Research Paper
The Importance of Nonfinancial Performance Measures
for Technical Joint Ventures.
Date: 07-06-2013
Name: Julius van der Werf Student no: S2405172
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INTRODUCTION
During the last twenty years, the formation of Joint Ventures and other types of alliances has increased significantly (Larimo and Rumpunen, 2008). Joint Ventures (JV) involve two or more legally distinct organizations (the parents), each of which shares in decision-making activities of the jointly owned entity (Geringer and Hebert, 1989). Notwithstanding the growth of JV’s, their performance often encounters problems; up to 70% of the JV’s are failures, are unstable and/or do not meet the goals set for them (Larimo and Rumpunen, 2008; Geringer and Hebert, 1991). These high failure rates result from poor selection of partner organizations but also from the problem of incompatible positions on JV performance measurement.
JV performance measurement, in almost all cases, is conducted using financial measurement of performance (Larimo and Rumpunen, 2008; Geringer and Hebert, 1989; Geringer and Hebert, 1991; Mohr, 2006). The use of only financial performance measures can be unsuitable to measure overall JV performance since it only covers one dimension (Anderson, 1990). These measures are inadequate to reflect the degree to which a JV has achieved its short- and long-term objectives (Killing, 1983; Artisien and Buckley, 1984; Blodget, 1987). In some ventures (i.e. new markets, new technologies) it is likely that there will be no profits generated in the early years. In that case, the use of financial measures will not be able to capture the JV performance relative to its objectives (Geringer and Hebert, 1991). In order to have an adequate understanding of JV performance, it calls for nonfinancial performance measures. JV’s can benefit from these measures since there are other areas that affect profitability that needs to be measured (i.e. customer loyalty, employee satisfaction). These measures provide a manager with information on the business’ progress well before a financial verdict is pronounced. The company receives better information on specific actions needed to achieve strategic objectives (Ittner & Larcker, 2006).
Therefore this study examines the question: How can technical Joint Ventures improve
performance using nonfinancial performance measures?
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combination of two research streams, technical JV performance and nonfinancial performance measurement, in order to fill the research gap on nonfinancial measures used in technical JV’s. This paper holds a systematic literature review on nonfinancial performance measures. This study contributes to the literature on JV performance measurement and success.
In the following section, theoretical background is provided on the nonfinancial performance measures for JV’s. The next section will elaborate on the methodology through which the research is executed. Next, the results from the empirical analysis are presented which is followed by the section were the implications of the findings will be discussed. The report will end with the conclusion and implications and will also provide directions for future research.
THEORY SECTION
Despite the increasing importance of JV’s, performance of these alliances has been evaluated unsatisfactory up to an estimated 70% of these alliances (Geringer & Hebert, 1991; Larimo & Rumpunen, 2006). Some studies have researched this failing rate of JV performance and concluded the causes to be parent firms’ disagreement on strategic objectives (Beamish & Lupton, 2009), disagreement on how to asses performance (Glaister, Husan & Huckley, 2005; Beamish & Lupton, 2009) the use of inadequate performance measures (Geringer & Hebert, 1991; Beamish & Lupton, 2009) and difficulties managing the JV (Inkpen & Birkenshaw, 1994). The use of inadequate performance measures can be assigned to JV’s mainly using financial performance measures which entail limitations to measure total performance of a JV (Geringer & Hebert, 1991; Beamish & Lupton, 2009; Glaister, Husan & Buckley, 2005). These measures embody financial indicators such as profitability, turnover and stock market return.
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have encountered problems with selection and implementation thereof because they fail to identify, analyze and act on the right nonfinancial measures (Ittner & Larcker, 2003; Neely, 1999) and when eventually implemented may fail to actively retain this performance measurement system and revert to the traditional performance measurement (Eccles, 1991).
There are limited sources on the implementation of nonfinancial measures in technical JV’s and the implication that this type of measurement has for two or more parent firms. The benefits of nonfinancial performance measures have not been extended to technical JV’s and therefore this research aims to connect two research streams, technical JV performance and nonfinancial performance measurement, in order to discover how these measures can increase technical JV performance. Also some of the sources used in this literature review are relatively dated which requires new insight from current literature.
