. 14, pp. 361-87.
Corresponding author
Rozhan Othman can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected]

Or visit our web site for further details: www.emeraldinsight.com/reprints

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.