英国南安普敦大学留学生管理会计硕士论文定制-关于德国一家公司实施平衡计分卡的项目研究-Implementing the

英国南安普敦大学留学生管理会计硕士论文定制,关于德国一家公司实施平衡计分卡的项目研究,平衡计分卡是一个综合性的，多维展示应用的工具，可以促进跨组织接轨的战略举措，澄清和沟通策略。但平衡计分轻松实现到任何组织。成功的关键因素需要考虑TOBE。The University of Southampton
Faculty of Law, Arts and Social Sciences
School of Management
MSc Dissertation
Implementing the Balanced Scorecard into a company of the German Mittelstand.
An action research project.
Student ID: 22964304
Presented for MSc. Accounting and Management
This project is entirely the original work of student registration number 22964304.
Where material is obtained from published or unpublished works, this has been fullyacknowledged by citation in the main text and inclusion in the list of references.
Content page
Abstract ............................................................................................. 4
Introduction ................................................................................................ 5
Literature Review .................................................................................... 8
The Balanced Scorecard ............................................................................. 8
Basics ................................................................................................. 8
Practical Usage ..................................................................................... 9
Criticism of BSC ...................................................................................... 10
Implementing BSC ................................................................................................ 11
Factors affecting BSC implementation ............................................................... 12
Selecting measures and perspectives ............................................................... 13
Summary ............................................................................................................... 14
Methodology ............................................................................................................. 16
Action research ..................................................................................................... 16
A medium sized family-owned company of the German education sector ............ 18
Research design – Plan of action .......................................................................... 20
Conceptual framework .......................................................................................... 23
SME characteristics: Implications on BSC implementation ................................ 23
National culture: Implications on BSC implementation ...................................... 24
Family ownership and succession: Implications on BSC implementation .......... 25
For-profit or not-for-profit? .................................................................................. 26
Linking research design and conceptual framework .......................................... 28
Case Study ............................................................................................................... 30
Analysis of the client company .............................................................................. 30
Change of leadership style ................................................................................ 30
Opaque structure and responsibilities ................................................................ 31
Importance of existing management accounting tools ....................................... 33
Lack of an unified formulated strategy ............................................................... 34
Developing a BSC ................................................................................................. 35
Formulating Strategy and strategic goals .......................................................... 35
Selecting perspectives ....................................................................................... 38
Selecting measures ........................................................................................... 41
Critical success factors of BSC implementation ........................................................ 44
Conclusion ................................................................................................................ 50
References................................................................................................................ 57
3
Appendix ................................................................................................................... 69
I Implementation process of BSC ........................................................................ I 1
Implementation process of BSC ........................................................................ I 1
Timeline of action research project and process phases ................................... I 1
II Recommendations for roll-out ......................................................................... II 1
Figures
Figure 1: Balanced Scorecard (adapted from Kaplan and Norton, 1996b, p. 54) ....... 9
Figure 2: Organizational structure of the client company .......................................... 19
Figure 3: The process of action research (Checkland and Howell, 1998, p. 15) ....... 20
Figure 4: Timeline of action research project ............................................................ 21
Figure 5: Adaption of the BSC framework for non-profit organizations (adapted from
Kaplan, 2001, p. 361) ................................................................................................ 27
Figure 6: Organizational structure of the client company as perceived by middle and
lower management ................................................................................................... 32
Tables
Table 1: Quantitative and qualitative studies investigating BSC implementation ...... 13
Table 2: Topics of performed interviews ................................................................... 22
Table 3: Conceptual framework of critical success factors ....................................... 29
Table 4: Vision and strategic initiatives of the client company .................................. 36
Table 5: Strategic objectives and underlying strategic directions .............................. 37
Table 6: Perspectives and strategic objectives and underlying strategic initiatives... 38
Table 7: Final BSC for top management use ............................................................ 40
Table 8: Useful measures not included in corporate BSC ......................................... 42
Table 9: Critical success factors derived from literature which play a role in the
investigated case ...................................................................................................... 49
Table 10: Considered critical success factors and confirmed research findings
accordingly ................................................................................................................ 51
Table 11: Interviews planned and carried out ........................................................... 55
4
Abstract
The Balanced Scorecard is a comprehensive, multidimensional performancemeasurement tool that can contribute to align strategic initiatives across anorganization, to clarify and to communicate strategy. But the Balanced Scorecardcannot be easily implemented into any organization. Critical success factors need tobe considered. The described research project evaluates critical success factors for asuccessful implementation of a Balanced Scorecard in a family-owned, medium sizedGerman company of the education sector following an action research approach. Acase study methodology is used to test a framework of critical success factorsderived from literature in a real world situation. The study shows that the BalancedScorecard is a highly flexible concept that is likely to be applied in various andunpredictable fashions in a business organization. The mayor constraint of animplementation is not the infeasibility of a developed Balanced Scorecard but politicalpower games among top managers. Probable benefits of a Balanced Scorecardusage are not seen as gains but as arguments in this ongoing discussion.
This dissertation is a rare approach of qualitative management research in a Germanbusiness setting. Furthermore the study follows the call of Malmi and Granlund(2009) for “interventionist studies” using an action research approach that helps toovercome a theory-practice gap in management accounting research. However, thevalidity of the findings is limited by a range various obstacles.

Introduction
Malmi and Granlund (2009) argue that contemporary theory development inmanagement accounting deals mainly with understanding the causes, effects andfunctioning of management accounting and is mostly directed towards academiccolleagues. Hence the relevance of management accounting research for practice islimited. According to Malmi and Granlund (2009) theory building through“interventionist studies” using an action research approach could help overcome thistheory-practice gap in management accounting. This research attempts to addresssuch reasoning and applies an action research approach to analyse theimplementation of a Balanced Scorecard (BSC) in a medium sized and family-ownedcompany of the German education sector. In an exploratory case study a frameworkof critical success factors of a successful BSC implementation derived from literatureis tested in a real world /situation which enables reflection on both theappropriateness of the framework andtheorganizationalpractice. Such assessmentof a German business organization through qualitative management accounting
research is rare. Only one such research could be found (Tillmann and Goddard,2008). Press reporting of the last years “over-optimistic” takeover of the public listedContinental AG through the considerably smaller family-owned Schaeffler Group(The Economist, 2009a) and the distracted merger between Porsche andVolkswagen this year (The Economist, 2009b) offer some interesting and rare
insights in the functioning of German industry. For example the significant influenceof families becomes apparent which pull the strings barely noticeable by theinterested public and are only exceptionally investigated by researchers. As far asmanagement accounting research assessing the BSC conducted in Germany isconcerned, it seems to concentrate on the quantitative application of the BSC inGermany. Despite the popularity of the BSC in Germany no in-depth case study canbe found that analyses the process of BSC implementations in a German businessenvironmentextensively. Possibly, a general secretiveness of family-ownedbusinesses in Germany limit researchers’ access to confidential information that isassociated with such a project. This research helps to fill the recognized gap ofqualitative management accounting research in Germany. The underlying researchquestion is to investigate critical success factors that affect the success of animplementation of a BSC in a German family-owned company. Superior access tonecessary data is secured through a trustful relationship between the researcher andmanagers of the company due to a prior working relationship.
The BSC is a comprehensive, multidimensional performance measurement tool thatcan contribute to align strategic initiatives across an organization, to clarify and tocommunicate strategy (Kaplan and Norton, 1996a). Previous research suggests that
the success of a BSC implementation is highly dependent on case specific criticalsuccess factors (Otley, 1999; Kaplan and Norton, 1996b; Pun and White, 2005;.Johanson et al., 2006). In this research a conceptual framework of critical successfactors is derived from literature before the researcher takes actively part in anorganizational change process. By this means the developed framework is tested ina real-world implementation process of a BSC. It becomes apparent that only half ofthe presumed critical success factors play a role in the case. In reality the BSC is ahighly flexible concept that is likely to be applied in different and unpredictablefashions in a business organization. Furthermore the findings suggest that the basicdecision of a BSC implementation depends on political power games of topmanagers rather than on the feasibility of the tool and possible benefits that could begained.
This study commences with a literature review which includes a detailed introductionof the BSC, its usage frequencies in practice and its main points of criticism. Inaddition experiences with BSC implementations are summarized from previous casestudies. Rather than developing a specifictheory or hypothesises the literaturereview is intended to provide a context and background to the research. Next an
introduction of action research and the applied research design and methods areprovided. Furthermore a conceptual framework of critical success factors of a BSCimplementation is derived from both previous literature and 代写留学生论文organizationalparticularities of the client company such as the size, not-for-profit, national cultureand family ownership. The main part of the dissertation includes the case ofimplementing a BSC in the client company. Based on interviews with managers of alllevels the researcher draws a comprehensive picture of the client company.Moreover a BSC is developed in close collaboration with the researcher andmanagement accountants of the client company. The actual implementation of theBSC is not covered in the project but recommendations for the final roll-out are given.The main part ends with an analysis of the impact of the critical success factors thathave been derived from literature and organizational particularities on theimplementation process of a BSC. The dissertation concludes with a summary of thefindings and a discussion of the quality and validity of the research approach.Moreover consequences on the initial discussed BSC framework are considered andrecommendations for further research are given.
Literature Review
The Balanced Scorecard
Basics
A performance measurement system is a set of metrics that is used to quantify both
the effectiveness and efficiency of a business organization’s actions (Neely, 1994
cited in Neely et al., 1995). Kaplan and Norton (1992) argue that contemporary
performance measurement systems should not rely exclusively on financial
performance measures because they would deliver an incomplete picture of business
performance. The Balanced Scorecard (BSC) was introduced as a multidimensional
performance measurement and control system in order to meet this dilemma. The
/ is a single management report which should provide a business unit manager
with a holistic and comprehensive view of the organization and should lead to a
better understanding of a business and should therefore improve managerial
decision making (Kaplan and Norton, 1992). As a pilot in an aircraft cockpit the
manager is informed quickly by the most important measures of a company (Kaplan
/ Norton, 1996b). Each measure should be derived from a strategic objective
formulated by top management. The initial concept of the BSC intends to illuminate a
business from four vital perspectives reflecting the business as a whole (see figure
1). To begin with, the financial perspective encloses measures that indicate the
financial performance of a company. Further, the customer perspective implies
indicators which map a company’s performance in activities valued by customers or
which indicate customer satisfaction. The Internal Business Processes perspective
focuses on measures which inform about the efficiency of a company’s core
competencies. Finally, indicators of the Learning and Growth perspective measure
continuous improvement and innovation, such as training and employee motivation.
