The balanced scorecard and related systems: The information dimensions in their performance reporting systems, and their effects on performance

Errol Iselin
Lokman Mia
John Sands

Abstract

The Balanced Scorecard (BSC) and related systems have become popular in recent times due to problems associated with traditional financial systems. The BSC incorporates a multi-perspective performance reporting system that reports information about four perspectives - learning and growth, internal business processes, customer, and financials. BSC theory argues that there is a cause and effect relationship from the first perspective to the last. There are broader multi-perspective systems in practice that have two additional perspectives to these four - social and environmental. Atkinson et al. (1997) have argued that the BSC is among the most significant developments in management accounting and that it deserves intense research attention. However, although these systems are an important development, research in the area has only just scratched the surface. The motivation for this research comes from the importance of BSC systems and the lack of knowledge about them. The objectives of the study are to: (1) explore the information dimensions of multi-perspective performance reporting, (2) explore the dimensions of organisational and managerial performance, and (3) study the effects of (1) on (2). A possible problem with multi-perspective systems is that they may cause information/data/redundant cue (I/D/C) overload and thus detrimentally affect performance. A further research objective is to study this issue. Our study found 11 dimensions of performance reporting information, two of I/D/C load, 13 of organisational performance, and one of managerial performance. The findings indicate that multi-perspective performance reporting is positively associated with performance. In contrast, I/D/C overload is negatively associated with performance.

© Copyright Errol Iselin, Lokman Mia & John Sands, 2004