METHODS
Both conceptual and empirical papers for the systematic literature review were selected from the fields of the two research streams (technological JV performance and performance measurement) since these would provide information on nonfinancial performance measures for technical JV’s. a systematic literature review is applied since this would provide better insight in existing theory than a case study. Also during primary article search, a substantial amount of articles on nonfinancial performance measurement was found which could contribute significantly to a literature review. The papers were collected using journals which are published in Business Source Premier and Google Scholar to have an extensive range of qualified papers. During primary search in the databases, a common journal could not be identified, therefore no selection of specific journals could be made since both research streams are very diffused among journals. The selection criteria within these databases were based on a couple of keywords/terms: “Technical JV’s performance”, “nonfinancial performance measurement”, “performance measurement in JV’s”. From these selection criteria, 18 papers have been selected for review, the summary for these articles can be found in the appendix.
DISCUSSION OF FINDINGS
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performance measurement. In the next section, a summary will be given on the review of both research streams.
Nonfinancial performance measures
Although a significant amount of research has been done on JV performance (Inkpen & Birkenshaw, 1994; Glaister, Husan, & Buckley, 2005; Geringer & Hebert. 1991; Beamish & Lupton, 2009), there does not exist a coherent set of measures that account for JV performance (Krishnan, Martin, & Noorderhaven, 2006). This lack of coherency results from the hybrid structures and transitory nature of alliances (Ren, Gray, & Kim, 2009). However, in all papers there is agreement on the lack of appropriability of solely using financial performance measures, which in most cases entail profit rates and cash flow, and state that companies needs to establish a balanced set of both financial and nonfinancial performance measures (Hill & Hellriegel, 1994; Kaplan & Norton, 1992; Venkatraman & Ramanujam, 1986, Eccles, 1991). Nonfinancial measures have been found to have the following advantages: it provides a more extensive operationalization of business performance (Venkatraman & Ramanujam, 1986; Said, HassabElnaby, & Wier, 2003), they offer a correct basis for self-assessment (Neely, 1999), these measures offer a long-term perspective to business performance (Said, HasabElnaby, & Wier, 2003; Ittner & Larcker, 2003; Eccles 1991), and nonfinancial measures have a positive effect on future firm performance (Neely, 1999; Maines et al., 2002; Said, HassabElnaby, & Wier, 2003). Several of these studies also have proven that firms using a combination of financial and nonfinancial measures perform better prospectively than firms solely using financial measures (Maines et al., 2002; Said, HassabElnaby, & Wier, 2003).
Technical JV performance
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have different viewpoint on occurring problems, multiple responses on these problems can help to confirm a viable solution (Hill & Hellriegel, 1994). Parent firms to a technical JV may agree on general aspects of the JV (e.g. which product or service to offer) but also have individual divergent performance objectives (e.g. which strategies and objectives?). This eventually will lead to confusion, contradiction in the defined performance measurement objectives, and therefore to management complexity (Geringer & Hebert, 1991; Beamish & Delios, 1997). To measure JV performance correctly, the parent firms should measure the extent to which the JV has achieved the goals of the firms, therefore it is crucial that the partners work together on creating a similar set of objectives for the JV (Hill & Hellriegel, 1994; Beamish & Lupton, 2009), because when the assessment criteria are dissimilar, than there may be totally different conclusions regarding a JV’s performance (Buchel et al., 1998). The establishment of suitable performance measures is done in which can be called the
negotiation stage, it is important to have a compatible understanding of each other which can
be improved by sense-making: “An enactment process in which organizational participants come to appreciate the potential for transacting with others by reshaping or clarifying the identity of their own organization” (Weick, 1979). This compatibility will increase the probability of agreeing on objectives and goals of the technical JV (Ring & Van de Ven, 1994). Another important factor for compatibility are partner selection criteria which can be divided in criteria that are associated with the operational skills and resources which a JV requires for it competitive success (task-related criteria) and criteria that are associated with the efficiency and effectiveness of partners’ cooperation (partner-related criteria) (Geringer, 1991; Glaister & Buckley, 1997; Larimo & Rumpunen, 2007). More specifically, task-related criteria refer to those variables that are closely related to the operations of the venture and may be either tangible or intangible. Partner-related criteria refer to those variables that are required for prosperous operation of the venture (e.g. corporate/ national culture, structure, past associations, and trust). These criteria impose requirements for the JV before formation takes place. These requirements increase the probability of selecting a compatible partner and are a critical element in forming JV’s (Hill & Hellriegel, 1994).
