why the balanced scorecard fails in smes a case study

• International Journal of Business and Management
• Vol. 6, No. 11 (2011)

Why the Balanced Scorecard Fails in SMEs: A Case Study

•   Nopadol Rompho    

Though studies abound for large organizations where use of the Balance Scorecard is quite common, literature focused on the uses and limitations of the Balanced Scorecard in small and medium-sized enterprises (SMEs) is difficult to find. To help fill the gap, this study was conducted using one SME that failed in its attempt to implement the Balanced Scorecard with the goal of ascertaining the cause of the failure of the Balanced Scorecard. Data was collected for this study via interviews and researcher observations. Two in-depth interviews were conducted, one with the manager-owner and one with the employee who is directly responsible for the design and implementation of the Balanced Scorecard. The researcher also observed and facilitated the design and implementation of the Balanced Scorecard in the company over the same period. The results reveal that frequent change in strategy was a major factor leading to the failure of the Balanced Scorecard in SMEs.

• DOI: 10.5539/ijbm.v6n11p39

• ISSN(Print): 1833-3850
• ISSN(Online): 1833-8119
• Started: 2006
• Frequency: bimonthly

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Why the Balanced Scorecard Fails in SMEs: A Case Study

Abstract: though studies abound for large organizations where use of the balance scorecard is quite common, literature focused on the uses and limitations of the balanced scorecard in small and medium-sized enterprises (smes) is difficult to find. to help fill the gap, this study was conducted using one sme that failed in its attempt to implement the balanced scorecard with the goal of ascertaining the cause of the failure of the balanced scorecard. data was collected for this study via interviews and researcher… show more.

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References 24 publication s, sustainability management with the sustainability balanced scorecard in smes: findings from an austrian case study.

Abstract:Given the economic importance of small and medium sized enterprises (SMEs) and their need for strategic sustainability management, this paper examines the concept of Sustainability Balanced Scorecard (SBSC) with respect to SMEs. This case study describes the development of an SBSC in a middle-sized Austrian brewery. The existing methods used in SBSC creation were adapted to suit the company's specific needs. The findings show that when developing an SBSC it is important to take specific SME characteristics into account and apply methods that allow for adaptation to the prevailing conditions, such as strategic management, organizational structure and resources. In the case study special attention was paid to strategy analysis and thereby the creation of a solid basis for the SBSC. Furthermore, the results show SBSC development is not a process of distinct consecutive steps, as it is often suggested in the literature, but rather that it is a complex process marked by iterative steps. Moreover, the paper highlights the supporting factors and challenges experienced. Whereas top management support, the presence of a project team and high employee involvement were identified as key supporting factors, a lack of specific resources and blurry strategy formulation exert negative influence on the development process. The results presented here should help other SMEs in their development of an SBSC. The paper stimulates scientific discourse on sustainability and strategic management by highlighting the relevant supporting factors and challenges.

Implementasi Balanced Scorecard pada Unit Usaha Kecil Menengah: Studi Kasus sebuah Restoran di Jakarta

Identification and ranking of specific balanced scorecard performance measures for hospitals: a case study of private hospitals in the klang valley area, malaysia.

Summary Performance measurement is a necessity for private hospitals as they need to be efficient, attract customers, increase profitability, and survive in the competitive environment of the health care industry. Hospitals typically struggle to identify appropriate performance measures because of lack of reliable source of performance measures for private hospitals. Despite numerous studies on performance measurement, few studies have focused on performance measures in private hospitals. This paper aims to fill that gap by identifying and ranking a specific set of performance measures that are feasible and relevant for private hospitals. Forty‐four health care performance measures in four balanced scorecard (BSC) performance perspectives (financial, customer, internal business processes, and learning and growth) were compiled and filtered based on “feasibility” and “relevance” criteria using a questionnaire survey in private hospitals in the Klang Valley area, Malaysia. Since all collected data were in numeric format, data analysis was performed quantitatively. Consequently, 31 BSC performance measures were identified for private hospitals. Next, the 31 performance measures went through a ranking survey in Klang Valley private hospitals. Therefore, a weight between 0 and 1 with a range of 0.095 to 0.207 was obtained for each performance measure to help hospitals quantify their overall performance more accurately.

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Please note you do not have access to teaching notes, leveraging the balanced scorecard – a tool for sme advancement.