9
Figure 1: Balanced Scorecard (adapted from Kaplan and Norton, 1996b, p. 54)
The perspectives should be linked through cause and effect relationships (Kaplan
and Norton, 1996b) and should include lagging (measuring past performance
outcome) and leading measures (performance drivers of future outcomes). If these
“hypothesises of cause and effect” are verified the BSC will lead ultimately to
improved financial performance (Kaplan and Norton, 1996b). Implementing a BSC
enables an organization not only to measure its true performance but also can
contribute to align strategic initiatives across an organization, to clarify and to
communicate strategy (Kaplan and Norton, 1996a).
The nature of strategy implies particular activities in order to reach a desired future
state of an organization or to realize an overriding entrepreneurial vision and
comprises a future plan, an evolved pattern from the past, a market position, a way of
doing things and a ploy of outdoing competitors (Mintzberg, 1987). Aligning strategic
actions rationally can be called strategic planning. According to Mintzberg strategic
planning involves a formalized procedure and an articulated result that is concerned
with an integrated system of decisions (Mintzberg, 1994, p. 14) that is aimed at
elaborating and operationalizing formal strategies (Mintzberg, 1994). As a result the
BSC can be seen as an instrument of both strategic formation and strategic planning.
The BSC includes both an operational (performance measurement) and a strategic
dimension (strategy implementation) (Olve et al., 1999, p. 37).
Practical Usage
Kaplan and Norton were not the first authors who ask for multidimensional
performance measurement systems. Since the 1950s French companies used the
‘tableau de bord’ which incorporated a financial and non-financial perspective
10
(Epstein and Manzoni, 1998). Parker (1979) argued for a balanced view of firms.
Furthermore balanced performance measurement frameworks are introduced by
other authors as well (Keegan et al., 1989; Fitzgerald et al., 1991; Maisel, 1992;
Neely et al., 2001). However, until 1992 the term “balanced scorecard” was
uncommon (Johanson et. al, 2006).
Malmi (2001) argues that the BSC is used by companies regardless of their size and
organizational structure. But it can be assumed, that the size of a firm is positively
related to the probability of a BSC implementation (Hoque and James, 2000; Hvolby
and Thorstenson, 2001; Speckbacher et. al, 2003; Schachner et al., 2006; Rigby,
2009). Furthermore the BSC is used in both private and public organizations (Kaplan,
2001; Malmi, 2001; Chan 2004; Ax and Bjørnenak, 2005; Modell, 2005) although the
concept was initially developed for private, or for-profit organizations (Kaplan, 2001).
During the 1990s the BSC became an internationally widely used tool of strategic
management accounting. In a global survey Rigby (2009) indicated that the BSC is
used by 53% of companies around the world and by 54% in Europe. According to
research findings, the concept is less popular in Germany. Actual usage rates vary
from 13% (Henschel, 2003), 16% (Henschel and Bischof, 2006) to 35% (Schachner
et al., 2006). Schäffer and Matlachowsky (2008) list 22 surveys investigating the
distribution of the BSC framework in German speaking countries. Speckbacher et al.
(2003) found that 24% of large companies in German speaking countries use a BSC.
But only 50% of them defined cause and effect chains. Findings of Schachner et al.
(2006) indicate that 8% of German medium sized companies implemented the BSC
following the initial concept. It can be seen, that the full implementation of the BSC’s
original approach as a tool for strategic alignment and organizational learning
incorporating cause and effect chains is very rare in German business practice.
Criticism of BSC
In literature various features of the BSC concept are criticised but most notably the
cause and effect chains and its mechanical top-down approach. Nørreklit (2000)
questions the existence of cause and effect chains between measures of different
perspectives. She argues, casual relationships are logical in nature and therefore
cannot be proofed empirically as assumed by Kaplan and Norton. For example, just
because increased customer satisfaction might lead to a better financial
performance, one cannot assume that an improved financial result is caused by
customer satisfaction. Furthermore the BSC ignores the time dimension in measuring
11
performance (Nørreklit, 2000). If a taken action leads to any effect, there is always a
time-lag between cause and effect. Ignoring this lag might lead to distorted
information (Nørreklit, 2000). In reality cause and effect relationships are likely to be
very complicated to detect (Oetly, 1999; Nørreklit, 2000) and are established and
maintained only by a minority of companies applying a BSC (Speckbacher et al.,
2003). As Jensen (2001) points out, performance improvement measured by the
BSC is dependent on multiple criteria. Unless they do not all improve simultaneously
it will be difficult to assess overall performance. Furthermore, cause and effect might
change over time and need to be adjusted constantly. As a result the BSC might
measure an improved performance but this does not necessarily mean that the
improvement can be traced back on the involved measures in the BSC.
In a later article Nørreklit (2003) tackles the cockpit metaphor used by Kaplan and
Norton illustrating the working of the BSC. This “company-as-a-machine metaphor”
(Nørreklit, 2003, p. 599) suggests that managers would rely only on mechanical
control while leading a company. Relying exclusively on formal control systems is
likely to produce a mental gap between managers and subordinates in an
organization because of involved levels of abstraction and simplification which is
needed to derive singular measures from complex organizational processes
(Johanson et al., 2006). Moreover, the BSC is described as a static “top-down
command and control model” (Nørreklit, 2003, p. 600) which would not promote
learning because of a lack of possibilities to collect feedback. A centrally developed
strategy tends to lack internal commitment, which can result in a gap between the
pre-formulated strategy and the actions undertaken by the employees (Nørreklit,
2000). Lawrie and Cobbold (2004) indicate that top-down implementation of a
strategy in different subordinated parts of an organization can be problematic
because of the existence of information asymmetries.
In summary Nørreklit (2003) argues the BSC would be by no means an innovative
and well functioning tool. Expected benefits of implementing a BSC such as
performance improvement and strategy implementation are likely to be more difficult
to achieve as assumed and presented by Kaplan and Norton.
Implementing BSC
The resource based view of strategy suggests that managers should except real
world imperfections and develop an organisation’s capabilities (resources and
competences) in order to maintain or build a competitive advantage (Hamel and
12
Parhalad, 1989, 1990). In a rapidly changing environment, strategies should assure
that organizations renew and recreate their resources and competences constantly
(Teece, 1997). It is argued that the BSC as an instrument for strategy implementation
needs to regard critical success factors (CSF) derived from a particular organizational
context (Otley, 1999; Kaplan and Norton, 1996b; Pun and White, 2005; Johanson et
al., 2006). As an instrument for strategy implementation a BSC need to be adapted
according to social settings the organization is operating in. Today, a significant
literature body of case studies documents experiences of designing and
implementing BSCs and gives advice to future attempts (e.g. Lipe and Salterio, 2000;
Ahn, 2001; Brewer et al., 2004; Chan, 2004; Papalexandris et al., 2004; Williams,
2004; Papalexandris et al., 2005; Tuomela, 2005; Assiri et al., 2006; Manville, 2006;
Muras et al., 2008).
Factors affecting BSC implementation
As documented by the American Accounting Association’s Financial Accounting
Standards Committee (2002) the bare variety of case studies suggests that benefits
of implementing BSC are likely to be determined by particular local settings and
measures should be selected according to company-specific characteristics. Assiri et
al. (2006) propose 19 factors to be crucial for a successful BSC implementation. A
clearly formulated vision and strategy as well as training of employees are the most
important factors of these. Similarly Chan (2004) provides a list of enablers for
successful implementation where top management commitment and departmental,
middle-manager and employee participation are named at the top. Radnor and Lovell
(2003) focus more on behavioural issues in guaranteeing a transparent
implementation process. They claim that the BSC’s theoretical and practical potential
to add value should be demonstrated, support to introduce the BSC should be
obtained and past experiences should not be ignored (Radnor and Lovell, 2003, pp.
102-106). Once implemented various research findings indicate benefits and
constraints of a BSC (see table 1).
13
Table 1: Quantitative and qualitative studies investigating BSC implementation
Selecting measures and perspectives
Performance is a multidimensional concept (Neely et al., 2005; Otley, 2008).
Therefore individuals assigned to build a BSC need to encompass every single
aspect of a business organization and might outreach the scope of management
accountants’ occupation in companies (Langfield-Smith, 2008). Questions such as
‘How do the customer see us?’ or ‘What must we excel at?’ presented by Kaplan and
Norton (1992, 1996b) can only be a starting point in selecting appropriate measures.
Measures should be derived from previously formulated strategic objectives. The
single measures should secure that short-term improvements should not conflict with
14
long-term goals and fit with overall vision and strategy (Olve et al., 1999). Olve et al.
(1999, p. 210, 211) recommend to foster an open discussion in a company on how
measures are interrelated and not to try to pre-establish cause and effect
relationships in a BSC during the design process. Lipe and Salterio (2000) indicate
that non-financial and leading measures tend to be under-weighted by managers.
Furthermore, in divisional structured companies, decision-makers place more weight
on measures which are used company wide than on unique measures of a particular
business unit (Lipe and Salterio, 2000) and financial measures tend to correspond
(Keats and Hitt, 1988).
