Performance Management through a Balanced Scorecard - A SystemsDynamics Modelling Approach

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    Abstract

    The object of this paper is to show how - normally separate practices - can be linked together to support the performance management system in a balanced scorecard framework. The monitor and learn of the strategy evaluation and the feedback process is important for the company to be on track. Building mainly on [Kaplan, R. S. & Norton, D. P. (2008) 'Mastering the Management System, Harvard Business Review, January, 2008); Ferreira A. & Otley, D. (2005). The Design and Use of Management Control Systems: An Extended Framework for Analysis, Working Paper; and Sterman, J. D. (2000), Business Dynamics. System Thinking and Modelling for a Complex World] we provide evidence of companies to overlook the] we provide evidence of companies to overlook the possible benefits of combining and integrating several accounting practice into a single BSC-framework. We extend their thoughts by using a system dynamic modelling approach to the BSC. Bringing it all together will make 'an economics of scope effect' that could increase both the value of the company but also increase the validity of the decision process. We intend to show in a series of scenarios that both structural as well as direct action settings (initial value settings in the model) can have quit a significant impact on the solution paths. Where the long run impact is important in relation to the formulated strategy (ceteris paribus), the short run impacts convey the main message for actual performance management in that long run inescapably begins over and over with a piece of short-runs. The short runs are, of course, where reality is situated.
    Original languageEnglish
    Publication date2009
    Publication statusPublished - 2009
    EventEuropean Accounting Association 32nd Annual Congress - Tampere, Finland
    Duration: 12 May 200915 May 2009

    Conference

    ConferenceEuropean Accounting Association 32nd Annual Congress
    Country/TerritoryFinland
    CityTampere
    Period12/05/200915/05/2009

    Keywords

    • Performance Management
    • Balanced Scorecard
    • Direct Costing
    • Time-delays
    • Coure-and-effect
    • System Dynamics
    • Simulation

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