Improving technical JV performance
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higher future oriented focus. Finally these measures improve performance since it provides a more comprehensive view of the venture which improves agreement between the JV’s parent firms since all factors of the venture are known. All these factors result in a better understanding about the objectives and future of the venture, it leads to more efficient problem solving and overall improvement of managing the technical JV.
Nonfinancial performance measures can improve technical JV performance in the following major causes of failure of JV’s: parent firms’ disagreement on strategic objectives (Beamish & Lupton, 2009), disagreement on how to asses performance (Glaister, Husan & Huckley, 2005; Beamish & Lupton, 2009), and the use of inadequate performance measures (Geringer & Hebert, 1991; Beamish & Lupton, 2009). First, nonfinancial performance measures improve the evaluation quality of a JV because it is tested on more relevant factors than only financial figures. A technical JV may want to know how the venture has been able to meet customer requirements which contribute to future performance, the firms will have no idea about customer satisfaction when using financial performance measures. Second, these measures can also improve the future performance of technical JV’s. The following sections will elaborate how the mentioned problems for technical JV’s performance can be improved by using nonfinancial performance measures and how this affects future performance.
Disagreement on strategic objectives
Congruency in the area of objectives is proven to be a driver of JV performance (Beamish & Delios, 1997). However, parent firms to a technical JV often have different performance objectives for a venture. Critical to this problem is partner selection. Nonfinancial measures can aid in this problem since including these measures will put the focus on the long-term and can identify objectives for both parties (compatible and divergent objectives), which ultimately improves performance (Neely, 1999; Said, HasabElnaby, & Wier, 2003). When financial objectives are used, agreement on these goals can still lead to disagreement in other areas which are not incorporated in the financial performance measurement system. By incorporating nonfinancial measures, like customer satisfaction, quality, etc, a more complete objective of the venture can be formulated, which leads to faster agreement.
8 Disagreement on performance assessment
Parent firms needs to incorporate both financial and non financial performance measures to have a complete picture of a JV’s performance measures (Hill & Hellriegel, 1994; Kaplan & Norton, 1992; Venkatraman & Ramanujam, 1986, Eccles, 1991). By agreeing on the strategic objectives of a technical JV, the basis for correct performance assessment is already in place; namely the direction of the JV. In the objectives there will now be agreement on also focusing on nonfinancial aspects of the technical JV which can only be measured with nonfinancial measures. The direction is enhanced by nonfinancial measures because it states the desired future position (what is going to be measured) and what can be currently done to reach that position (Eccles, 1991; Neel, 1999).
Using inadequate performance measures
The use of financial measures has been dominant in JV performance measurement. These measures are inadequate since they only cover one dimension of its performance (Anderson, 1990). For example; if a technical JV is measuring profits as a performance indicator, then this still does not give management a clear view of its operations. Because profits can be obtained by several causes: higher price, customer satisfaction, new market segment or superior supply chain structure. By employing both financial and nonfinancial measures, it will create a complete performance measurement framework. JV’s that apply both types of measures are proven to perform better than JV’s only applying financial measures (Glaister, Husan, & Buckley, 2005; Said, HassabElnaby, & Wier, 2003).
The parent firms and technical JV management need to create causal relationships between the JV’s strategy and how the realization of that strategy can be measured with financial and nonfinancial measures. From this causal relationship it is easier to select nonfinancial performance measures that reflect the strategy and objectives.
Process framework
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illustration on how a relational process is developed. However, according to the research, extra stages can be included in the model. This paper will enrich this model by including stages and factors that are relevant to technical JV’s and nonfinancial performance measurement. The following process model (illustrated in figure 1) will provide a framework which parent firms to a technical JV can apply to establish a sound JV and which will aid during the operation of the venture to keep all parties involved and satisfied. Correct application of this framework will increase the probability of high performance for a technical JV.
Figure 1: Process framework for technical JV development
The process will start off with Strategy Development, implying that a company establishes the objectives for the firm. Concluding from the strategic assessment that a technical JV is the correct IOR for the firm, it should proceed to determine further requirements and its short- and long-term goals. These requirements relate to what resources are needed, how these resources should be obtained, and the durability of the technical JV (Beamish & Lupton, 2009). In this stage, a firm needs to formulate nonfinancial performance measures and link them to objectives since they give a more comprehensive view of the objectives and the long-term perspective. A clear strategy will provide a good starting point from which to develop a technical JV.
