Success factors in Balanced Scorecard implementations – A literature review

Abstract

1. IntroductionOver the past 20 years, Kaplan and Norton's (1992) Balanced Scorecard (BSC) has attracted considerable interest from academia and practice (for a general review of the BSC-literature, cf. Hoque, 2014). With the increase in popularity, the BSC has evolved from a simple performance measurement system to a strategic management system (Kaplan & Norton, 2001a). Kaplan and Norton (1996) make the normative claims that the BSC enables organizations to clarify and translate vision and strategy into measureable outputs; communicate and link strategic objectives and measures; plan, set targets, and align strategic initiatives; and enhance strategic feedback and learning. Lawson, Desroches and Hatch (2008) argue that 62% of large organizations worldwide use BSC-style practices. In the U.S., BSC adoption rates are reported to be between 40-50% (Marr, 2001; Williams, 2001), and 57% in the U.K. (Anonymous, 2001). Among the largest listed organizations in the German-speaking area, 24% claim to have adopted the BSC (Speckbacher, Bischof, & Pfeiffer, 2003). Yet, the researchers Speckbacher, Bischof and Pfeiffer (2003) are more critical and only agree with 7% of the respondents that they have really implemented a full BSC. According to a recent international survey from Bain & Company among 1,208 executives across countries and organizational types, the BSC is the fifth most frequently used management practice among contemporary organization: approximately 20% of the respondents use the BSC, and their average satisfaction level ranges around '4' on a 5-point Likert scale (Rigby, 2013). The BSC shares this top-5 position with inevitable practices such as customer relationship management and benchmarking, and its popularity even surpasses crucial practices of a business such as supply chain management or outsourcing.However, it is intriguing to notice that many organizations still have not adopted the BSC despite the ostensible benefits consulting firms like to promote. One conjecture from the contingency literature could be that these organizations see the BSC as not performance-optimal in their specific contexts and therefore do not want to use it in the first place (Chenhall, 2003). An alternative conjecture from the organizational change literature could be that many non-adopters would actually like to use the BSC, but they expect or have experienced that they do not have the necessary capabilities to implement it (Buchanan, Fitzgerald, Ketley, Gollop, Jones, Lamont, & Whitby, 2005). In this paper, we would like to understand this second conjecture better. This requires a closer look at the existing literature on the initial processes of implementations (Buchanan et al., 2005) rather than the quite different literature that assesses the fit between an already implemented BSC and the organization (Chenhall, 2003). According to Chan (2004), managers only concur that the benefits of the BSC outweigh its costs if it is implemented thoroughly. However, this implementation process is expensive, time-consuming, and subject to uncertainty. Some of the key reasons why organizations choose not to implement the BSC are inadequate information systems, organizational resistance to change, and insufficient sponsorship of the BSC by senior managers (Northcott & Taulapapa, 2012). A prerequisite for a BSC implementation is to know the critical success factors (CSFs), such as the resources needed, or the key ac- tors to involve. Thus, we pose the question: Which are the critical success factors for a successful implementation of the BSC?In order to reach this level of understanding, we conduct a systematic literature review (Denyer & Tranfield, 2009). We specifically analyze which success factors from the general literature on organizational change have been ignored by researchers, or are seen as irrelevant in practice.We organize our findings along the established framework on organizational change by Buchanan et al. …