Page 75 - CITN 2017 Journal

indicate the financial strengths, weaknesses, opportunities and threats are Return on
Investment (ROI), Residual Income (RI), Earning per Share (EPS), Dividend Yield, Price
Earnings Ratio, Growth in Sales, Market Capitalization etc. But it is found that some users
of financial statements are interested on non-financial performances of the corporate
bodies beside financial performances. In such cases some non-traditional measurement
tools are to be used like Economic Value Added, Balanced Scorecard etc. that inhibits
successful organizational performance (Cameron1984).

Balanced Scorecard: A type of Performance Measurement
Although the Balanced Scorecard has become very popular, there is no single version of
the model that has been universally accepted. The diversity and unique requirements of
different enterprises suggest that no one-size-fits-all approach will ever do the job.
Gamble, Strickland and Thompson (2007) list ten financial objectives and nine strategic
objectives involved with a balanced scorecard. The Balanced Scorecard "translates an
organization's mission and strategy into a comprehensive set of performance measures that
provide the framework for a strategic measurement and management system"(Kaplan
2001). However, McCurry (2012) assert that performance measurement is most suitable
for the private sector to "overcome deficiencies in the financial accounting model".

The Realities of Balanced Scorecard
Before the emergency of the concept of balanced scorecard, financial measures of
corporate performance (Return on investment and Earnings per share) were based on the
firm's past activities (results) and thus have small predictive value to the management and
control of the firm (Kaplan& Norton1996). Thus the need to have an effective performance
measurement with predictive reality of an organization becomes imperative. The
traditional financial measures cannot be ruled out but due to complex management
challenges of current economic realities posed by competitiveness in the manufacturing
sector as every industry/firm wants to be the market leader. Kaplan and Norton (1996)
argued that, most of the financial measures are rigid targets to be achieved, which
discourages alternative action opportunities, no matter how promising they are.

In this changed business paradigms, the Balanced Scorecard throws an insight into an
organization's performance by integrating financial measures with other key performance
indicators around customer perspectives, internal business processes and organizational
growth, learning and innovation, and enables organizations to track short-term financial
and operating results while monitoring progress for future growth, development and
success.

Greening and Turban (2000), Jensen (2002) and Cheng et al (2014) in their different
studies argued that sustainability strategies unnecessarily raise a firm's costs, thus creating
a competitive disadvantage vis-à-vis competitors. Arguing from an agency theory
perspective (Jensen 2002) have suggested that employing valuable firm resources for
positive social performance strategies benefit the manager through reputation building but
not the shareholders. On the other hand, Hillman and Keim (2001) have argued that the
need for control and improvement by managers can lead to obtaining better resources,
higher quality employees, better marketing of products and services; better access to
finance and lower cost.

Besides financial measures, operational performance measures (non-financial measures)
measures performance such as employee's job satisfaction and managerial performance
etc., are defined in a broader conceptualization of organizational performance (Kaplan,
1993; Hofer & Sandberg, 1987). More recently, performance management literature

68