The adoption of balanced scorecard: an exploration of its antecedents and consequences

Abstract

Purpose The purpose of this paper is to study the adoption of balanced scorecard (ABSC) as performance management system (PMS). It also proposes a framework for empirically validating the antecedents and consequences of the ABSC as PMS. Design/methodology/approach Through the extensive review of BSC literature, the antecedents and consequences factors of BSC adoption as PMS are explored. A conceptual model is derived which hypothesises the relationship between the antecedents and consequences of the ABSC. The data collected by surveying perception of 128 bank employees is empirically tested. Confirmatory factor analysis is used to test the validity of the proposed measurement model, and hypothesised relationships are tested using structural equation modelling. Findings The findings confirmed the hypothesised conceptual model. They indicate that top management involvement and interdepartmental communication are the two prime antecedent factors which significantly lead to ABSC as PMS. In addition to this, the findings validate a strong causal relationship between ABSC and three consequence factors, namely, employees’ behaviour, organisational capabilities and perceived performance. Research limitations/implications The current study broadens the understanding of the notion of BSC as PMS in a considerable manner. It overcomes the inadequacy of the previous studies which failed to explore the antecedents and consequences of ABSC in a comprehensive way. The studies’ key limitation is that it is based on the perception of employees which can be overcome by using multiple methods to collect data in future studies. Originality/value The current study makes a significant contribution to the BSC literature. It is a first of its kind study to provide empirical validation to the conceptual model of antecedents and consequences of the ABSC as PMS. The research finding offers key implications for both researchers and practitioners.