Publication date: 17 May 2021

Teaching notes

Learning outcomes.

Illustrate the typical organizational responsibility of a small, medium industry dealing with precision manufacturing products. Introduce a balanced scorecard (BSC) as a concept about the case in the context. Introduce the parameters specific to small and medium enterprise (SME) that could be considered to be part of the key performance indicators. Understand the advantages and disadvantages of using a BSC in SMEs in emerging economies.

Case overview/ synopsis

Gopika Rani, the recently hired Executive Assistant along with Sanjana M, the Business Development Manager of SEP India Private Ltd. (SEPI), a small medium enterprise, were finalizing a proposal for the forthcoming “India Small Business Excellence Awards 2020.” The proposal was to be considered by the Board of Directors scheduled to meet next week for approvals. Sanjana apprises Gopika on CRISIL’s policy advisory role and its annual awards scheme for SMEs in India. She also details recent modifications announced by the Government of India that had impacted SEPI and was pertinent for filling the application. Gopika understood that SEPI was well-known for the precision and durability of its component, and was poised for growth. The business catered to global suppliers (Tier-1 companies) of the Indian automotive industry that accounted for over 75% and the balance contributed to exports. SEPI’s unique products such as Starter Motor Ignition or the Fuel Vending pump (Automotive) or the non-automotive products such as arrowheads and bowstrings (sports) or the heart-valves (medical) have all the quality certifications. For new product development, customer feedback played a crucial role at all stages of development from prototype to pilot tests. SEPI’s mission “be our customers’ preferred supplier and business partner” drove their personnel and organizational objectives. Also, SEPI could get multiple benefits and be in a strong market position because of this award recognition. Gopika was, however, unclear about SEPI’s business strategies and use of appropriate performance measurement tools. Gopika desired to address the Board of Directors next week on her idea of applying a BSC as a useful “strategic planning and management tool.” The BSC methodology can be used to monitor the performance of SME firms against strategic goals. It can be successfully implemented in smaller organizations because of their simpler set-ups and tendency to arrive at a consensus quickly. However, implementation of BSC within the Indian micro, small and medium enterprises has been scant. Several studies found that the lack of ownership, resistance to change, a scarcity of training and coordination between the departments and lack of funds were among the challenges. The firms also had to make numerous changes to their strategies as business environments evolved. Gopika was convinced that the tool could blend in all the “four perspectives – customer, financial, internal business and learning and growth” and grow. The tool could demonstrate meeting all the prerequisites, “needs to have an exemplary vision, demonstrate outstanding business acumen, use best practices and create a legacy for the others to follow,” that were prerequisites for receipt of this award. Her next project would be to seek approval for the implementation of BSC, a beneficial and apt tool for SEPI. Do you agree with Gopika Rani that BSC is a suitable tool for SEPI? If yes, why? If no, why?

Complexity academic level

This case study titled leveraging the BSC – a tool for SME advancement is intended for use in the graduate management program (MBA) in subject electives, namely, entrepreneurship, strategy formulation, human resource management or production management.

Supplementary materials

Teaching Notes are available for educators only.

Subject code

CSS 3: Entrepreneurship.

• Small businesses
• Strategic management/planning
• Performance measurement/metrics
• Balanced scorecard

Acknowledgements

The authors acknowledge the inputs and support of Ms Anjana Mohan, General Manager at SEP India Private Ltd. (SEPI) for deliberations, information, and in-plant visits from June 2019 to December 2020. Funding : Research Grant (11.06.2018) ARIF, India.Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.

Koul, S. and Gupta, H. (2021), "Leveraging the balanced scorecard – a tool for SME advancement", , Vol. 11 No. 2. https://doi.org/10.1108/EEMCS-08-2020-0282

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Leveraging the balanced scorecard – a tool for SME advancement