Each perspective should contain a balanced set of performance drivers and outcome
measures (Kaplan and Norton, 1996b). Various authors acknowledge that the
perspectives should not be seen as given. Rather the categories should be chosen in
order to picture a company completely in its particular environment (e. g. Butler et al.,
1997; Kaplan and Norton, 2001; Malmi, 2001; Lawrie and Cobbold, 2004; Assiri et
al., 2006; Kaplan and Norton, 2006; Rickards, 2007). However, most companies stick
to the initial four perspectives suggested by Norton and Kaplan (Speckbacher et al.,
2003; Assiri et al., 2006). Olve et al. (1999) propose to choose perspectives before
single measures are derived from a strategy.
The selected measures and perspectives should be linked through casual
relationships. Kaplan and Norton suggest picturing these linkages in strategy maps
(Kaplan and Norton, 2001 and 2004). In Lawrie and Cobbold’s (2004) destination
statement a time reference is added by means of setting target points when strategic
objectives measured by selected indicators should be reached. However, information
overload should be prevented and delivered information should be both consistent
and simple in order to enable effective decision-making (Kaplan and Norton, 1992;
McAdam and Walker, 2003).
Summary
The BSC is the translation of a company’s strategy in a set of performance measures
and can be used to clarify, communicate and implement strategy (Kaplan and
Norton, 1996a). Although the early BSC publications of Kaplan and Norton lack a
clear implementation guide the tool became widely adopted. Today, a significant
literature body of case studies documents experiences of designing and
implementing BSCs and gives advice to future attempts. However, the initial concept
is implemented only rarely and the implementation of a BSC often fails (Neely and
15
Bourne, 2000) or intended goals are not achieved. The BSC is far away of being a
uniquely defined concept or a one-size-fits-all approach (Nørreklit, 2000;
Speckbacher et. al 2003; Braam and Nijssen, 2004; Johanson, 2006). Critical
success factors need to be considered while implementing a complex and
comprehensive performance measurement tool such as the BSC.
Furthermore only very few attempts of qualitative case study research of the BSC
can be found in German speaking countries (along with Jones and Luther, 2005).
Quantitative research suggests that BSC usage is less common in Germany than in
the rest of the world. The particular critical success factors of a successful BSC
implementation German business environment have not been investigated yet. This
research tries to fill this gap in investigating critical success factors of a BSC
implementation in the case of a medium sized German company. The research
approach is outlined in the following chapter.
16
Methodology
The described research project evaluates critical success factors of a BSC
implementation in a family-owned, medium sized German company of the education
sector following an action research approach. In the following action research and
the client company are introduced in more detail and the research design used in his
dissertation is presented.
Action research
According to Rapoport (1970, p. 499) “action research aims to contribute both to the
practical concerns of the people in an immediate problematic situation and to the
goals of social science by joint collaboration within a mutually acceptable ethical
framework”. Hence, action research is about reconciling of expectations of the
researcher and the client organisation towards a particular problem as well as
contributing to scientific knowledge. The action researcher interferes in real-world
situations and aims both to improve it and to acquire new knowledge (e.g. Eden and
Huxham, 1996; Checkland and Holwell, 1998). By this means research is brought
into action (Coughlan and Coghlan, 2002).
The theoretical concept of action research goes back to the work of the psychologist
Kurt Lewin in the 1940s who believed that social behaviour can be studied through
actively changing social processes and observing the effects empirically (McKerrnan,
1991). According to Lewin (1946, cited in Gill and Johnson, 1997) action research is
problem centred research and results in understanding the dynamics of change.
Whereas the positivistic influenced Lewin emphasised hypothesis testing during the
last decades other approaches to action research evolved which were more
influenced by the interpretative research paradigm (for a discussion of research
paradigms in management accounting research see Burrell and Morgan (1979) and
Hopper and Powell (1985)). Namely, Whyte (1989) argues that successful
organizational change can only be achieved through a process that enables
organizational learning. Therefore members of the observed organization should
participate in the research process and actively bring in own ideas. By this means
practitioners can feel a sense of ownership for decisions which are proposed as a
result of the research project (Whyte, 1989, p. 368). Accordingly action research is
concerned with understanding and improving human behaviour (McKernan, 1996, p.
20). Furthermore, through participation in day-to-day business the action researcher
17
can build a rich understanding of a situation or process under study. Especially
unspoken information can be detected that is extremely difficult to capture using
descriptive research methods (Ottosson, 2003). Eden and Huxham (1996) point out
that the most valuable insights from the research process emerge unexpectedly.
Hence, theory building in action research would always be inductive. Moreover,
theory and action are brought together in an integrated and dynamic “knowledge
construction process” (Olsen and Haslet, 2002, p. 455). Theory might govern action
which in turn affects rethinking of theory and so forth. However, as Gill and Johnson
(1997) claim, the researcher’s intervention into real life business of an organization
can be based on researcher’s personal beliefs or on a theory.
Beside a couple of applications of action research in management accounting
(Malmi, 1997; Goddard and Ooi, 1998; Seal et al., 1999; Malmi et al., 2004), two
studies were found that deal with the implementation of a BSC or a similar
performance measurement system in companies following an action research
approach. Both authors employ single, longitude case studies. First, Kasurinen
(2002) took part as a member of a project team which implemented a BSC in a large
Finnish manufacturing company. Focusing on the barriers to management
accounting change, he presumes that both planning and change processes are
unsystematic and political activities in organizations. He concludes that the context of
change needs to be considered in early stages of the project in order to achieve a
complete implementation, which did not succeed in the presented case. Furthermore
the central role of a single powerful advocate of the system is detected. Secondly,
Tuomela (2005) presents the successful implementation of a performance
measurement system similar to the BSC in a Finish subsidiary of a large international
technology company. The researcher was part of the implementation team which
was as well obliged to analyse follow-up effects of using a new performance
measurement system over a period of several years. He points out that performance
measurement systems can be used both diagnostically (strategic control) and
interactively (learning). He outlines the balanced performance measurement systems’
potential to enable learning about causal relationships and the relative importance of
different measures. On the other hand strong resistance to change is perceived
among lower management groups and additional reporting duties are generated. Not
only the specific features need to be considered but also the way they are applied in
practice while implementing a performance measurement system.
18
A medium sized family-owned company of the German education
sector
The company under study is an amalgamation of more than hundred schools and
colleges spread all over Germany which operate under twelve different brands.
Founded in 1966 it is one of the biggest private education companies in Germany
with approximately 2000 employees. It comprises of colleges where students can
gain different bachelor and master degrees and schools where a diversified and
locally different range of education products are offered. The manifold product
portfolio of these schools ranges from general short- and long-term business and
language courses to specialised apprenticeship and re-education programmes for
children, teenagers and adults. The strongest-selling products are public funded
education programmes assigned in extensive tendering procedures.
The organization is a limited liability company and is fully owned by the founder
family. Since establishing the company the founder lead the company. He deceased
in March 2009 and left the sole ownership and full responsibility for the business to
his wife. She and two executive directors form the top management team. The
company’s organizational structure is comparable to a matrix as described by the
owner (see figure 2; see Mullins (2005) for a discussion of organizational structure).
19
Figure 2: Organizational structure of the client company
According to German corporate law executive directors are appointed by the owner
of a company. Therefore the owner takes an elevated position within the top
management team. In terms of functional duties and division of labour the
responsibilities of top managers are clearly cut. The owner is majorly concerned with
advertising, total quality management (TQM) and the college branch. The financial
executive director is responsible for financial and management accounting, revision
and IT. Within the other executive director’s jurisdiction is HR, product development
and the school branch. The top management team is supported by a range of service
departments and single employees (e. g. for HR, revision and Management
Accounting) representing centralized business functions. The service department
managers have no formal disciplinary power towards principals of schools and
colleges. The regional managers are the direct superiors of the principals of schools
and colleges. Each regional manager is assisted by one management accountant.
Whereas the college branch is headed by one regional manager the school branch is
subdivided geographically in five regional branches, each headed by one regional
manager. Together with the heads of the service departments the regional managers
20
form the middle management of the client company. The lower management
comprises of the principals of the schools and colleges. The staff turnover within the
middle and top management is very low. Only one of the 14 top and middle
managers is employed less than ten years by the client company.
Research design – Plan of action
The action research project described and analysed in this dissertation follows
roughly Checkland and Holwell’s seven step process of action research (1998),
which is shown in Figure 3.
Figure 3: The process of action research (Checkland and Howell, 1998, p. 15)
In this agenda the researcher firstly declares a framework which is going to be tested
and a methodology which is going to be used before he actively takes part in the real
world change process. This approach should enable the recoverability of the project
through an interested third party and hence is an important argument for the validity
of the research approach (Checkland and Howell, 1998). In this dissertation the area
of concern is the above introduced family-owned medium sized company of the
German education sector and its efforts of implementing a BSC. A one-shot case
study (Campbell and Stanley, 1963) is employed as the methodology. Yin (2003, p.
13) defines the case study as an “empirical inquiry that investigates a contemporary
phenomenon within its real-life context”. The case study inquiry “copes with the
technically distinctive situation in which there will be many more variables of interest
than data points, and, as one result relies on multiple sources of evidence […] and as
another result benefits from the prior development of theoretical propositions to guide
21
data collection and analysis” (Yin, 2003, pp. 13, 14). The case study methodology
serves as a test of the developed theoretical framework. In this study the framework
is tested only once and on a single research object applying methods of case study
research. No feedback loop as pictured in figure 3 is performed.
In action research the researcher actively takes part in the process of implementing a
BSC in the client company that is well known to the researcher because he worked
there for three years in a management supporting role before beginning his MSc
studies. The research methods applied in this dissertation comprehend semistructured
interviews with managers of all levels and management accountants,
observations and analysis of documents as well as personal experiences of the
researcher. The project schedule is shown in figure 4.