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Hellriegel (1994) as “the extent to which the joint venture partners bring nonredundant distinctive competencies to the partnership”. These competencies should be possible to combine and transfer between parent firms and the technical JV itself. In selecting a partner, firms must also focus on factors relating to the cooperation in the technical JV (partner-related criteria). Parents firms should have compatible strategies and operating philosophies which increases the probability of reaching consensus on prosperous cooperation (Hill & Hellriegel, 1994). Partner-related criteria could also relate to trust in a partner, commitment to the venture, structure of a partner and its culture. Here firms should consider if their firms are compatible in terms of strategy, objectives and motives.
The following three stages are part of a continuous cycle for a technical JV. This cycle originates from the model of Ring and Van de Ven but the terminology is slightly altered. Considering a technical JV to remain long-term, conflicts and disagreement can arise on factors relating the venture. Partners should therefore evaluate and renegotiate the technical JV on an ongoing base.
When the right partner has been selected, the firms will Negotiate in order to develop joint expectations, objectives, obligations, and control for the technical JV (Ring & Van de Ven, 1994). There should be both formal bargaining and informal sense-making as mentioned in the ‘Technical Joint Venture’ section since a combination of these approaches will enhance the potential of the relationship (Ring & Van de Ven, 1994). In the negotiations stage, complementarity plays a role in which agreement needs to be achieved on which firm contributes what resources and skills to the venture. Except for inputs and outputs from the parents firms, they should also agree on how to assess performance of the technical JV and which measures should be used. As mentioned earlier, causal relationship need to be established between strategy and how the realization there of can be measured using both financial and nonfinancial measures. When ‘strategy development’ and ‘partner selection’ are correctly executed, agreement on performance measurement can be obtained more rapidly.
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When Implementing and Managing the venture, all previous agreements and commitments are carried out where all parties carry out a certain amount of control over the venture, preferably in their field of expertise. The operations of the venture are guided by the formally designated roles of the parties involved and reduces uncertainty. The relationship between partners and its members will improve through interpersonal relationships between the parties, increasing the likelihood of higher performance through employee satisfaction which is a nonfinancial performance measure. When problems arise in this stage, renegotiations considering the venture will take place.
The final aspect of the model is performance measurement which is central to the continuous cycle in the model. First, firms should agree on which performance measures reflect its strategy and they should agree on a set of financial and nonfinancial measures. Second, parent firms ought to mirror their commitment to the nonfinancial measures. Finally, the operation of the JV should be evaluated using the negotiated performance measurement system. The parent firms should continuously assess performance of the venture using financial measures to satisfy stakeholders and create value for the partners, and they should use nonfinancial performance measurement to create a comprehensive view of the venture’s operation and direction for the future.
CONCLUSION AND IMPLICATIONS
The aim of this paper was to see how nonfinancial performance measures could improve technical JV performance. Although many JV’s rely on financial performance measures, academic research suggests that nonfinancial performance measures are essential in creating a comprehensive representation of the venture’s operations. Research shows that nonfinancial measures enhance performance of technical JV’s since it is more compatible with a venture’s objectives, and through better realization of these objectives will enhance performance and eventually financial returns. The nonfinancial measures also create better guidelines for parents firms to develop a JV since it includes more than solely financial figures. This paper has also given a process framework for firms to develop a technical JV which, when executed correctly, should enhance a technical JV’s performance.
Implications for research
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performance measures for firms in a JV. The importance of nonfinancial measures is considerably for research to further investigate since the application of these measures will continue to grow (Neely, 1999).
Implications for managers
The paper provides managers of JV’s with evidence of not only the contribution of nonfinancial performance measurement in organizations but also when applied to JV’s. It encourages managers to discard from solely financial performance measures and include nonfinancial measures to improve performance measurement of technical JV’s.
Limitations and future research
This research has not been able to fully focus on technical JV’s since a lot of papers were based on regular or international JV’s. Therefore a third research stream could be added to this topic which solely relates to technical JV’s. The distinction of financial and nonfinancial measures can be further divided into objective and subjective performance measures. This field also leaves room for additional research. According to the papers used in this research, these subjective performance measures can have high influence on parent firm satisfaction. Many papers that were used are dated; further research could include more recent papers. A more extensive literature review could also include which nonfinancial measures technical JV’s should include.
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Maines, L.A., Bartov, E., Fairfield, P.M., Hirst, E., Iannaconi, T.E., Mallet, R., Schrand, C.M., Skinner, D.J., & Vincent, L. (2002). Recommendations on Disclosure of Nonfinancial Performance Measures. Accounting Horizons, 16(4): 353-362.
