Editing Balanced scorecard (section)

== Criticism ==
Academic criticism of the balanced scorecard can be broken into three distinct (but overlapping) areas of concern.

# '''Lack of rigour:''' The first kind of criticism focuses on the empirical nature of the framework and the lack of any formal validation of the ideas it is based on in the early articles that introduced the concept. Kaplan and Norton notoriously failed to include any citations of earlier articles in their initial papers on the topic,<ref name=Kaplan_Norton_1992/><ref name=Kaplan_Norton_1993 /> an absence noted, for example, by Norreklit.<ref name=Norreklit_2000>{{cite journal|last=Norreklit|first=Hanne|title=The balance on the balanced scorecard – a critical analysis of some of its assumptions|journal=Management Accounting Research|year=2000|volume=11|issue=1|pages=65–88|doi=10.1006/mare.1999.0121}}</ref> Others identified technical flaws in the methods and design of the original balanced scorecard<ref name=Malina_2001 /><ref name=Schneiderman_1999 /><ref name=Lingle_1996>{{cite journal|last=Lingle|first=J. H.|author2=Schiemann W. A. |title=From balanced scorecard to strategic gauges: Is measurement worth it?|journal=Management Review|year=1996|volume=85|issue=3|page=56}}</ref> or concerning the lack of validation for the approach – for example Flamholtz observed that no validation was provided for the choice of the "four perspectives" of the 1st Generation design:<ref name=Flamholtz_2003>{{cite journal|last=Flamholtz|first=Erik|title=Putting Balance and Validity into the Balanced Scorecard|journal=Journal of Human Resource Costing and Accounting|year=2003|volume=7|issue=3|pages=15–26|doi=10.1108/eb029081}}</ref> 
# '''Lack of an overall score:''' The second kind of criticism is that the balanced scorecard does not provide an overall score or a unified view of performance with clear recommendations: it is simply a list of metrics that managers have to interpret before deciding upon appropriate interventions (e.g. Jensen 2001<ref name=Jensen_2001>{{cite journal|last=Jensen|first=M. C.|title=Value maximisation, stakeholder theory, and the corporate objective function|journal=European Financial Management|year=2001|volume=7|issue=3|pages=297–318|doi=10.1111/1468-036x.00158|citeseerx=10.1.1.214.9827}}</ref>). These critics usually include in their criticism suggestions about how an 'unanswered' question they identify in their commentary could be answered, but typically the unanswered question relate to things outside the scope of balanced scorecard itself (such as developing strategies) (e.g. Brignall<ref name=Brignall_2002 />)
# '''Not reflective of all stakeholder needs:''' The third kind of criticism is that the model fails to fully reflect the needs of stakeholders – putting bias on '''financial stakeholders''' over others. Early forms of Balanced Scorecard proposed by Kaplan & Norton<ref name=Kaplan_Norton_1992/><ref name=Kaplan_Norton_1993 /> were orientated towards the needs of commercial organizations in the USA – where a focus on investment return was appropriate. This focus was maintained through subsequent revisions.<ref name=Adams_2007>{{cite book|last=Adams|first=C.|title=Performance measurement frameworks: a review|year=2007|publisher=Cambridge University Press|location=Cambridge, UK.|author2=Neely A. |author3=Kennerley M. }}</ref> Even now over 20 years after they were first proposed, the four most common perspectives in Balanced Scorecard designs mirror the four proposed in the original Kaplan & Norton paper.<ref name=2GC_Survey /> There have been many studies that suggest other perspectives might better reflect the priorities of organizations – particularly but not exclusively relating to the needs of organizations in the public and non-governmental sectors.<ref name=Andersen_Lawrie_2002>{{cite journal|last1=Andersen|first1=Henrik V.|last2=Lawrie|first2=Gavin|title=Examining Opportunities for Improving Public Sector Governance Through Better Strategic Management|journal=Proceedings, Third International Conference on Performance Measurement and Management (PMA 2002)|date=2002|url=https://www.researchgate.net/publication/237340660|access-date=11 July 2017}}</ref> For instance, the balanced scorecard does not address important aspects of nonprofit strategy such as social dimensions, human resource elements, political issues and the distinctive nature of competition and collaboration in nonprofit settings.<ref name=Kong_2010>{{cite journal|last1=Kong|first1=E.|title=Analysing BSC and IC's usefulness in non-profit organisations.|journal=Journal of Intellectual Capital|date=2010|volume=11|issue=3|pages=284–303|doi=10.1108/14691931011064554}}</ref><ref name=Moulin_PSS /> More modern design approaches such as [[third generation balanced scorecard|3rd Generation Balanced Scorecard]], the Public Sector Scorecard<ref name=Moulin_PSS /> and the UN's [[Results Based Management]] methods explicitly consider the interests of wider stakeholder groups and perhaps address this issue in its entirety.<ref name=Lawrie_Kalff_Andersen_2005 />

