Balanced Scorecard Design and Performance Impacts: Some ...

JAMAR Vol. 6 · Number 2 · 2008Table One : Industry (GICS) and SizeNon-BSC UsersBSC Users# % # %Energy 4 1.3 2 2.4Materials 27 9.1 7 8.2Industrials 99 33.3 23 27.1Consumer discretionary 64 21.5 12 14.1Consumer staples 32 10.8 10 11.8Health care 17 5.7 5 5.9Financials 35 11.8 15 17.6Information technology 8 2.7 7 8.2Telecommunications 8 2.7 1 1.2Utilities 3 1.0 3 3.5Total Firms 297 85Size (average employees)Company 6,797 17,296SBU 564 627Note: 33 non-BSC users and 7 BSC users did not fill in GICS codesVariable Measurement and DescriptiveDataRespondents were asked about threecharacteristics of their BSC design (the useof cause and effect logic in the developmentof the BSC, the linking of compensation tonon-financial measures and the extent thatthe BSC has been implemented throughoutthe organisational hierarchy), as well aseleven benefits and three outcomeindicators measuring various aspects of thesuccess of the BSC. Prior to sending out thesurvey, the items were pilot tested with twosenior accounting managers at a division ofa large international consumer goodscompany, with students in an accountingMBA class and academic staff. Piloting ofthe survey instrument resulted in a numberof minor changes, mainly to the wording ofquestions in the survey. As most of the datais either categorical or single itemmeasures, pilot testing focused on theconvergent understanding of the surveyitems. It is this convergence between pilottest subjects, particularly in cases wherelittle theory exists to guide development,that essentially determines the validity ofthe items or constructs used (Rossiter,2002; see also Bergkvist and Rossiter,2007). Furthermore, as the two multipleitem measures in this study (link tocompensation and extent ofimplementation) are indices or ‘formative’constructs (as opposed to reflective – seeBisbe, Batista-Foguet and Chenhall, 2007),the use of traditional validation techniques,such as confirmatory factor analysis andCronbach’s Alpha, are inappropriate(Rossiter, 2002). Descriptive data is shownfor each of the three aspects of BSC designin Tables Two, Three and Four, and forbenefits and outcomes in Table Five.As shown in Table Two, a large number oforganisations do not use cause and effectlogic (43.5%), despite this being considereda central tenet of BSC design in practitionerliterature. Some organisations alsoindicated that they only used cause andeffect logic between perspectives. Given thesimplicity of this type of logic, it is likely tohave few beneficial outcomes unlessmeasures within and between perspectivesare also linked together. These seven firmswere not considered as having used causeand effect logic in testing the firstproposition.24