Research On BSC's Value Adding Effect On The Management Of Enterprise

BSC was established in the 1990s by American economists Kaplan and Norton to transcend the traditional financial-accounting-indicator-oriented performance measurement system, supplying the top management with a comprehensive perspective to monitor the operation of the enterprises. This system contains at the same time the value measurement mechanism and value driven elements to generate a feed-forward performance appraisal and control format. It was originally adopted by many companies for budgeting and financial warning. However, it is gradually discovered that BSC's core lies in its attribution to the enterprises' vision and strategy, which enables it to be used as a strategic management tool. This is actually BSC's true value, that is, to add value by guaranteeing the effective implementation of strategy through combining operation and strategic intent.The starting point of BSC adoption is same: gaining an effective strategic management tool, whose advocates highly think of the theory, suggesting that this is a coherent performance appraisal system which reasonably employs the cause-effect relation to contain outcome measurement indicators and value driven elements. They believe this model can integrate the departmental and individual aims with those of the company. But many researches have demonstrated that the current BSC system is far from perfect and many companies' experience also implies the hidden problems. It is obvious that now we are too early to assert that BSC can really add value as expected. If it can not achieve this goal, then we will face a danger bigger than wasting the users' money and time, this can lead to the collapse of the company's total management system. So an essential question that we must answer is: can BSC's contents, model and implementation truly improve effectively the company's strategy and outcome?This thesis targets at these questions to analyze BSC's theoretical foundations and the accuracy and clarity of its essential elements by literature review and formative analysis. The paper explores deeply the cause-effect relation, the performance measurement indicators, the choice of the indicators, the choice of references, the true meaning of Balanced, the compensation planning, the overload of information, etc. before it points out BSC's defects or aspects to be improved, such as the poor transformation of the dynamic and static function of the controlling model. Since BSC is only part of management accounting system, and according to the contingency theory, the design of the management accounting system of companies should be contingent on the competitive environment, technology development, organizational structure and business strategies. Obviously, the logical analysis and critical approach are not able to capture all these variables, and therefore cannot assess whether the BSC is value added or not. The thesis conducts empirical research and three case studies that directly appraise the BSC's attributions to adding value in the real situation by qualitative and quantitative analysis.The paper also points out that we can not jump to any final conclusions in the study of BSC theory and shall pay enough attention to the complicated situations occurred in its real applications, which can be a valuable domain for the future research.