Figure 4: Timeline of action research project
In February 2009 the owner of the client company declared her willingness to enable
the research project. In June 2009 the researcher substantiated his plan in a kick-off
meeting that has been attended by the owner and the head of financial accounting,
who is the researcher’s contact person throughout the study. Furthermore the
project’s scope and a concrete project schedule have been determined. Subsequent
to the kick-off meeting the actual development of a BSC starts with clarifying the
vision or mission of the client company (Kaplan and Norton, 1996b; Olve et al.,
2003). For this purpose interviews with the owner, middle managers and at least with
one principal of each regional branch are carried out as well as mission statements
or similar existing documents are analysed. Apart from extracting a centrally
developed vision the interviews can give access to valuable insights into the goals
and functioning of the client company. Johnson et al. (2008) suggest to involve
middle managers in strategy formation because of their knowledge of the operational
business and due to their responsibility for the implementation of strategy. Therefore
questions concerning the strategy, culture and leadership as well as questions
concerning existing management tools and performance measures are asked (see
22
table 2). Furthermore interviews take place with the headquarters management
accountant and the head of financial accounting, who are assigned to share
responsibility for an implemented BSC in future. These interviews follow a similar
structure as shown in figure 4 with additional questions regarding management tools
and performance measures.
Table 2: Topics of performed interviews
Subsequent to the first round of interviews strategic initiatives substantiating the
vision and related operational strategic objectives are derived from the vision and
appropriate indicators and measure owners are selected. Summarized in appropriate
perspectives the strategic objectives, measures and measure owners form a first
draft of a BSC. These steps involve a close collaboration between regional and
headquarters management accountants and the researcher. Next the feasibility of
the selected measures is checked in interviews with service department managers
that would be responsible to provide information for the assessment of the measures.
The reworked draft is then revised by the top managers in order to secure top
management support. This second round of interviews with the top management
team and service department managers focuses on the developed BSC. Accordingly
necessary adjustments of the BSC become apparent. Hence the research design
resembles Campbell and Stanley’s (1963) separate-sample pretest-posttest control
group design (see also Easterby-Smith et al., 1991). As a result a final BSC to be
implemented in the client organization is proposed by the researcher in a meeting of
top and middle managers. The BSC development process follows briefly a structured
plan proposed by Papalexandris et al. (2005) (see Appendix I).
All interviews that are carried out should last 30 to 60 minutes depending on the
interviewees’ time available and should be face-to-face. They are recorded with a
23
function of the researcher’s mobile phone. Because of his past working experience
the researcher knows most of the interviewees in person. The gathered data is
meaningfully categorized and linked to findings of the literature review and the
theoretical framework that is developed in the next chapter in an exploratory case
study.
Conceptual framework
As pointed out before the success of a BSC implementation is highly dependent on
case specific critical success factors. In the following text literature is reviewed to
develop a conceptual framework that reflects probable critical success factors of
implementing a BSC in the client organization and sets the field for the action
research project.
SME characteristics: Implications on BSC implementation
Although the company under study does not meet the characteristics of small and
medium- sized enterprises (SME) defined by the European Commission (e.g. <250
employees; European Commission, 2003) it meets several features of SMEs
described by Ghobadian and Gallear (1997; see also Hudson et al., 2001). In
particular it can be described through
• a flat structure,
• a unified culture,
• a low degree of standardization and formalization,
• a short decision chain,
• ability to response rapidly to environmental change,
• the domination of pioneers and entrepreneurs and
• the use of directive or paternal management styles.
The BSC was developed for large organizations (e. g. Andersen, 2001). Because “a
small business is not a little big business” (Welsh and White, 1981, p. 18) the
suitability of the BCS concept in a SME environment needs to be critically assessed.
Research findings suggest significant deficits in strategic planning in SMEs. In
particular, strategic planning is considered to be too time-consuming (Hudson et al.,
2001; Deimel, 2008). Managers of SMEs base decisions on personal intuitions and
preferences rather than relying on rational decision making processes or consulting
available information (Brouthers et al., 1998). Furthermore SMEs are characterized
through resource constraints. In particular a lack of time, human and financial
24
resources hinder the successful implementation of sophisticated performance
measurement systems (Barnes et al. 1998; Hudson et al. 2001; Hvolby and
Thorstenson 2000). Summarizing prior research Garengo et al. (2005) describe
SMEs’ approach to performance measurement as informal, not planned and not
based on predefined models.
Combining insights of the previous literature and the client company’s distinct
features of a SME the following critical success factors should be considered while
implementing a BSC:
• A BSC needs to be efficient to implement and easy to operate in order to respond
to scarce managerial time and constraints of human resources.
• Due to resource constraints a BSC need to be dynamically and flexibly organized
in order to respond to environmental change.
National culture: Implications on BSC implementation
National culture can be understood as the collective programming of people’s minds
in a society (Hofstede, 1984) and can be regarded as a behavioural factor (De Waal,
2006). Granlund and Lukka (1998a) acknowledge an increasing standardization of
management accounting techniques internationally. However, differences in national
and corporate cultures may lead to different ways of using generated information.
Furthermore individual behaviour is likely to be influenced by the cultural environment
(Granlund and Lukka, 1998b). Other research evidence implies that accounting
values, systems (Perera, 1989; de Waal, 2006; Van der Stede, 2003; Scheytt et al.,
2003) and particular tools (Awasthi et al., 1998) are contingent on national cultural
settings. These findings suggest that specific aspects and tensions of national
cultures need to be considered while designing and implementing an effective BSC.
Exploring notions of management control across different European cultures, Scheytt
et al. (2003) suggests German employees are mainly concerned that applied
underlying rules of control are fair. Appling Hofstede’s (1984) dimensions of national
culture Steger et al. (2002) characterize Germany’s national culture as one of high
masculinity, low power distance, low to middle individualism and low uncertainty
avoidance (see also Easterby-Smith et al., 1991).
Ahrens and Chapman (2000) point out that German management accountants’
occupational identity is characterized as the distanced analysis of business
processes and objective moderation between single business units and is shaped by
their general academic training of business administration. Management accountants
25
in German SMEs are mainly concerned with traditional financial analyses of business
operations (Rautenstrauch and Müller, 2005). It is understood that the main task
should be to provide useful information for decision-makers but not to intervene in
operational matters personally (Ahrens, 1999). Due to the absence of an
authoritative, professional independent body in Germany, such as the Chartered
Institute of Management Accountants, German management accounting practices
are largely developed by academics (Scherrer, 1998). However, Messner et al.
(2008) conclude that the academic management accounting discipline is still
struggling to gain legitimacy. Their research suggests that German management
accounting researchers lacked an international orientation of management accounts’
education in the past and opened only recently for an international discourse.
Furthermore, German management accountants are likely not to refresh their
knowledge after graduation (Jones and Luther, 2005).
Combining insights of the previous literature research and the client company’s
distinct feature of being a German business organization the following critical
success factors should be considered while implementing a BSC:
• In order to regard staff’s scepticism towards control systems a BSC
implementation needs to be a transparent process considering managers’
tensions on all levels.
• Due to a lack of international orientation of management accounting education
and a focus on analysing financial information in day-to-day business German
management accountants need external support in implementing a BSC.
Family ownership and succession: Implications on BSC implementation
The company under study is run by its owner, as the majority of companies of the
German ‘Mittelstand’ which includes SMEs and/or family-owned companies (Kröger
and Schüssler, 2006). 95,1% of all companies in Germany are family businesses,
where 50% or more of a company’s shares are owned by a one or more family
members and these manage the company (IFM, 2009). In family businesses strategic
planning processes and strategies differ significantly from those of non-family firms
(Harris et al., 1994; Ward, 1988). Research evidence suggests that German
companies managed by their proprietor are less likely to plan strategically and to
employ strategic planning tools such as the BSC (Deimel, 2008). Habbershon and
Williams (1999) and Habbershon et al. (2003) indicate that family businesses can
gain competitive advantages through employing unique and hard-to-duplicate
26
resources and competences created by interactions of family and business, which
they call “familiness”. Their resource based view approach informs how “familiness”
of a business can be managed successfully and provides an explanation for
organizational behaviour of family-owned firms. Craig and Moores (2005) introduced
“familiness” as a measure dimension in the perspectives of the BSC. However, a
basic assumption of the resource based view is that financial success is the aim of
family businesses (Chrisman et al., 2005). But research suggests that noneconomical
goals are of similar importance for family businesses (Chrisman et al.,
2003; see also Chrisman et al. 2005). Cabrera-Suárez et al. (2001) see trust,
commitment, know-how and reputation as distinctive assets of family businesses.
As pointed out earlier, a distinct characteristic of the client company is that the
founder died recently. Ward (1988) points out that only few family businesses exist
over several generations. He suggests that businesses which renew and adjust their
strategy over the decades survive and even prosper. Dryer (1988) differentiates
between cultural patterns of family companies and emphasize the leader’s role of
creating a business culture and the need to understand those cultures in order to
sustain the continuity of the business. In fact many companies struggle to survive
after the founder’s replacement by the second generation (Davis and Harveston,
1998; Handler, 1990, 1992). Ward (1988) argues that owners are incapable to
provide successors with a “conceptual framework for assessing their company and
planning for the future” (Ward, 1988, p. 107).
Combining the insights of the previous literature research and the client company’s
distinct feature of being family-owned the following critical success factors should be
considered while implementing BSC:
• Distinct characteristics of family-owned business require an individual BSC
approach which considers “familiness“.
• Due to the recent death of the founder the client company might struggle to
survive because successors lack crucial knowledge of managing and planning.
For-profit or not-for-profit?
The client company operates in the German education sector. In general education is
perceived as a public good in Germany that should be offered for free to each citizen.
As a consequence a significant share of the client’s products is funded by public
donors and the actual local customers receive a service without paying. Moreover, a
significant minority of schools is not-for-profit. Any profits must be reinvested in the
27
school. Thus, it can be assumed that the client company features some
characteristics of public services companies.
Kaplan (2001) suggests that not-for-profit and public organisations should place an
overarching mission on the top of the BSC instead of the financial perspective. The
single objectives in the scorecard should be aimed at this “high-level objective”
(Kaplan, 2001, p. 360). Furthermore, he points out the need for an extended
customer perspective (see figure 5). Often receivers of services offered by not-forprofit
organizations would not pay for the service but a third party does. Therefore a
donor perspective and a recipient perspective should form the customer perspective.
