Journal of Accounting and Management Information Systems (JAMIS)

An investigation of the organizational learning valorization within the use of Balanced Scorecard

16/2006 ,   p83..105

Cătălin-Nicolae ALBU
Nadia ALBU

Keywords:   Balanced Scorecard, organizational learning, performance management, advances in management accounting, strategy


Today’s business environment of the firm is dynamic and compels organizations to strive for new management accounting techniques, especially in transition economies. During these last years, traditional management accounting techniques have been criticized and, consequently, a number of various new models have been introduced. Balanced Scorecard is one of the most successful accounting management concepts in recent years.  The purpose of this research is to examine organizational learning as a benefit of the Balanced Scorecard used as a control system within organizations. In this study, three major issues are addressed. Firstly, we analyze the Balanced Scorecard as a Performance Management System and we present the normative evolution of Balanced Scorecard and some of its various strengths and limitations. Secondly, we study organizational learning as a benefit of the use of Performance Management Systems. Finally, we investigate the way Balanced Scorecard valorizes organizational learning in each of the three degrees of valorization. We propose a framework put forward as a research tool for examining the use, the roles and trends in refining Balanced Scorecard.  
This paper is in its essence a literature review mainly for two reasons: (1) the lack of coherent knowledge on the matter in Romanian management accounting literature, and (2) the need for a solid theoretical framework to be used in future empirical research. As for the background research theory, this paper heavily relies on the organizational behavior theory. Consequently, we suggest a framework identifying three degrees of OL valorization in using the BSC:
BSC 1 – minimalist OL valorization– BSCs of this degree are performance measurement tools, centered on choosing financial and non-financial measures. These measures provide richer and more relevant information about the managed activities (internal analysis focus). The main function is management control.
BSC 2 – medium OL valorization – BSCs in this stage are mainly used to describe and implement strategy, though it can support strategy formulation should new strategies emerge. The role of these measures shifts from tracking performance of a process to monitoring the extent to which the planned activities to achieve the strategic goals have been undertaken and are working as expected and whether or not strategic choices made are the right ones. The main function of BSCs of this degree is strategic control.
BSC 3 – extended OL valorization – the shift in using BSCs from strategy measurement to strategy management is realized by managing intangibles resources (especially intellectual capital). Their main role is then to sustain individual and organizational learning, to understand how process performance affects OL and to drive change.  
This framework has not yet been used in case/field studies or surveys, which is a significant limitation (but an important future research opportunity) that needs to be addressed in future research, in order to inductively enrich and adjust it.