Applying theoretical perspectives to the balanced scorecard
Nicholas Davis
Working Paper 15/06
November 2006
About the Author
Nicholas Davis, Charles Sturt University, Panorama Avenue BATHURST NSW 2795
Charles Sturt University – Faculty of Business Working Paper Series
Managing Editor: Associate Professor Jayne Bisman, School of Accounting, Bathurst
Editors: Dr P. Mathews, School of Commerce, Wagga Wagga
Associate Professor M. O'Mullane, School of Business, Albury
Dr R. Tierney, School of Marketing and Management, Bathurst
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Table of Contents
- Abstract
- Introduction
- The Balanced Scorecard
- Criticisms of the BSC
- Research traditions concerning the BSC
- Economic Perspectives
- Political Economy Theories
- Application of Audit JDM research
- Concluding thoughts
- References
Abstract
Zimmerman (2001) described the type of research underpinning the development of the Balanced Scorecard (BSC) as being atheoretical because it did not conform to the methods consistent with traditional modes of scientific theory building, testing and development. While not specifically arguing against Zimmerman’s (2001) conjecture, this paper identifies and reports on a number of theoretical bases, derived from a variety of methodological approaches, that can be used to explain and provide insights into why the BSC is initially adopted by organisations and how well the BSC achieves its aims once implemented in practice. In terms of explaining why the BSC may be introduced initially, aspects of the economics based literature, as well the political economics literature, are applied. It is also proposed that political economy theories, such as legitimacy theory, as well as critical theories, have potential to elucidate and explain the BSC adoption decision, as well as the implementation and on-going operation of the BSC in organisations. Furthermore, branches of the audit judgment/decision making (JDM) literature are used to provide predictions as to the effectiveness of managerial capacity to deal with information presented by the BSC once it is implemented. This paper aims to identify the relevance of each of these theoretical perspectives to the BSC and to assess the potential implications and interpretations of these perspectives for the usefulness of the BSC as a strategic management and performance measurement system.