The Use of the Balanced Scorecard in Small Companies

Abstract

The Balanced Scorecard (BSC) is a performance measurement and strategic management system which appears suitable for use by all types and sizes of business. The BSC's greatest strength for most businesses comes from its innate ability to integrate financial and non-financial measures together by measuring both strategic and business performance across four interrelated perspectives. Many studies have shown that the BSC can be successfully implemented within large-scale companies and organizations. However, there is limited empirical evidence regarding the use of the BSC within small companies. This study adds to the existing literature by reporting the results of a comparative investigation of BSC awareness and use within small companies located in the UK and Cyprus. In addition, the study examines the reasons for non-adoption by small companies and whether these companies use performances measures that are similar to those typically contained within the BSC model. The research data was collected from self-completed questionnaires that were distributed to 500 companies in the UK and Cyprus. The findings of the survey suggest that the majority of small companies, especially in the UK, are unaware of the BSC, and consequently levels of BSC usage are extremely low. Certain respondents believed that BSC is an unsuitable tool for small companies and that its implementation is beyond the resources available to such entities. However, the findings also suggest that even though very few small companies actually use the BSC, many such companies appear to use performances measures and indicators similar to those typically included within a BSC model.

The use of management control and performance measurement systems in SMEs

“…In terms of empirical contexts, many studies have focused on large private firms, often to assess the design, implementation and use of popular frameworks such as the Balanced Scorecard (BSC) (Kaplan and Norton, 1992;2008;Malina and Selto, 2001;Micheli and Mura, 2017). Some have concentrated on SMEs and argued that scorecards can be equally useful in small and large companies (Monk, 2000;Laitinen, 2002;Gumbus and Lussier, 2006;Giannopoulos et al, 2013;Basuony, 2014). For example, Basuony (2014) suggests that the main benefit of using the BSC in SMEs is to promote a focus on the company's vision and strategic objectives, as well as initiating discussion about underlying assumptions of the business model.…”

The Balanced Scorecard Approach as a Tool for Performance Evaluation in the Hospitality Industry

“…In the competitive environment of nowadays this kind of information may be misleading and insufficient, especially in areas relating to the development and the innovation of the organization. 32 In addition, such information fail to measure the impact on the overall organization. 33 Furthermore, traditional performance measurement has been criticized for creating single focus and short-term orientation, lacking strategic focus, and discouraging continuous improvement 24 Although traditional financial performance measures offer an easy way of measuring the quantitative part of the performance of hotels, they have a serious limitation that they cannot recognize intangible factors, such as customer/employee satisfaction, customer equity, and the brand image of the hotels.…”

Business Process Assessment with Balanced Scorecard and Framework COBIT

“…COBIT supports IT governance by serving a framework to define the alignment of IT with the business [5]. The BSC covers an amount of assess that enable the managers to have a fast and complete enterprise view [6]. Balanced Scorecard (BSC) is an evaluation of an organization that is not only limited to traditional financial evaluation, but also with steps on customer satisfaction, inside processes and the capability to improve [7].…”