Increase the Effectiveness of Balanced Scorecard System through the Expansion in its Dimensions and the Development of Measurement Method

Abstract

The research problem is twofold: the first deals with the inadequacy of the four dimensions of balanced scorecard system (BSCS) (financial, customer, internal business processes, growth and innovation), the second addresses the apparent lack of accounting studies and research on the measurement of the relative importance of dimensions of BSCS and of the measurement of the relative importance of performance indicators for each of these dimensions.

The objectives of this research can be divided into three axes. The first is to provide a conceptual framework that includes the analysis of the efforts of researchers towards measuring and evaluating the BSCS, in terms of the principles and foundations that must be considered when it is used, its relationship to strategic planning, its functions, and its general applications. The second is to build a comprehensive model to measure and evaluate the BSCS. The third is to give the model the applicability property by relying on an appropriate statistical method that is the Analytic Hierarchy Process (AHP) to measure the relative importance of dimensions and performance indicators.

The current research proves the validity of two Hypotheses. The first hypothesis indicates that the use of a system to measure and evaluate the BSCS leads to acquisition of the comprehension characteristic by increasing coverage in the dimensions, to increase the general nature of the economic units that use it, and to increase the effectiveness of measurement and evaluation of performance in managerial accounting. The second hypothesis involves the assumption that reliance on the Analytic Hierarchy Process can lead to increasing the credibility and objectivity of the provisions of the relative importance of the dimensions of the system and performance indicators. Accordingly, the research plan included three axes to demonstrate and evaluate the previous studies. The first group of studies covers the nature of BSCS and its relationship to strategic planning. The second group of studies covers the coverage of the dimensions in the BSCS. The third group of studies attempts to develop the process of measurement and evaluation.

The current empirical study used a deliberately chosen sample of experts working in the field of performance measurement using BSCS to apply the Analytic Hierarchy Process in two phases, the first is to quantify the relative importance of the seven dimensions that have been suggested by previous research and the second is to determine the amount of the relative importance of performance indicators for measuring and evaluating each of the seven dimensions. Also, the current study extended to include how to calculate the degree of consistency among the experts interviewed for judging the credibility of their judgments.

The current study highlighted a distinct group of findings and recommendations, which can add an acceptable and satisfactory solutions to measure and evaluate the BSCS, both in the scope of the amount of the relative importance of the dimensions and indicators. The study was also characterized by showing a number of topics that could be fertile ground for future research.