Performance Parameters Interrelations from a Balanced Scorecard Perspective : An Analysis of Greek Companies

The proponents of Balanced Scorecard (BSc) claim that lead factors interrelate and their improvement ultimately leads to increased financial performance. In this paper, we use the underlying hypotheses of BSc in order to assess whether improvements that relate to learning and growth, internal processes and customers actually contribute to alterations of reported financial performance. In our research we used a structured questionnaire and gathered data from 90 leading Greek companies in relation to the progress they have experienced during a three-year period regarding various activities that can be broadly classified as aspects of the three qualitative perspectives of BSc (i.e. the Learning and Growth Perspective, the Internal Business and Production Process Perspective and the Customer Perspective). We also used published financial data in order to calculate several financial ratios for all sample firms for the same time period. Our empirical data verified the underlying theoretical hypothesis of BSc that lead BSc perspectives are positively correlated with each other at a statistically significant level in a sequential way. However, within a given perspective not all measures exhibit homogeneous behaviour in terms of statistical significance. We also found supportive evidence that the companies that have improved their ROE and ROA during the analysis period have increased their efforts towards aspects that characterize the learning and growth perspective more than the companies whose ROE and ROA values decreased. The innovative dimension of our research work relies mainly on the fact that we used the BSc framework as a general structured model in order to assess the relationships between non-financial parameters and financial performance. Thus, our conclusions are not restricted only to companies that actually apply BSc