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APPENDIX ARTICLE SUMMARIES
Study Research question Type of research Method Remarks De Man &
Duysters (2005)
Which type of alternative governance mechanism, M&A’s or alliances, is superior to the other in terms of strengthening the
innovative capabilities of the partners involved?
Conceptual paper with a theory building approach.
Systematic literature review with clear criteria. 30 papers on alliances and 15 papers on M&A’s (large-scale, empirical papers in refereed published journals on the effect of alliances and M&A’s on innovation)
Alliances are outperforming M&A’s in terms of their effect on innovation.
Lhuillery & Pfister (2008)
1)What type of collaboration portfolios may be more susceptible to encounter cooperation problems leading to innovation failure.
2)What factors can prevent such difficulties in
collaborations from appearing and from having a detrimental impact on the innovation project.
Empirical research with a theory testing approach.
Core sample from the French Second Community Innovation Survey (CIS2). Survey of 1350 non-cooperating firms and 1004 cooperating firms.
Partnerships with competitors and Public Research Organizations (PRO’s) are both likely to end up in Cooperation Failure (CF).
Firms which have greater size, belonging to a group, having experience with cooperation, and having greater appropriability of innovation (patents, copyrights) have a lower change of cooperation failure.
Glaister, Husan & Buckley (2005)
What are the motives for IJV formation?
Do these motives coincide between partners to an IJV?
Empirical research / theory building approach.
Sample of UK IJV’s with European partner firms between 1990 and 1996. Parallel mixed analysis with qualitative (interview) and quantitative (self-administered questionnaire) data.
The degree of favorable past association between partners appears to become a more important partner-related selection criterion as the number of prior ties between partners increases.
Trust between top management teams is the most important partner-selection criteria in IJV’s. Different partners to an IJV exert different control mechanisms.
Performance measures of the IJV are namely financial. Subjective performance measures are not widely implemented.
Evaluation of performance relies on both partners and management of the IJV.
Larimo & Rumpunen
What is the importance of selection criteria in IJV’s?
Empirical research / theory testing
Survey data in 60 IJV’s in
manufacturing organizations by 47
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(2008) What is the link between
selection criteria and IJV performance?
approach. Finnish based firms between 1988 and
2001.
Strong commitment to the venture Trust between partners
Knowledge of the target market’s economy and customs Permit faster entry into the target markets.
Well performing IJV’s placed more value with the following criteria:
Mutual trust
Management fit and commitment Similar culture
Similar size Geringer &
Hebert (1991)
What is the reliability of and correlation between various IJV performance measures?
Conceptual study / theory building approach.
US and Canadian Studies with collected data from US and Canadian IJV’s. US data was collected on IJVS with two parent organization in the manufacturing industry in the years 1979 till 1985. Canadian data was collected from IJV’s with two or more parent organizations in the
manufacturing industry that were formed in 1981 and still were in operation in 1988.
Positive correlation between:
Objective and subjective measures of IJV performance; The parents’ and the IJV general manager’s (IJVGM) assessment of IJV performance;
A parent’s satisfaction with IJV performance and perceptions by the other partner and the IJVGM of this parent’s satisfaction;
Partners’ assessment of IJV performance will be stronger in IJV’s involving partners with similar national cultures; A parent’s satisfaction with IJV performance and the perception by the partner and the IJVGM of this parent’s satisfaction will be stronger in IJV’s involving parents with similar national cultures.
Ittner & Larcker (2006)
What are common mistakes in nonfinancial performance measurement?
What practices allow companies to realize nonfinancial performance measurement?
Empirical study/ theory building.
Field research in more than 60 companies in the manufacturing and service sector based on interviews and two surveys on performance
measurement practices.
Mistakes:
- Not linking the measures to strategy; - Not validating the links;
- Not setting the right performance targets; - And measuring incorrectly.
Practices:
- Develop a causal model; - Gathering data;
- Turn data into information; - Continually refine the model; - Base actions on findings; - And assess outcomes. Neely (1999) How did the performance
measurement revolution come about and what are its
Conceptual research / theory testing
Performance measurement is on the agenda because of seven main reasons. It further states areas for
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implications?
What are current state-of-the-art performance measures in business?
