The balance on the balanced scorecarda critical analysis of some of its assumptions

Management Accounting Research, 2000, 11, 65-88 doi:10.1006/mare.1999.0121 Available online at http://www.idealibrary.com on

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The balance on the balanced scorecarda critical analysis of some of its assumptions Hanne Nerreklit”

In recent years academic scholars have given increasing attention to the importance of strategic measurement systems including both non-financial and financial measures.
One of the approaches adopted is that of the balanced scorecard. It is distinct from other strategic measurement systems in that it is more than an ad hoc collection of financial and non-financial measures. It contains outcome measures and the performance drivers of outcomes, linked together in cause-and-effect relationships, and thus aims to be a feed-forward control system. Furthermore, the balanced scorecard is intended not only as a strategic measurement system but also as a strategic control system which can align departmental and personal goals to overall strategy. This paper first examines the extent to which there is a cause-and-effect relationship among the four areas of measurement suggested (the financial, customer, internalbusiness-process and learning and growth perspectives). The paper then examines whether the balanced scorecard can link strategy to operational metrics which managers can understand and influence. Finally, it discusses and suggests some improvements to the balanced scorecard.
0 2000 Academic Press

1. Introduction
1.1. Background
In recent years, increasing criticism has been levelled against the financial measures of accounting systems (Emmanuel and Otley, 1995). The criticism has, in part, focused on their historic nature, which ensures that they reveal a great deal about the company’s past actions but nothing about its future alertness (Merchant, 1985;
Chakravarthy, 1986; Schoenfeld, 1986; Dearden, 1987; AICPA, 1994; Kaplan and
Norton, 1996). Accounting figures do not emphasize the elements

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