Learning outcomes Illustrate the typical organizational responsibility of a small, medium industry dealing with precision manufacturing products. Introduce a balanced scorecard (BSC) as a concept about the case in the context. Introduce the parameters specific to small and medium enterprise (SME) that could be considered to be part of the key performance indicators. Understand the advantages and disadvantages of using a BSC in SMEs in emerging economies. Case overview/ synopsis Gopika Rani, the recently hired Executive Assistant along with Sanjana M, the Business Development Manager of SEP India Private Ltd. (SEPI), a small medium enterprise, were finalizing a proposal for the forthcoming “India Small Business Excellence Awards 2020.” The proposal was to be considered by the Board of Directors scheduled to meet next week for approvals. Sanjana apprises Gopika on CRISIL’s policy advisory role and its annual awards scheme for SMEs in India. She also details recent modifications announced by the Government of India that had impacted SEPI and was pertinent for filling the application. Gopika understood that SEPI was well-known for the precision and durability of its component, and was poised for growth. The business catered to global suppliers (Tier-1 companies) of the Indian automotive industry that accounted for over 75% and the balance contributed to exports. SEPI’s unique products such as Starter Motor Ignition or the Fuel Vending pump (Automotive) or the non-automotive products such as arrowheads and bowstrings (sports) or the heart-valves (medical) have all the quality certifications. For new product development, customer feedback played a crucial role at all stages of development from prototype to pilot tests. SEPI’s mission “be our customers’ preferred supplier and business partner” drove their personnel and organizational objectives. Also, SEPI could get multiple benefits and be in a strong market position because of this award recognition. Gopika was, however, unclear about SEPI’s business strategies and use of appropriate performance measurement tools. Gopika desired to address the Board of Directors next week on her idea of applying a BSC as a useful “strategic planning and management tool.” The BSC methodology can be used to monitor the performance of SME firms against strategic goals. It can be successfully implemented in smaller organizations because of their simpler set-ups and tendency to arrive at a consensus quickly. However, implementation of BSC within the Indian micro, small and medium enterprises has been scant. Several studies found that the lack of ownership, resistance to change, a scarcity of training and coordination between the departments and lack of funds were among the challenges. The firms also had to make numerous changes to their strategies as business environments evolved. Gopika was convinced that the tool could blend in all the “four perspectives – customer, financial, internal business and learning and growth” and grow. The tool could demonstrate meeting all the prerequisites, “needs to have an exemplary vision, demonstrate outstanding business acumen, use best practices and create a legacy for the others to follow,” that were prerequisites for receipt of this award. Her next project would be to seek approval for the implementation of BSC, a beneficial and apt tool for SEPI. Do you agree with Gopika Rani that BSC is a suitable tool for SEPI? If yes, why? If no, why? Complexity academic level This case study titled leveraging the BSC – a tool for SME advancement is intended for use in the graduate management program (MBA) in subject electives, namely, entrepreneurship, strategy formulation, human resource management or production management. Supplementary materials Teaching Notes are available for educators only. Subject code CSS 3: Entrepreneurship. Supplementary materials Teaching Notes are available for educators only.

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Smart Technologies for Organizations pp 107–114 Cite as

Business Performance Management Platform for SMEs

• Pedro Pimenta 11 ,
• Célio Carvalho 11 &
• Joaquim P. Silva   ORCID: orcid.org/0000-0002-0138-2456 12  
• Conference paper
• First Online: 16 April 2023

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Part of the book series: Lecture Notes in Information Systems and Organisation ((LNISO,volume 60))

Business performance management systems are common in large enterprises and play a key role in their management. However, just a few small and medium-sized enterprises (SMEs) have implemented performance management. The obstacles to the implementation of performance management in SMEs have been identified in many studies, but solutions to overcome them are still lacking. This project proposes the development of a modular and adaptable business performance management solution, using a low-code application development platform. This solution can be implemented by SMEs in the short term, at low cost, and through a simplified process.

• Business performance management
• Small and medium enterprises
• Low-code platform

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Instituto Politécnico do Cávado e do Ave, 4750-810, Barcelos, Portugal

Pedro Pimenta & Célio Carvalho

2Ai—School of Technology, IPCA, Barcelos, Portugal

Joaquim P. Silva

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Correspondence to Joaquim P. Silva .

