Balanced Scorecard: To Adopt Or Not To Adopt‪?‬

The Balanced Scorecard’s (BSC) appeal is reflected in the widely reported estimate that more than 50 per cent of Fortune 1000 firms have used it in some form. In this article the authors report on their research—among the first of its kind—which examines the critical factors that increase the likelihood that a firm will adopt the BSC. The authors found that BSC adoption was significantly associated with strategy: firms that followed a Prospector or Analyzer strategy were more likely to adopt the BSC than other firms. BSC adoption was also positively related to the firm's size as the research showed that BSC adopters were significantly larger than non-adopters. The study also found that the propensity to adopt the BSC was positively related to the firm's environmental uncertainty. In examining the association between BSC adoption and the firm’s performance, the authors highlight the need for greater understanding of and further research on BSC formulation and implementation issues. The article concludes with recommendations for effective BSC formulation and implementation. These recommendations include: Obtain senior leadership involvement; articulate the firm's business vision and strategy; identify the performance categories that link vision and strategy to results; cascade the scorecard to team, division and functional levels; develop effective measures and meaningful standards (both short- and long term; leading and lagging); deploy appropriate budgeting, IT, communication and reward systems; view the BSC as a continuous process, requiring maintenance, reassessment and updating; and believe in the BSC as a facilitator of organizational and cultural change.