In response to these concerns there have been many studies seeking to provide (retrospective) academic underpinnings for the Balanced Scorecard concept,<ref name=Lawrie_Cobbold_2004 /><ref name=Epstein_Manzoni_1997 /><ref name=Schneiderman_1999 /> and to provide case study and validation information for the various design generations.<ref name=Elefalke_2001 /><ref name=Radnor_2003 /><ref name=Lawrie_et_al_2016 />

There are relatively few reliable assessments of the effectiveness of the approaches embodied in the balanced scorecard, but some studies demonstrate a link between the use of balanced scorecards and better decision making or improved financial performance of companies.<ref name=Ittner_2003>{{cite journal|last1=Ittner|first1=C. D.|last2=Larcker|first2=D. F.|last3=Randall|first3=T.|title=Performance implications of strategic performance measurement in financial services firms|journal=Accounting, Organizations and Society|date=2003|volume=28|issue=7|pages=715–741|doi=10.1016/S0361-3682(03)00033-3|url=https://repository.upenn.edu/cgi/viewcontent.cgi?article=1089&context=accounting_papers}}</ref> Broadcast surveys of usage have difficulties in this respect, due to the wide variations in definition of 'what a balanced scorecard is' (making it hard to work out in a survey if you are comparing like with like).<ref name=2GC_Survey /> Single organization case studies suffer from the 'lack of a control' issue common to any study of organizational change – what the organization would have achieved if the change had not been made isn't known, so it is difficult to attribute changes observed over time to a single intervention (such as introducing a balanced scorecard). However, such studies as have been done have typically found Balanced Scorecard to be useful.<ref name=Epstein_Manzoni_1997 /><ref name=Malina_2001 />

Consideration has been given to the effect of organization size on balanced scorecard effectiveness:
* For large organizations this work has focused on how to translate aggregate corporate strategies into performance management tools relevant to individual teams / units within the organization.<ref name=Lawrie_et_al_2016>{{cite journal|last1=Lawrie|first1=Gavin V.|last2=Abdullah|first2=N. A.|last3=Bragg|first3=Christopher|last4=Varlet|first4=Guillaume|title=Multi-level strategic alignment within a complex organisation|journal=Journal of Modelling in Management|date=2016|volume=11|issue=4|pages=889–910|doi=10.1108/JM2-11-2014-0085|url=https://zenodo.org/record/895434/files/article.pdf|access-date=11 July 2017}}</ref>
* In [[small and medium-sized enterprises]] (SMEs), the balanced scorecard has been found to be effective, but that focus is required on balancing design complexity and relevance with the availability of resource to do the design work.<ref name=Lawrie_Andersen_2006>{{cite journal|last2=Andersen|first2=Henrik V.|last1=Lawrie|first1=Gavin|title=Balanced Scorecard implementation in SMEs: reflection in literature and practice|journal=Proceedings of the Fourth SMESME Conference|date=2006|url=https://www.researchgate.net/publication/252637217|access-date=11 July 2017}}</ref> Others have argued that the balanced scorecard is unsuitable for SMEs for a variety of reasons, including the belief that SMEs lack a long-term strategic focus (Hvolby and Thorstenson (2000), McAdam (2000)) and that SMEs have limited knowledge about performance measurement in general (Rantanen and Holtari 2000) and therefore do not recognise the benefits that might accrue from use of the tool (McAdam 2000; Bourne 2001), but it is also important to note that none of these studies attempts to theorise the reasons behind their negative findings.