Empirical Analysis of the Reliability and Validity of Balanced Scorecard Measures and Dimensions

Abstract

For many years management accountants have been involved in the design of information systems for decision-making. To be effective in system design, accountants need pertinent and reliable performance measures within a valid framework. The Balanced Scorecard (BSC) has received a great deal of attention as a comprehensive model of performance that takes into account both financial and non-financial measures. This paper examines the empirical reliability and validity of the BSC framework and its associated measures. With reference to content validity, internal consistency reliability, and factorial validity, results show that BSC, with measures grouped into its four dimensions, is a valid performance model. Previous studies have called for better reliability and validity of BSC measures. The present study may help in the design and implementation of BSCs in business units by adding robustness to the BSC framework, and by suggesting a set of valid measures associated with the four BSC dimensions. The results may lead to reduced costs of BSC design and implementation, and enhanced consistency of future studies of the BSC.