What will the situation on performance measurement entail?
of selection and implementations of the nonfinancial measures. Maines, Bartov, Fairfield, Hirst, Iannaconi, Mallet, Schrand, Skinner & Vincent (2002) An evaluation of academic research related to nonfinancial performance measures. Conceptual research/theory testing approach
Literature review. Nonfinancial measures are relevant for predicting future
financial performance and valuing corporate equity; Nonfinancial measures possess at least some degree of reliability, having such information audited should increase investors’ perceived reliability of those measure;
Nonfinancial measures can enhance the value of financial measures due to the interactive effect between the two.
Eccles (1991) Describing the revolution of Business Performance Measurement (BPM).
Conceptual research/ theory testing.
Literature review. Open-mindedness about the structures and processes that
will be most effective in BPM, now and in the future, is of major importance;
BPM is a never-ending revolution Beamish &
Lupton (2009)
What are the factors that influence Joint Venture Performance?
Conceptual paper/ theory testing approach.
Literature review of 318 articles. Research paper selection based on the number of citations measured using Social Science Citation Index (SSCI).
Most important factors: Assessment of JV performance; knowledge management; governance and control; challenges from dissimilar national and organizational cultures; the role of JV’s in the internationalization process; and assessment of the JV market value. Inkpen & Birkenshaw (1994) An investigation of JV performance within an interorganizational framework. Empirical Research/ Theory building approach. Sample of 40 American-Japanese JV’s in the automotive industry located in North America.
Ingredients for a successful working JV: Trust, cooperation, Great emphasis on complementarity in objectives. Iteratively, satisfaction could lead to a greater willingness to integrate the JV with the parent which in turn could generate greater satisfaction, and so on. Said,
HassabElnaby & Wier (2002)
What are the current and future consequences of incorporating nonfinancial measures in a set of performance metrics? Empirical research/ theory testing approach.
Comparing the performance of a sample of firms that used both financial and nonfinancial measures to a
matched sample of firms that based their performance measurement solely on financial measures (1.441 firm-year observations).
Nonfinancial performance measures are associated with subsequent firm economic performance.; Using
nonfinancial measures in evaluating performance affects market performance.; The overall evidence on
nonfinancial measures’ impact on accounting-based performance is mixed.
Hill & Hellriegel
Integrative examination of the following aspects of joint
Empirical research/ Theory building
Data collected from a sample of 31 pursued by US and European oil
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(1994) venture formation:
1)Complementarity of the partners;
2) Ownership and Control; 3) Joint venture autonomy.
approach. companies. 2) Complementarity needs to be weighed against
operating philosophies/ management styles;
3) Partner’s should focus on influencing in their own expertise field/ complementarity;
4) JV performance should be measured by the extent to which the JV fulfills the goals of the partner firms. Reng, Gray &
Kim (2009)
What are the most important conceptualizations of IJV performance, what are the dominant drivers of
performance, and what are the key links among all these critical variables?
Conceptual research / Theory testing approach.
Systematic literature review using 54 empirical studies examining IJV performance from 12 journals in the field of management and international business.
The development of a multilevel, longitudinal model for analyzing IJV performance.
Beamish & Killing (1997)
How can dissatisfaction in the performance of International Joint Ventures (IJV’s) be explained.
Conceptual/ Empirical research. Theory building approach.
Conceptual work from the strategy field for IJV’s and empirical evidence through the small cases.
The dissatisfaction and low performance of IJV’s can be explained through a lack of congruity/ consensus about the objectives for the IJV and the strategies to overcome those objectives.
Ring & Van de Ven (1994)
How do cooperative interorganizational
relationships (IOR’s) emerge, grow and dissolve over time?
Conceptual research / Theory testing approach.
Literature review. Development of a framework with & underlying
propositions that explain why cooperative IOR’s emerge, grow and dissolve over time.
Kaplan & Norton (1992)
How does the balanced scorecard (BSC) work and how can its drive performance.
Conceptual research / Theory testing approach.
Literature review and small case study on the application of the balanced scorecard for Electronic Cirquits Inc. (ECI).
Managers require a balanced set of both financial and operational measures).
The BSC puts strategy and vision at the center, and uses measures that are designed to pull people toward the overall vision. This approach to performance
measurement is consistent with the initiatives under way in many companies: cross-functional integration, customer-supplier relationship, global scale, continuous improvement, and team rather than individual
accountability. Venkatraman
& Ramanujam (1986)
What are different approaches to the measurement of business performance in strategy research? Conceptual research/ theory testing approach.
