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Time Evolution Analysis and Forecast of Key Performance Indicators in a Balanced Scorecard

ABSTRACT This paper offers a generic and rational construction of Balanced Scorecard. The construction involves implementing a time-managed approach to identify the evolution of the main contributors to the current company’s strategy as well as their behavior in the future organizational performance. After the optimal structure of the model is generated employing financial and non-financial strategic indicators collected from the organization, the study puts forward a realistic analysis of the evolution in time of the performance metrics. This analysis is based on the Partial Least Square equations behind the Balanced Scorecard proposed methodology, statistically comparable to the Structural Equation Modeling. Using historical data in the final model, an accurate prediction of the performance indicators can be achieved in the Balanced Scorecard tool as the approach establishes a stable cause-and-effect sequence. Under certain statistical assumptions, this allows forecasting the effects of future strategic decisions. Although the paper proposes a generic methodology, applicable to any organization, both public or private, commercial or non-profit, this technique is applied, reinforced and validated with a practical example from a public-owned Swiss electricity company.

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    ABSTRACT: Balanced Scorecard from the process perspective (3): -The analysis of 'how to' improve the effectiveness of the BSC. -Sanjay Kumar, Research Scholar, Delhi University. Abstract: Two earlier articles (ssrn no 2368919 and ssrn no 2463978) have explored the benefits of applying the process perspective to explore the underlying mechanisms that cause the consequences of adopting the BSC to vary across organizations and the understanding derived from a survey of users of BSC in India. The second article had, however, only addressed the issues of 'how' and 'why' of the effectiveness of BSC. The research objective was to also explore the 'how to' aspects of improving the effectiveness of BSC. This article elaborates on these aspects by exploring in greater details the different relationships between the different constructs (the Latent Variables) and the measures (the Manifest Variables). These relationships are explored through the application of Multiple Regression Analysis and Structural Equation Modeling on the data set. For reasons explained in the article, the SEM approach applied is the PLS-SEM and not the CBSEM. The outcomes tend to establish the conclusion that the perceived benefits of adopting the BSC do not seem to emanate from the processes involved but from Implementation (MRA outcome) and Antecedent factors, particularly Management Style and Ownership (SEM outcome). Each construct is analyzed further to bring out the specific 'how to' factors which could help to improve the effectiveness of the BSC.
    08/2014;
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    [Show abstract] [Hide abstract]
    ABSTRACT: Balanced Scorecard from the process perspective (3): -The analysis of 'how to' improve the effectiveness of the BSC. -Sanjay Kumar, Research Scholar, Delhi University. Abstract: Two earlier articles (ssrn no 2368919 and ssrn no 2463978) have explored the benefits of applying the process perspective to explore the underlying mechanisms that cause the consequences of adopting the BSC to vary across organizations and the understanding derived from a survey of users of BSC in India. The second article had, however, only addressed the issues of 'how' and 'why' of the effectiveness of BSC. The research objective was to also explore the 'how to' aspects of improving the effectiveness of BSC. This article elaborates on these aspects by exploring in greater details the different relationships between the different constructs (the Latent Variables) and the measures (the Manifest Variables). These relationships are explored through the application of Multiple Regression Analysis and Structural Equation Modeling on the data set. For reasons explained in the article, the SEM approach applied is the PLS-SEM and not the CBSEM. The outcomes tend to establish the conclusion that the perceived benefits of adopting the BSC do not seem to emanate from the processes involved but from Implementation (MRA outcome) and Antecedent factors, particularly Management Style and Ownership (SEM outcome). Each construct is analyzed further to bring out the specific 'how to' factors which could help to improve the effectiveness of the BSC.
    08/2014;