Supplementing his argument, Kaplan describes successful and failed
implementations of BSCs in not-for-profit organisations.
Figure 5: Adaption of the BSC framework for non-profit organizations (adapted from Kaplan, 2001, p.
361)
Papenhausen and Einstein (2006) apply the described framework in an American
Business college (see Micheli and Kennerley (2005) for a comprehensive literature
review of the field).
However, Olve et al. (2003) indicate that the more successful BSC implementations
in not-for-profit organizations can be found in lower levels of the organization, where
28
the BSC is used to clarify roles and expectations of single employees. Conducting a
longitudinal study in UK local governments McAdam and Walker (2003) highlight the
BSC usefulness in breaking down strategic objectives to a service level leading to
tangible improvements of operations in public sector organizations. Oversimplification
of customer and stakeholder needs and lacking information collecting systems are
identified as major obstacles in implementing BSCs. Investigating an implementation
of a BSC in a university Lawrance and Sharma (2002) argue that the BSC is a
symbol for economic or capitalistic thinking and efficiency that might degrade the
public good education and its function in society.
Combined with insights of the previous literature research and the client company’s
distinct feature of operating partly in a not-for-profit market the following critical
success factors should be considered while implementing BSC:
• Due to the client company’s diversified position on the German education market
the correct choice of true stakeholders or customers can be problematical.
• The fundamental orientation of the BSC might defer from the classical approach
because of a missing shareholder perspective in a not-for-profit sector.
Linking research design and conceptual framework
Following Checkland and Holwell’s seven step process of action research the case
study methodology will be used in order to test and to justify the validity of a
theoretical framework. The theoretical framework is made up of critical success
factors which are derived from literature and summarized in table 3. It is argued that
these factors are crucial for a successful BSC implementation in the client company.
The empirical findings of the case are described in the following chapter.
29
Table 3: Conceptual framework of critical success factors
30
Case Study
“This is not the story of a company. This is the story of a human being” the founder of
the client company concluded his speech on his 60th birthday reflecting the firm’s
evolution from a single language school to one of the largest private education
companies in Germany with more than 100 sites. In the following and based on
performed interviews with managers the company is analysed in more detail before
the development process of a BSC is described.
Analysis of the client company
Change of leadership style
The founder and his top management team employed during the first decades of the
client company’s history an authoritarian style of financial control as described by
Goold and Campbell (1987). Briefly the founder was more interested in starting new
projects such as a language study travel and a translation service than in managing
established sites. Or, as an executive director remarks
“If only the financial results are okay, we [the top management team] will leave you [the
principal or regional manager] alone.”
However, during the 1990s more and more services were centralized, tightening the
control of colleges and schools. This process is closely linked with the owner’s wife
who supervised the implementation of a unified management accounting system, of a
TQM system complying with ISO 9001 and the set up of a central advertising agency.
The newly centralized management functions were allocated in separate service
departments. Today, 15 years after first centralization efforts, middle and lower
managers report that financial success still provides freedom in day-to-day business
and is rewarded in a bonus system. The assumption prevails that the way a positive
financial result is produced does not matter as long as formal rules and formalities
are followed.
Furthermore the superior role of financial control is underlined by the occupation of
the offices in the headquarters building. In the top floor and beside the offices of the
founder, his wife and their secretaries, the offices of the financial executive director
and her closest employees can be found. The rest of the headquarters’ offices are
occupied by employees who report to the financial executive director. Other functions
which are not directly connected with the financial executive director, e. g. the second
31
executive director responsible for HR, product development and the school branch
reside in rental buildings around the corner, in the town’s outskirts or in other towns
across the country.
However, after the death of the founder in March this year, a higher focus on formal
control tools and a parental emphasis of controlling of more and more business
activities is anticipated by principals and regional managers. A regional manager
assumes that the founder’s wife and now sole owner of the company will emphasize
a multidimensional approach towards control which surpasses the financial control
style of the past. But so far actual changes in leadership and strategy style cannot be
named by regional managers. Regional managers agree firstly that the founder’s
death leaves a significant gap behind which will not be wiped out easily but secondly
that his death will not have an impact on the day-to-day business in schools and
colleges exceptionally. Therefore fears of the future do not dominate because, after
all, the remaining members of the top management team would be in place for
decades.
Opaque structure and responsibilities
Regional managers and principals report that the organizational structure is in fact a
hierarchical line-organization and not the “official“ matrix-organization as described
by the owner. Service department managers have no disciplinary power over schools
and colleges and act not as staff managers but as representatives of the top
management team. Top managers supervise both regional and service department
managers. Furthermore top managers communicate directly with principals without
consulting the direct supervisors of principals the regional managers which indicates
a line relationship between top managers and all subordinates. The “perceived“
organizational structure is pictured in figure 6.
32
Figure 6: Organizational structure of the client company as perceived by middle and lower management
A recently engaged principal complains that responsibilities of top managers and
service department managers are neither clear nor transparently communicated.
Furthermore he points out that decision-making processes are prolonged because
“everyone needs to put in his or hers two cents”.
Responsibilities are not visualized in commonly accessible documents. Similarly
another principal mourns that although the company is highly hierarchical,
authorizations are not always clear. An overall company wide organization chart is
not available. At best the different business units can be described as profit centres.
For example investments over €500 need to be approved by the financial executive
33
director of the top management team. A detailed description of the process how an
investment is permitted is not available. A newly employed manager thinks that
knowledge of processes is used as a power instrument. Only few processes routinely
performed by top managers are described in sufficient detail in documents of the
TQM system. Furthermore not all parts of the company are included in the TQM
system. In summary, it can be assumed that despite the slim hierarchical structure
several obstacles such as information asymmetries and power structures prevent a
smooth and quick execution of management initiatives. The organizational structure
of the client company is difficult to understand because of a difference between
perceived and officially communicated structure.
Importance of existing management accounting tools
The client company uses a performance measurement system that relies totally on
financial measures. There are three central documents:
1. the monthly updated financial business assessment of each business unit
based on financial accounting information prepared by the central financial
accounting department,
2. a budget of the year which is updated monthly by each principal and
3. a rolling cash budget which is updated monthly by each principal.
These reports are controlled by the management accountants of each regional
manager. The headquarter management accountant summarizes them to companywide
reports. The monthly budget is extended by financial ratios showing the relation
between different cost positions (staff, rooms, administration etc.) and sales revenue.
Furthermore the sales revenue is divided in accordance to its origin and product
group. In an annual planning meeting the budgets for the next period are determined
for each business unit in negotiation between principals and regional managers. The
regional management accountants are actively involved in preparing various
standardized documents for this occasion.
Managers from all levels highlight the importance of the management accounting
documents as an information source for decision making. In particular the importance
of the monthly budget is emphasized. However, a regional manager argues that he
cannot trust the documents prepared by financial accounts or bookkeepers because
an actual accounting policy would not represent the reality resulting in distorted
information. Hence he instructs his management accountant to make additional
adjustments. Furthermore he criticizes that financial accounting and management
34
accounting data are mixed together in the annual budget. A principal outlined the
symbolic value of the documents. If correctly and promptly completed superiors
would assume the school is well lead and the responsible principal would be well
qualified for his role. This impression is confirmed by the owner who states:
“In most cases, it is true that if a business is going well, then quality management is going
well and financial reports are promptly delivered. There are only few businesses that are
running well even though deadlines are not met and the day-to-day business is not well
organized. This is the exception.”
Furthermore, managers name customer surveys within the scope of the TQM system
as an important information source. These surveys are performed after each
completed education programme and are reported by the regional managers to the
owner. Finally results of annually quality audits of each business unit are summarized
by the regional management accountants in annual reports (management review),
which are communicated to the TQM service department and the client company’s
owner. However, none of the principals recalls an incident of disciplinary action that
followed bad performance in customer surveys or audit.
Lack of an unified formulated strategy
Various documents are published by different actors in the client company which are
regarding strategic issues. Two mission statements can be found, a shorter one
created by the TQM manager and a longer one which was established by the
executive director responsible for HR, product development and the school branch.
But both documents focus on the school division and lack a company wide
perspective. The only available document which informs about strategic ideas that
addresses all parts of the organization is a presentation prepared by the owner for
the introduction of newly employed managers. The presentation’s main message is
the legally secured succession after the recent death of the founder. Furthermore the
slides outline requirements for a successful future collaboration of employer and
employees. The presentation points out that it would be the top management’s
ambition to formulate a clear strategy and comprehensible goals as well as to provide
a clear-cut organizational structure and transparent responsibilities. However these
points are not explained in more detail. In the end no uniform strategy is
communicated. Unsurprisingly, the regional managers’ statements when asked after
strategic objectives of the business deviate remarkably. Their main priorities of daily
work vary from generating sales, establishing a diversified product portfolio and
35
obtaining sustainability through delivering a high quality product to simply expansion
of business. In addition a significant majority of regional managers agrees that
building customer and employee satisfaction plays an important role. One regional
manager could not name a single overriding goal of doing business. Only one
regional manager named a vision or an overall purpose of the whole organization
that matches with the owner’s ideas. From the different priorities of regional
managers only establishing a diversified product portfolio was mentioned by
interviewed lower managers, the local principals of schools and colleges. In summary
the client company does not achieve its ambition of formulating and communicating
strategy as well as providing a clear organizational structure and responsibilities.
Developing a BSC
The company founder’s wife, being aware of the weak approach towards strategy
formation, welcomed the enquiry of the researcher of executing a project of a BSC
implementation in February 2009. She pointed out that the lack of a rationalized
strategizing process induced her positive attitude towards the project. Moreover, she
recognized inconsistent expectations towards an overriding vision and strategy of the
business on all levels of management due to communication problems. Further, she
stated that the planned employment of a second management accountant in the
headquarters in the near future should create sufficient human resources in order to
carry-on with the project. However, she declared the fact that the researcher is well
known in the company and his familiarity with internal specialities was essential for
her final approval of the project.
