Adoption of the Balanced Scorecard: A Contingency Variables Analysis

We examine the association between contingency variables and the adoption of a Balanced Scorecard (BSC). The contingency variables we examine include business-level strategy, firm size, environmental uncertainty, and investment in intangible assets. Utilizing both survey and archival data, collected as part of a mixed-methodology design, we find that BSC adoption is significantly related to business strategy, firm size, and environmental uncertainty. Specifically, BSC adopters are (1) more likely to follow a Prospector or Analyzer business strategy, (2) are significantly larger, and (3) exhibit significantly higher environmental uncertainty than non-adopters. We also examined the financial performance of BSC adopters prior to the decision to adopt and following the implementation of the BSC. While we found no post-implementation performance effects, we did find tentative evidence that the financial performance of BSC adopters leading up to the adoption decision was weaker than comparison firms. Our empirical findings provide theoretical and managerial insights into the BSC adoption decision, and substantiate the need for additional BSC adoption and implementation research.