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University of Neuchâtel, Neuchâtel, Switzerland

Cinzia Dal Zotto

Afshin Omidi

Saint Joseph University of Beirut, Beirut, Lebanon

Georges Aoun

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Pimenta, P., Carvalho, C., Silva, J.P. (2023). Business Performance Management Platform for SMEs. In: Dal Zotto, C., Omidi, A., Aoun, G. (eds) Smart Technologies for Organizations. Lecture Notes in Information Systems and Organisation, vol 60. Springer, Cham. https://doi.org/10.1007/978-3-031-24775-0_6

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Published : 16 April 2023

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The use of Balanced Scorecard on Small and Medium Enterprises

Executives in profit or non-profit organisations need a performance measurement systems (PMSs) to get the picture of their organisation condition. The traditional performance measurement system (PMS) focus in a financial aspect only; on the other hand, executives need a complete PMS to give their complete information. Small and medium enterprises (SMEs) better using a balanced scorecard as their performance measurement system (PMS) because it provides a comprehensive measurement, not only from the financial aspect, but it includes both internal and external aspects.

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Mahshid Lonbani

Balanced scorecard (BSC) has been used in different businesses with different sizes. Large firms as well as small and medium sized enterprises (SMEs) tend to use multidimensional BSC instead of relying on traditional performance measurement. Although there are plenty of studies evaluating the use of BSC in large companies, studies which specifically focus on small firms is relatively few. The purpose of this paper is to review the literature regarding the use of BSC in SMEs to find out the level of its applicability and implementation in these environments. Based on extensive review of available literatures, it can be seen that most of the BSC scholars believe that it has the potential to be used in small firms, and therefore it is applicable in this context; however, SMEs do not implement BSC effectively, and due to different reasons, they tend to use only some specific parts of this performance measurement system.

Aliza Zainal

Scholarly literature offers methodologies for the implementation of a PMS that are based upon a top-down approach and that aim at translating strategy into action, with little consideration to the tendency of small enterprises not to give much importance to the formalisation of their strategic choices. In this chapter, the authors identify a circular methodology to implement a strategically aligned performance measurement system in SMEs. The proposed methodology is based on the Balanced Scorecard Model and features four main phases: (1) the analysis of current " individual dashboards " to actually show the performances that are kept under control; (2) the clarification of the key success factors (CSFs) underlying the measures under control; (3) the definition of the desired strategy map as a result of the comparison between CSFs that are currently under control and the desired strategy; (4) the translation of the desired strategy map into a dashboard of indicators necessary for the implementation of the strategy.

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Maria João C V Machado

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Husna Ainu syukri

Small and medium enterprises (SME) have become the backbone of Indonesia domestic economy and accountable for Indonesia Gross Domestic Product (GDP). Yogyakarta is known for many metal casting SMEs including SP Aluminium which produce household appliances and crafts. The competition between SMEs that continues to increase will require company performance measurements that are not only based on financial aspects, but also emphasize the balance of other aspects such as the Balanced Scorecard method. Currently, many SMEs such as SP Aluminium have never carried out performance measurements outside financial aspects, while non-financial aspects are also important for business development. The objective of this study is to measure SP Aluminium performance using Balanced Scorecard. The results showed that for the Financial Perspective, SP Aluminium had exceeded ROI and Profit Margin targets, but the Revenue Growth Indicator only reached the company target in 2013. For the Customer Perspe...

budi suprapto

The needs for SMEs to measure their performance is to improve their service to customers, employees, societies and stakeholders. The purpose of the study was to investigate the implementation of Balance Score Card as the performance measurement system in SMEs. In this study, 1000 mailed questionnaires were sent to health care services in Malaysia. Out of this, only 105 responded and data collected were analyzed. Using factor analysis with varimax rotation technique, the study found four factors with eigenvalue value more than 1.0. Those factors that explained total variance of 69.346 percent, indicated the four components of BSC implemented by SMEs in Malaysian Health Care Services. Those components are as follows: learning and growth, mission and vision, customer and internal business perspective.

Isnaini Rodiyah

This research aims to know key indicators of performance measurement in Small and Medium Industry (SMI). The method mostly used in this research is the qualitative method with balanced scorecard concept approach. The study has seven indicators; these are Ability, Resources, Environment, Strategy, Process, Measurement, and analysis, innovation and learning. The result of research is significant indicators that important for performance measurement of small-medium industry are resources variable with leadership experience indicators in managing firms with 3.7 critical ratio value and ability variable with human resources management and resources useful with 3.55 critical ratio. Based on the result, in the real that development of small and medium industry depend on leadership or owner. Based on these results that in reality for the SMI developed based on leadership or owners. This is because the owner is indirectly the leader of the SMI, and all policies and rules based on the leader....

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