In a kick-off meeting in June 2009 with the owner and the head of financial
accounting the researcher presented his ideas of the action research project in detail
and proposed his plan of action. Interviews with managers of all levels and a
formulated strategy should be the starting point for developing a BSC in close
collaboration with the researcher and management accountants. It was agreed that
both divisions colleges and schools should be covered in a corporate BSC which
should be developed for top management use only.
Formulating Strategy and strategic goals
Because of the lack of a comprehensive document which formulates the vision and
strategy of the client company, an additional meeting between the researcher and the
owner needed to be arranged. Here the owner formulated and clarified a vision and
36
derived single strategic initiatives, which are shown in randomly sequence in table 4.
She stated that the executive directors would not be needed on such an occasion.
Table 4: Vision and strategic initiatives of the client company
The owner simply assumes that through reaching each strategic initiative the
company’s vision of being a partner for lifelong learning will be implemented. She
points out that the vision was formulated in a continuous “creative” dialogue between
her husband and herself and was not changed after her husband’s death. Rational
market analysis of any kind was not involved in this process. The derivation of
strategic initiative from the vision was comparable to a brainstorming session.
Consequently the existing mission statements were not used as an orientation or
benchmark.
The strategic initiatives listed in table 4 are partly abstract and difficult to grasp
analytically. Therefore they need to be translated in a next step into measurable
strategic objectives. For example “Supplier of complete solutions“ cannot be
measured in any terms. The strategic objectives are translations of the strategic
initiatives into an operationally manageable level. In addition to the owner’s remarks
the regional managers’ emphasis on the employee satisfaction was considered (see
table 5). A first attempt of translations of strategic initiatives into strategic objectives
was performed by the researcher and corrected by the owner.
37
Table 5: Strategic objectives and underlying strategic directions
Apparently not all translations are straight forward and easily to comprehend.
Especially the initiative “Being a mediator between learning and working environment
and foster employability of customers” is highly abstract and it requires creativity to
translate it into an operational manageable objective. Basis for these translations are
explicit statements and used words of interviewed managers. For example
“innovation“, “best practice“ and “quality“ were repeatedly mentioned as important
and can be connected to the strategic direction “Supplier of complete solutions“. The
comprehensive initiative “Establish internal network of multiplex education
educational institutions” can be linked to the TQM system, which is expressed by the
already formulated strategic objective “Maintain quality”. Moreover an executive
director named “Sustain managerial flexibility” as essential in this context. At last it is
assumed at this stage, that a direct relationship exists between the initiative and the
derived objective for the time being. However, a good deal of arbitrary was involved
in the translation process and the assumed casual relationship between initiatives
and objectives need to be verified during the early months of the BSC usage.
38
Selecting perspectives
Table 6: Perspectives and strategic objectives and underlying strategic initiatives
The strategic objectives can be summarized in four perspectives (see table 6). The
chosen perspectives resemble only partly the ones initially proposed by Kaplan and
Norton (1992). The financial perspective is not placed at the top but at the bottom
and the renamed “Brand/Customer” perspective takes its place. Although important,
financial success is not the overriding goal of the organization but can be seen as the
fundamental basis of doing business as the executive director of the client company
suggests. The owner and single shareholder of the client company is mainly
interested in preserving the company for the next generation of the family and sees
the customer-orientated vision as the best to reach that goal. Being a partner for
lifelong learning clearly puts the customer in the centre of all business activities. The
brand’s function of personalizing a company to external individuals is a vital part of
the customer focused strategy and therefore the perspective has been named
“Brand/Customer”. Furthermore the “Learning and Growth” perspective is renamed in
“Employee” in order to recognize the outstanding importance of employees’
capabilities in a service organization that provides (immaterial) education
programmes. Adequate furnishings and decoration of rooms might appeal to
39
customers but because the principal service education is provided face-to-face the
actual competences and skills of a teacher or coach are crucial for success. The
“Processes” perspective which comprises mainly features of the TQM system that is
installed in the client company is the only perspective in the proposed BSC that
resembles Kaplan and Norton’s initial BSC framework.
A further speciality of the client organization becomes apparent while considering the
strategic objective “Achieve successful tenures and accreditations of colleges”. As
pointed out earlier a significant share of the client’s product portfolio is funded by
public donors and the actual customers receive an education product without paying.
The executive director of the client organization distinguishes between direct and
indirect customers accordingly. Indirect customers can be found exclusively in
schools. A major share of sales revenue is generated in extensive tenders issued by
the government and other public institutions. After accepting a bid the donor
designates individuals to the “purchased” education programme from an organization
such as the client company. Acquiring customers is fundamentally different where
customers pay for an education service on their own. Whereas an acceptance of a
bid in a tender bases on a written report with a detailed description of the offered
service, the latter requires face-to-face consultations and other trust building
techniques of contacting potential customers. Because of the fundamental
differences between direct and indirect customers uniform measures cannot be
selected within the “Brand/Customer” perspective. Therefore the “Brand/Customer”
perspective is divided into two parts. The final proposal of a corporate BSC for the
client organization is pictured in table 7
40
Table 7: Final BSC for top management use
* : Meaning customers that already attended an education programme before starting a new
programme in the actual period.
** : The IT department is responsible for implementation and operation of a uniform administration
tool, where customer details are saved, timetables as well as teaching staff and room allocation
plans can be generated. According to the service department manager needed information for the
measures can be generated from the system if responsible individuals enter information in
compliance with guidelines. The implementation of the tool in all sites will be concluded this year.
*** : Colleges need to be accredited to offer the same degrees as public universities.
**** : New products are products that were not sold in the last period.
***** : The measure should inform about the degree reporting deadlines are met.
****** : Because of a high share of temporary working contracts employee turnover is not appropriate as
a basis.
41
Selecting measures
The final BSC shown in table 7 evolved from a first draft developed by the
researcher, the headquarter management accountant, one regional management
accountant and the head of financial accounting. They chose single lead and lag
measures to indicate the progress of achieving a strategic objective based on their
experience of the business. Relative measures were used preferably because they
show real improvements and are not falsified by regularly occurring fluctuation of
customer numbers or sales volume. Furthermore the department which is
responsible for delivering data for each indicator is named as a contact partner and
targets for each measure that still need to be determined by top managers are
shown.
In order to confirm the practicability of selected measures in the first draft BSC the
managers of the service departments TQM and IT were consulted regarding the
existence of required information. Furthermore the feedback of an executive director
on the first draft offers important insights. It became apparent, that remarkable
obstacles and resource constraints exist which hinder the feasibility of various
measures. Therefore the final corporate BSC (see table 7) contains only 15 of an
initial number of 26 proposed lead and lag measures. Furthermore and due to a
limited availability of information to assess the measures, the strategic objective
“Sustain managerial flexibility (and quickness of decisions)” is not included in the
proposed BSC. An appropriate measure would be “Responsiveness of central
services”, but no adequate recording system is in place. In addition, it is highly
questionable if “Rise customer satisfaction” and “Developing strong brand
awareness” can be measured by the single indicators proposed. But various
constraints limit the practicability of adequate measures. The strategic objective “Rise
customer satisfaction” should be assessed through customer surveys which are
already performed abiding with ISO 9001 requirements. But a major share of
colleges does not comply with the ISO 9001 norm. Therefore customer surveys
cannot be used as an information source for a corporate BSC because they do not
comprehend the whole company. The strategic objective “Developing strong brand
awareness” should be assessed through an external survey. But as exposed by the
executive director the company becomes visible to the public only on a local level.
Due to limited financial resources no national campaign which could increase the
general brand awareness was ever performed. At the moment schools and colleges
which operate under different brands undertake advertising efforts on a local level
42
independently. The launch of a unified corporate design for the whole organization is
planned for the end of the year. Therefore an external national market survey could
deliver valuable results if ever only after the launch. Table 8 summarizes measures
that seemed to be useful but cannot be included in the final BSC because needed
information is not available on a corporate level.
Table 8: Useful measures not included in corporate BSC
The final BSC includes measures that are feasible because the information for
assessment is ready available. The researcher hopes that choosing familiar and
manageable measures can help to reduce scepticism towards the BSC. Therefore a
smooth continuation of the BSC implementation project with the reminding phases
“Operationalize” and “Implement” of Papalexandris et al.’s implementation process
can be expected (see Appendix I). Recommendations for a successful roll-out are
discussed in Appendix II. Furthermore ideas of managers were picked up as much as
43
possible in order to enable a feeling of ownership for the tool. In the next chapter the
presented empirical findings of the case are linked with the previously developed
conceptual framework of critical success factors and the literature research.
44
Critical success factors of BSC implementation
Various attributes complicate a successful BSC implementation in the client
organization. In the following text these are presented in detail by linking the findings
of the case study to the conceptual framework of critical success factors which has
been declared before entering the client company. To begin with, a significant
shortage of managerial time and human resources hinder the successful continuation
of the project confirming previous observations of resource constraints in SMEs
(Barnes et al., 1998; Hudson et al., 2002; Hvolby and Thorstenson, 2002). Although
the owner announced in the kick-off meeting to employ a second qualified
headquarter management accountant in order to strengthen the central management
accounting function no action has been taken yet. Hence it seems likely that the BSC
project joins the pile of the headquarters management accountant’s undone projects.
Furthermore the actual role of management accountants in the client organization is
confined to generate financial information for decision making through distanced
analysis as previously observed by Ahrens and Chapman (2000). Current
management accounting tools are more concerned with the control of behaviour of
subordinates than forecasting future opportunities. Assigning a management
accountant to attend to a BSC, which is aimed at providing a holistic and
comprehensive view on the organization, requires a rethinking of management
accounting as an integrating business function. In order to acknowledge these
challenges and to enable a relieved customization with the tool financial measures
prevail in the proposed BSC. Because measures have been selected that can be
generated from existing data, any additional workload is reduced as much as
possible and detecting of complicated cause and effect chains has been completely
omitted. Therefore the critical success factor
‘A BSC needs to be efficient to implement, easy to operate in order to respond to
scarce managerial time and constraints of human resources.‘
can be confirmed. However, the critical success factor
‘Due to a lack of international orientation of management accounting education
and a focus on analysing financial information in day-to-day business German
management accountants need external support in implementing a BSC.’
cannot be confirmed to be important in this case. Firstly, a lack of an international
orientation of the German management accounting education could not be found.
