Does BSC Represent an Organizational Development? Evidence from Indonesian Manufacturing Firms

RIBER: Review of Integrative Business & Economics Research, Vol. 3, Issue 1, March 2014, p. 150-171, ISSN # 2304-1013

22 Pages Posted: 17 Feb 2014 Last revised: 13 Dec 2019

See all articles by Irma M. Nawangwulan

Irma M. Nawangwulan

International University Liaison Indonesia (IULI) - Hotel & Tourism Management

Samuel P. D. Anantadjaya

International University Liaison Indonesia (IULI)

B. Agus Finardi

Bafardi Group

Date Written: March 2014

Abstract

The competition and dynamics of the macro-economy have certainly pushed companies to pay attention into their survival rates. Businesses have to maintain focus on multiple issues instantaneously, from shaping visionary management, skills improvement, quality excellence, and better efficiency rate, for instance, to externalities beyond firms’ control (Indra & Anantadjaya, 2011). It is, undoubtedly, aside from the sign toward better governance (Bank Negara Malaysia, 2013; Clarke & dela Rama, 2008), a major task to simultaneously maintain and balance these requirements.

Historically, focusing only on financial performance was considered sufficient. At that time, it was understood that superb financial performance was the key success factor toward survivability. As time passes, combinations of measurements may have to be incorporated to provide a much clearer picture of the firms’ performance (Kaplan & Norton, 2008). Though financial performance may guarantee some level of viability, however, those measurements may actually ignore the longer-term implications on the movement toward intangible assets (Colombo & Grilli, 2005; Sampurno, 2006) as the new drivers in cash flow generation (Carroll & Hunter, 2005; Colombo & Grilli, 2005; Stancic, Todorovic, & Cupic, 2012; Starovic, Cooper, & Davis, 2004). The new "guidelines" on intangible assets and the intellectual assets of companies (Capasso, 2004), which may include high quality of services, effective internal business processes, customer satisfaction, customer loyalty, employees’ skills, employees’ motivational level and employees’ talents and experiences (Council Positive People Kerala, 2010), may have to be included in the firms’ performance indicators (Kaplan & Norton, 2005).

Using the perspective of Balanced Scorecards ("BSC"), with a consideration also on the "extended" version of BSC, which includes the environmental issues toward sustainability, and focusing on publicly-listed manufacturing firms in Bursa Efek Indonesia ("BEI"), this study attempts to note the performance of firms in such an industry sector. It is expected that the BSC (Kaplan, 2010) is able to provide an overview on firms’ performance, not only from the financial perspective, but also from other relatively intangible perspectives. Also, it is expected that such combinations represent better governance, which depends on proper corporate culture (Nooteboom, 2002), and eventually becomes the evidence on organizational development.

Keywords: Balanced Scorecard, performance, intangible assets, financial indicators, non-financial indicators, organizational development, manufacturing firms, governance

JEL Classification: A10, E44, G30, L20, L60, M10, M20, O10, O30, O31, M00

Suggested Citation

Nawangwulan, Irma M. and Anantadjaya, Samuel P. D. and Finardi, B. Agus, Does BSC Represent an Organizational Development? Evidence from Indonesian Manufacturing Firms (March 2014). RIBER: Review of Integrative Business & Economics Research, Vol. 3, Issue 1, March 2014, p. 150-171, ISSN # 2304-1013, Available at SSRN: https://ssrn.com/abstract=2396913

Irma M. Nawangwulan

International University Liaison Indonesia (IULI) - Hotel & Tourism Management ( email )

Indonesia, 15330
Indonesia

Samuel P. D. Anantadjaya (Contact Author)

International University Liaison Indonesia (IULI) ( email )

Eco Campus, The Breeze
BSD City
Serpong, Tangerang, Banten 15345
Indonesia
+62-21-5058-8000 (Phone)

HOME PAGE: http://www.iuli.ac.id

B. Agus Finardi

Bafardi Group ( email )

Jakarta
Indonesia

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