Balanced scorecard edge over memorandum of understanding for public enterprises in India

Abstract

This paper unfolds two objectives; first, assesses the impact of memorandum of understanding (MoU, a socio-economic performance measurement technique) on the performance of public sector enterprises (PSEs) in India and identifies the gaps under MoU system. Second, enumerates how balanced scorecard (BSC) bridged these gaps and proposes broadly a generic model of BSC (for performance evaluation and assessment) for PSEs in India. BSC is an instrument, takes into consideration multiple indicators and includes financial and non-financial parameters. The study has used ratios to examine the performance of MoU opted PSEs over a period of more than one and half decade. The paper further explains the perspectives and importance of BSC. How BSC has an edge over MoU? The findings reveal that the extent of MoU is limited to the pre-specified objectives determined by the top management of a PSE and government, non-allocation of task linked incentives and limited involvement of all the stakeholders. Whereas, the BSC comprehensively covers all the gaps identified under MoU to meet the organisational vision strategically through set of objectives; it allows the participation of all the stakeholders, global practices to accomplish corporate objectives.