Quasi-Analytical Definition of a Practical Balanced Scorecard: A Building Process Approach

This paper examines the relationship between structural equation modeling and the balanced scorecard in a banking institution. Using financial and non-financial data taken from the banking establishment, the paper propose a rational construction of Balanced Scorecard by choosing the right indicators for the right axes. This choice is made by implementing the Partial Least Squares (PLS) in our model. In addition, the scheme gives us the cause-and-effect chain, the one described by Kaplan and Norton as: measures of organizational learning and growth; measures of internal business processes; measures of the customer perspective; financial measures. We will observe that the Kaplan and Norton's model of BSC is nothing but a particular case of our findings. Following this we propose a general approach to build step-by-step a rational Balanced Scorecard and we will apply this modeling to a special case in the banking sector.

[1]  Chee W. Chow,et al.  Continuous Improvement in Business Education: Insights from the For-Profit Sector and Business School Deans. , 1999 .

[2]  Norbert Sellin,et al.  Partial Least Squares Modeling in Research on Educational Achievement , 1995 .

[3]  Kimito Funatsu,et al.  GA Strategy for Variable Selection in QSAR Studies: Application of GA-Based Region Selection to a 3D-QSAR Study of Acetylcholinesterase Inhibitors , 1999, J. Chem. Inf. Comput. Sci..

[4]  Steven E. Salterio,et al.  The Balanced Scorecard: The Effects of Assurance and Process Accountability on Managerial Judgment , 2004 .

[5]  R. Kaplan,et al.  The balanced scorecard--measures that drive performance. , 2015, Harvard business review.

[6]  Anton J. Hopfinger,et al.  Application of Genetic Function Approximation to Quantitative Structure-Activity Relationships and Quantitative Structure-Property Relationships , 1994, J. Chem. Inf. Comput. Sci..

[7]  A. Höskuldsson.  PLS regression methods , 1988 .

[8]  Christopher D. Ittner,et al.  Subjectivity and the Weighting of Performance Measures: Evidence from a Balanced Scorecard , 2003 .

[9]  Robert C. MacCallum,et al.  Model specification: Procedures, strategies, and related issues. , 1995 .

[10]  Mary A. Malina,et al.  Communicating and Controlling Strategy: An Empirical Study of the Effectiveness of the Balanced Scorecard , 2001 .

[11]  Kim Langfield-Smith,et al.  Structural equation modeling in management accounting research: critical analysis and opportunities , 2004 .

[12]  S. Gudergan,et al.  An empirical study on customer profitability accounting, customer orientation and business unit performance , 2004 .

[13]  Hanne Nørreklit,et al.  Balanced scorecard versus French tableau de bord:beyond dispute, a cultural and ideological perspective , 2001 .

[14]  Charles J. Pineno.  The balanced scorecard: an incremental approach model to health care management. , 2002, Journal of health care finance.

[15]  Zahirul Hoque,et al.  Linking Balanced Scorecard Measures to Size and Market Factors: Impact on Organizational Performance , 2000 .

[16]  Steven E. Salterio,et al.  The Balanced Scorecard: Judgmental Effects of Common and Unique Performance Measures , 2000 .

[17]  A. Shenhar,et al.  Beyond the Balanced Scorecard:: Refining the Search for Organizational Success Measures , 2003 .

[18]  H. Abdi.  Partial Least Squares (PLS) Regression. , 2003 .

[19]  D. Larcker,et al.  Innovations in Performance Measurement: Trends and Research Implications , 1998 .