45
And secondly, the comprehensive feedback of the client company’s management
accountants on the first draft of a BSC indicated an excellent understanding of all
involved business processes. Therefore it is assumed that management accountants
in place are well qualified to attend to a BSC. However, as long as no individual is
available to supervise and mediate the further implementation process, it is likely to
fail.
Another serious obstacle concerning the implementation of a BSC became apparent
after speaking to the executive director responsible for HR, product development and
the school branch. He remarked in regards to the progress of the project:
”if you would want to introduce a BSC and if you could implement it”
showing his uncertainty about whether or not a BSC should be implemented. This
indicates a lack of commitment, which would hinder a successful roll-out significantly
(Chan, 2004). The executive director describes the BSC as a uniformed, all-inclusive
management tool that could not consider all particularities of an organization. He
argues that tailored and specific solutions would be needed. The high flexibility of the
BSC concerning the choice of perspectives and measures is not considered or not
understood by him. Furthermore he neglects the strategic objective “Developing
strong brand awareness”. He denotes that the building of a national recognized
brand as dreaming and refers to limited financial resources. The opinion of the
financial executive director can be neglected because she intends to leave the
company as soon as possible. This lack of shared goal concordance and
discordance of top management members in strategic issues is felt by principals as
“strategic dilution”. Top management initiatives are rarely pursued rigorously. In
general, strategizing can be described as emergent because current strategies were
developed in dialogue between the owners of the client company, strengthening
Ghobadarien and Galhe’s findings (1997) of the domination of individuals or
entrepreneurs in SMEs. The obvious communication errors between top managers
and the recent death of the founder and owner suggest that no coordinated corporate
strategic planning takes place anymore in the client company.
However, the critical success factor of implementing a BSC
‘Due to the recent death of the founder the client organization company might
struggle to survive because successors lack crucial knowledge of managing and
planning.’
46
cannot be verified in this case. The top management team has considerable
knowledge of all aspects of the business which contradicts Ward’s (1988) statement
that successors lack crucial knowledge as suggested. Rather old approaches
towards planning need to be replaced by new ones. Furthermore managers of all
levels explained that the death of the founder would not be felt on an operational
level in schools and colleges. His wife plans to seize his role of strategizing and
developing visionary orientation for the company. However, previous research results
that indicate poor strategic planning in SMEs (Hudson et al., 2001; Deimel, 2008) can
be confirmed through findings of this study. In particular potential competitors are
ignored and no appropriate medium of discussing and communicating strategic ideas
on a corporate level can be identified. In the rare occasions where strategic issues
are communicated, a top down approach is used where the owner prescribes her
ideas towards future performance. Subordinates do not participate in this process in
any way. This approach results firstly in a general cluelessness of lower and middle
managers about a corporate vision and strategy and secondly in an isolated strategy
formation process that does not consider employee’s ideas. Altogether, the BSC’s
potential to align strategic initiatives across an organization, to clarify and to
communicate strategy (Kaplan and Norton, 1996a) should be powerful arguments for
implementing a BSC. But scepticism towards the model is likely to rise from all levels
of the organization. During the interviews with lower and middle managers a general
critical attitude towards headquarter initiatives became apparent. Corporate initiatives
of introducing new management tools and accounting policies are accused to be
headquarters’ instruments to justify fees that schools and colleges have to pay
without adding any value. Hence Nørreklit’s (2003) assumption that a centrally
developed strategy lacks internal commitment can be confirmed. Furthermore it was
felt that the middle managers were not willing to invest time in a tool developed not
for their own use and benefit but for the sake of controlling their behaviour. However,
it was perceived that the interviewees appreciate the chance to influence the BSC
development process. Therefore the critical success factor which emphasized the
role of national culture
‘In order to regard staff’s scepticism towards control systems a BSC
implementation need to be a transparent process considering managers’ tensions
on all levels.’
47
plays a significant role in this case. But other general influences of national culture
could not be identified.
The design of the BSC follows Kaplan and Norton’s (1992) argument that measures
should be derived from previously formulated strategic objectives. However a
balance between lead and lag indicators was not aspired in the first place and is not
realized either. It was perceived to be helpful to create familiarities with the new tool
at an early stage of the implementation process instead of complying with
recommendations at the price of loosing commitment. The choice of perspectives
recognizes the critical success factor
‘Due to the client company’s diversified position on the German education market
the correct choice of true stakeholders or customers can be problematical’.
Although, similar perspectives are included in the final BSC as proposed by Kaplan
and Norton (1992, 1996a, 1996b) the divided customer perspective recognizes the
distinct character of the business the client company is operating in. Kaplan’s (2001)
argument for an extended customer perspective for not-for-profit organizations has
been applied on a privately owned company in this case. Similarly, the final critical
success factor
‘The fundamental orientation of the BSC might defer from classical approach
because of missing shareholder perspective in a not-for-profit sector.’
has been employed in the BSC. The overriding purpose of the company is to fulfil the
owner’s vision of establishing the company as a partner for lifelong learning with
profitability being a vital factor. However the deviation from Kaplan and Norton’s
shareholder perspective is acknowledged to the fact that the client company is
family-owned. The feature of operating in a sector which is close to not-for-profit did
not tip the scale. After all, this confirms Chrisman et al.’s (2003, 2005) findings of the
importance of non-economical goals for family businesses. However, the initially
assumed critical success factor
‘Distinct characteristics of family-owned business require an individual BSC
approach which considers “familiness”. ‘
cannot be confirmed. “familiness” suggests the existence of unique resources and
competences that offer a competitive advantage which originate from interactions
between family and business. In this case the private financial liability of the owner
fosters a commitment towards long-term investments and “transgenerational wealth
48
creation” (Habbershon et al., 2003, p. 458) which can be indentified as the single
distinct asset of the family business and that could offer a competitive advantage in
this sense. In the BSC this is simply expressed through the strategic objective of
„Determine sustainable financial success“ in the Financial perspective. Therefore and
in contrast to Craig and Moores’ BSC (2005) with “familiness” as an additional
“dimension”, no individual BSC approach is needed in the project.
In the final BSC the complete translation of a company’s strategy into a set of
performance measures as intended by Kaplan and Norton (e. g. 1996a) and their
linking through a casual chain is sacrificed in favour of comprehensibility. The
strategic objective “Sustain managerial flexibility” is not included in the proposed
BSC. Therefore the BSC’s aim of clarifying and communicating strategy (Kaplan and
Norton, 1996a) can only be partly realised during the first months of implementation.
Furthermore cause and effect relationships were not mapped. To win the support of
managers the BSC needs to be as simple and straightforward to implement as
possible. Detecting cause and effect chains would require extensive discussions and
were considered as not useful at the early stage of the project as suggested by Olve
(1999). Moreover the critical success factor
‘Due to resource constraints a BSC needs to be dynamically and flexibly
organized in order to respond to rapid change.’
appeared as too challenging to be addressed in detail during the initial development
process of the BSC. It addresses the update process of the BSC which is not
covered in this dissertation. The chosen selected measures are rather broad than
specific and rather well established than newly developed. Furthermore managerial
experience of past periods was recognized. By this means the BSC offers some
elbowroom in which environmental change might occur. However, the BSC’s feature
of responding to change refers to the actual use of the BSC and its updating, which is
not covered in this study. Similarly the important note of a principal that internal
administrative processes could not cope with the speed of markets’ change need to
be considered in the follow-up of the project. He assumes that a formal control tool
such as the BSC has a limited ability to adapt to environmental change because too
many decision makers are involved in an updating process. Furthermore the
unsuitability of an established accounting policy reported by a regional manager
suggests that the client company is not able to adopt formal tools to environmental
change quickly.
49
In summary table 9 shows the single critical success factors derived from literature
and their investigated relevance for the client company. Only half of the critical
success factors of the conceptual framework were considered in this project.
Table 9: Critical success factors derived from literature which play a role in the investigated case
50
Conclusion
This dissertation made the case of implementing a BSC into a medium sized familyowned
company of the German education sector using an action research approach.
Starting from a vision and strategic initiatives formulated by the owner, the
researcher derived strategic objectives and developed appropriate measures
accordingly in close collaboration with the company’s management accountants. At
last the strategic objectives were summarized in the four perspectives
Brand/Customer, Processes, Employee and Financial and feasible measures were
selected. Generally, it can be argued if the proposed BSC deserves its name
because the lack of several important features (e. g. cause and effect chain,
balanced set of lead and lag measures) but the BSC design recognizes
organizational specialities and uses only existing data which should reduce
opposition towards the tool.
However, the BSC framework cannot be easily implemented into the organization.
Critical success factors need to be considered. In this dissertation a conceptual
framework of critical success factors was derived from literature before the
researcher took actively part in the organizational change process of implementing a
BSC. As a result only half of the factors played a role and were considered while
developing a BSC (see table 10).
51
Table 10: Considered critical success factors and confirmed research findings accordingly
Therefore previous research findings that critical success factors can only hardly be
forecasted because a detailed understanding of the organizational setting is required
(Otley, 1999; Kaplan and Norton, 1996b; Pun and White, 2005; Johanson et al.,2006)
can be confirmed. In reality the BSC is a highly flexible concept that is likely to be
applied in various and unpredictable fashion in a business organization.
In this case the critical success factor
‘Due to resource constraints a BSC needs to be dynamically and flexibly
organized in order to respond to rapid change.’
addresses the update process of a BSC which was not covered in this dissertation
due to the limited time period available. Hence the factor has not been applied in this
research project. Similarly the intended assessment of cultural influences goes
beyond the scope of this study. These results question the approach of deriving a
framework of critical success factors which bases on the assumption that factors
perceived to be important in other research could be transferred to the actual case.
