How managers use the balanced scorecard to support strategy implementation and formulation processes

A.M.S Da Costa Ferreira

doi:10.1016/j.tekhne.2017.04.001

Abstract

In the last twenty years the relationship between Management Control Systems (MCS) and strategy has become a relevant issue to management control investigation. This study aims to understand how managers use the Balanced Scorecard (BSC) to support the processes of implementation and formulation of strategy. The research adopts an exploratory case study approach and was conducted on a business unit of a large industrial Portuguese company. Results were analyzed from the standpoint of Simons’ four control levers (1995, 2000), and demonstrate that the BSC methodology may be used under a diagnosis mode to implement deliberated strategies and, simultaneously, under an interactive mode to promote learning, support strategy revision, and provide conditions for new strategies. The research provides insights into the relationship between MCS and strategy, as it identifies the characteristics of using the BSC in the several levers of control.

Highlights

Discussion about the relation between Management Control Systems (MCS) and strategy is fairly new
Results were analysed from the standpoint of Simons’ four control levers (1995, 2000), and demonstrate that the Balanced Scorecard (BSC) methodology may be used under a diagnosis mode to implement deliberated strategies and, simultaneously, under an interactive mode to promote learning, support strategy revision, and provide conditions for new strategies
The research questions considered in this investigation are: how do managers within the Business Unit (BU) use the BSC, and how is the BSC implicated in the process of strategy implementation and strategic change? Our research focuses on the use of the BSC, on its diagnosis and interactive mode, and its relationship with strategy implementation and change, rather than on the BSC’s technical details

Summary

Introduction

Discussion about the relation between Management Control Systems (MCS) and strategy is fairly new. During the decade of 80, investigation starts to relate MC and strategy based on the contingency theory These studies have been widely criticized on because they do not facilitate the interpretation of results within an integrated model, the identified relationships are weak and the results are fragmented (Chenhall, 2003; Chenhall & Chapman, 2006; Covaleski, Dirsmith & Samuel, 1996; Dent, 1990; Hopper, Otley & Scapens, 2001; Langfield-Smith, 1997; Otley, 1999; Wickramasinghe & Alawattage, 2007). The conceptual framework of Simons highlights the way managers can use MCS to define and implement strategy and promote strategic change (Langfield-Smith, 1997)

Objectives

Results

Conclusion