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Balanced scorecard and sustainability state of the art review

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Companies have historically preferred financial indicators to design and monitor their strategies. However such indicators tend to have a retrospective character, giving little insight to managers on where they should take corrective action. The Balanced Scorecard (BSC) approach was developed in the early 1990s to address this problem by providing a framework to establish causal relationships between sets of qualitative indicators and the financial bottom line. More recently, BSC has been proposed to augment the management of environmental and social issues by firms, and provide a way of integrating these practices into its' core strategy. The objective of this paper is not yet to propose a new methodology. This paper is original because it explores the extent to which hypothetical adaptations of the Balanced Scorecard would be "fit" to achieve both integration and pressure to improve environmental and social performance in firms. No technical discussion can in our view take place without a careful evaluation of strengths and weaknesses inherent to the Balanced Scorecard. This evaluation has been carried out through an exploration of the literature and of the practice. The literature has provided very little insight in the problems that the use of a BSC might provoke. On the other hand interviews with practitioners provided with interesting insights on the motives, expectations and achievements of the BSC use. Furthermore some problems both on theoretical and practical level on the integration of environmental and social issues in a BSC framework have been found and discussed. Such approach to the topic allowed us to propose some critical issues for discussion and to point out possible directions for the design of empirical research.

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2002/2002-65.pdf

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Copyright INSEAD. All rights reserved