Probably a more sophisticated framework of management accounting change such
as the one proposed by Burns and Scapens (2000) seems to be more appropriate to
be included into the applied seven step process of action research of Checkland and
Holwell (1998). The most valuable insights on the BSC implementation are likely to
52
arise during the early months of bringing the developed BSC into practice. Until now
the developed BSC grounds more or less only on the researcher and management
accountants’ assumptions about the organizational reality. Whether these
assumptions are correct can only be shown by implementing the proposed BSC.
The BSC’s basic idea of providing managers with a holistic and comprehensive view
of the business, communicating strategy and aligning strategic initiatives looks
promising in order to solve investigated organizational dilemmas. During the
interviews the impression arose, that structure and strategy style did not evolve in the
same speed as the company which grew considerably during the last decades.
Furthermore a general cluelessness what an overriding vision and strategy of the
company should be is indicated. The BSC and the process of its implementation offer
a promising potential to solve these organizational dilemmas of the client company.
To begin with the process led to a formulated vision and strategy. Before strategizing
happened in the heads of the owners only and was rarely communicated to
subordinates. The conducted interviews gave individuals an opportunity for reflecting
on the topic strategy and vision of the company. A BSC implementation will open
plenty of opportunities to discuss strategic issues and to involve all managerial levels
of the client company. By challenging the appropriateness of measures and strategic
objectives accordingly strategizing would be put closer to a democratized and
integrated process. Additionally, implementing the proposed BSC will inform about
the vision and strategy on an overarching level. By this means the discordance
among top managers towards strategy style can be solved which should in turn result
in clearer responsibilities of middle and top managers. This case study suggests that
the BSC implementation would support efforts of switching the strategy style from a
financial control style to strategic planning style as promoted by the owner.
Nevertheless several reasons can be pointed out that hinder an implementation of
the developed BSC in the near future. Firstly no responsible project manager is
assigned to conduct the continuation of the BSC implementation. Secondly the top
managers’ commitment towards a BSC implementation varies. The founder’s wife
and successor wishes to use the BSC as a rational control system and a means to
formulate and adjust strategy. The BSC project offers an opportunity for the
nowadays sole owner to get a grip on the company in transition after the founder’s
death. At least one executive director favours a financial control style of leadership
concentrating on a few financial measures generated by existing management
accounting tools. Therefore he does not see the need to implement a new tool which
53
confirms results of Henri (2006). Hence the top management’s commitment towards
a BSC implementation is not guaranteed. Even worse, the BSC project runs the risk
of being a playground for power games of the top management and might disperse in
a more general dispute over the desired system of control and strategy style in the
client company. This result confirms findings of Burchell et al. (1980) who suggest a
political use of accounting systems to formulate and promote particular positions and
values. Thirdly the top managers are highly engaged in the day-to-day management
of single business units. On the one hand this results in the documented opaque
structure and confusion about responsibilities. On the other hand top managers have
a deep understanding of the functioning of the business. Whittington (2001) claims
deep managerial involvement in a business is crucial for successful strategy
implementation. As a result decisions are often based on “gut feeling” rather than on
formal control systems (see also Garengo et al., 2005) and the positive development
of the company in the past indicates the success of this approach. This questions the
sense of using a formal performance measurement system such as the BSC
fundamentally. The informal and personal formation process of strategy practiced by
the owner sets a trend in this context.
In summary the results of this dissertation suggest that the design of a feasible BSC
is mainly shaped by organizational specialities. Particular critical success factors that
need to be recognized while implementing a BSC are difficult to forecast. More
surprisingly, the major argument for implementing a BSC is not its feasibility and
adaptability but the result of power games among top managers.
A range of limitations lessen the validity of the action research project’s results. A
common argument against action research concerns difficulties of the recoverability
of a project by other interested researchers. In order to meet this concern Checkland
and Howell’s FMA framework was used in this study. The researcher derived a
framework of critical success factors from literature before taking part in the client
company’s change process. By this means it was declared what should count as new
knowledge investigated during the research (Checkland and Howell, 1998). However,
particularities in the researcher/client company-relationship complicate a possible
repetition of the approach. The researcher had the significant advantage of knowing
the client company well from a previous working relationship. Despite the short time
period available for conducting the dissertation project this experience proved useful
to gain access and to prepare the project. But it makes a recoverability by another
researcher almost impossible. Interviewees referred explicitly to the fact of knowing
54
the researcher personally for several years while allowing certain questions. On the
one hand the researcher’s familiarity with the client company enabled a superior
access to information. On the other hand old roles and expectations were still in
place that might have led to biased statements of the interviewees.
Notwithstanding the researcher’s familiarity with the client company only the owner
allowed to record the interview although anonymity and confidentiality was assured.
Hence, only a few direct quotes were used. The alternatively use of indirect speech
and researcher’s interpretations reduced the force of a convincing argument. Similar
concerns of German managers of the use of sensible data by externals were also
experienced by Schäffer and Matlachowsky (2008) who investigated barriers of BSC
usage in six German companies of different size and were only allowed to attend one
internal workshop where issues of the principal use of a BSC were discussed.
Probably limited experiences with qualitative management research conducted in
Germany (Jones and Luther, 2005) leads to the lack of trust in the confidentiality of
researchers.
Furthermore the plan of action has not been realized as intended. Firstly a preformulated
vision and centrally communicated strategic initiatives did not exist. The
starting point for developing a BSC needed to be investigated in an additional
interview with the owner. Secondly management accountants did not participate to
the outlined extent. E. g. the researcher derived strategic objectives from strategic
initiatives and the overriding vision without assistance from them. The researcher
noticed a general passive attitude towards his undertakings and perceived the
collaboration as slow and tedious probably because management accountants were
not consulted before starting the project. Communication between the researcher
decelerated because drafts and related feedbacks were sent via e-mail only. Thirdly
and due to regional distances between the places of work of interviewees, a general
reluctance of calling the researcher and managers’ time constraints only fourteen of
nineteen attempted interviews were carried out. Eight were face-to-face interviews
(see table 11).
55
Table 11: Interviews planned and carried out
Due to managers’ time constraints the planned interviews with service department
managers did not take place. The communication took place via email. Also the
strategic objectives the researcher derived from the strategic initiatives formulated by
the owner have been verified only party by her and a feedback on the final BSC from
her was not received in time. Therefore the owner’s support of the final BSC can only
be assumed. Disappointingly the financial executive director did not participate in the
project at all. Fourthly the initially planned presentation of the final BSC on a meeting
of top and middle managers and a following discussion was cancelled by one of the
executive directors because of schedule difficulties. An alternative meeting can only
be arranged after the deadline of the dissertation. This supports the impression that
the BSC is only seen as a playground for power games of top managers. In
consequence implemented research design resembles more elements of grounded
theory (Glaser and Strauss, 1967; Locke, 2001) than it complies with the initial
intended separate-sample pretest-posttest control group design (Campbell and
Stanley’s, 1963).
However, the initial plan of action proved to be highly appropriate for assessing the
client company. Although not all planned interviews were carried out a
comprehensive picture of the client company is drawn from which an applicable BSC
was developed. The owner’s commitment can be assumed because due to the initial
lack of a formulated strategy she was more involved in the development process as
set out in the beginning of the project. The received feedback of the executive
director was very useful and important for the BSC development and helped drawing
conclusions for this research.
56
Indeed, the action research project discussed in this dissertation was a valuable
experience for the researcher. Despite the limited time available rich insights into the
functioning of the client company are gained. Moreover the finding that an
implementation of the developed BSC seems unlikely not because of an infeasibility
of the tool but because of power games between top managers is surprising. After
studying rational approaches towards strategy and management accounting in class
the research project shows that the reality is significantly more complicated.
Changing the way how things are done in an organization is as difficult and
exhausting as changing the people behind those processes. Unfortunately a three
month lasting dissertation project is only sufficient to observe the beginning of an
organizational change process. Hence, this study represents only the start for an
action research project and a continuation with academic attendance seems to be
desirable.
The findings of this dissertation indicate two fields of further research. Firstly the
perceived BSC’s quality of supporting a style of strategic planning rather than
financial control (Goold and Campbell, 1987) and the role of individual advocates of
these different styles could be assessed in a case study. Secondly a longitude case
study analysing the influences of national culture on the shape of a BSC could
supplement this study.
57
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Appendix
I Implementation process of BSC
Implementation process of BSC
(adapted from Papalexandris et al., 2005, p. 223)
Timeline of action research project and process phases
(In accordance with Papalexandris et al., 2005)
*: Because of time constraints the phases “Operationalize” and “Implement” take place subsequent to the
dissertation project and are directed by the client company’s headquarters management accountant.
70
II Recommendations for roll-out
The action research project ends after proposing a BSC for implementation to top
and middle managers. Due to his experiences during the project and the knowledge
of the client company the researcher is able to formulate the following
recommendations concerning a successful continuation of the project.
1. A single individual should be assigned who is responsible for filling the BSC with
hard data and updating it regularly.
2. The proposed BSC is only a starting point. The BSC should be reworked and
updated on an ongoing basis including missing strategic objectives and
appropriate measures. The assumed casual relationships between strategic
initiatives and objectives need to be verified. Furthermore cause and effect
relationships between perspectives and measures could be discussed and
described in this process. Throughout the uniform formulation of objectives and
the use of relative measures where possible should be retained. In order to
resolve doubts of employees, the process should be made transparent by putting
it down in a commonly assessable process description.
3. An additional BSC for middle manager use should be derived form the corporate
BSC which can include results of customer surveys and other important measures
that are not considered so far. By this means a cascading strategic performance
management system could be introduced.
71
I declare that this dissertation is my own work, and that where material is obtained
from published or unpublished work, this has been fully acknowledged in the
references.