Academic journal article International Review of Management and Business Research

The Relationship between Cultural Factors and Balanced Scorecard Implementation

Academic journal article International Review of Management and Business Research

The Relationship between Cultural Factors and Balanced Scorecard Implementation

Article excerpt

Introduction

The twenty first century brought about significant changes that challenged managers all over the globe. Owing to these changes, economic fluctuations in the economically interdependent countries of the world, the considerable computer use, and a dynamic global business market resulted. The situation i s such that skilled managers face a complex business market place rife with both opportunities and risks, where in effective business decisions can be made, interpersonal relations can be enhanced and societal obligations can be met through the correct strategy. This study concentrates on management accounting change, particularly on the strategy known as the -Balanced Scorecard" (BSC).

Several researchers including Abdel-Kader and Luther (2008) and Johnson and Kaplan (1987) reported crisis in management accounting owing to the low percentage of implementation. Additionally, others like Askarany (2009), Al Sawalqa, Holloway and Alam (2011), Upton (2012), and Rabab'ah (2014) emphasized innovation in terms of the BSC. Owing to its attractive potential, companies around the globe have implemented it as a tool. However, its successful operation requires the effective implementation and continuous management of measures and the relevant strategic linkages.

Niebecker, Eager, and Kubitza (2008) said that BSC has been widely implemented, but most of the implementer companies believe that long-term results will not be. In reality, less than 20% of companies implementing the BSC have realized measurable performance improvement (Williams, 2004). Previous studies tried to know the reason of low implementation rate by testing the relationship between some organizational and technological factors and BSC implementation, but there is been very few empirical research studies on the relationship between organizational culture and BSC implementation. Buytendijk (2007) said that the perception that implementation of a BSC, in and of itself, will lead to organizational alignment is a "fairy tale". Previous studies such as (Kaplan and Norton 2004, Assiri and Eid, 2006 and Deem et al. 2010) found a direct relationship between organizational culture and BSC implementation. Scapens and Roberts (1993) suggested that organizational culture is a vital Factor affecting resistance to management accounting change he added that People in business units with more innovative cultures are more likely to respond positively to new management techniques, then increasing the chance of their success, while the converse will apply in units with less innovative cultures.

Till now, there has been very few empirical research studies on the relationship between organizational culture and BSC implementation. The important of this study come from the wide spread use of the BSC and, at the same time, a high level of BSC project failure. Prior studies however are divided on their perspectives as to the factors that affect BSC implementation and they remain knowledge gaps with regards to the use of BSC as a novel management accounting tool. Similarly, information concerning the diffusion and success of new management accounting tools is still few and far between. Therefore, studying the influence of cultural factors to the new management accounting diffusion would be strong contributions to the field (Rababah, 2012). However in this study these cultural factors (Outcome-oriented, Innovation, Team orientation, and Attention to detail) will be tested to examine the relationship between organizational culture and Balanced Scorecard implementation.

Jordanian companies must adapt to a competitive environment more and more acute, both to survive and benefit from the opportunities presented to them. Of course, the economic environment is an important consideration in any research in management. Especially, Jordan became a member of the World Trade Organization (WTO), and signed the Free-Trade Agreement with different parties, which led to increasingly changing, hostile, complex and diverse. …

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