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A “system dynamics‐based Balanced Scorecard” to support strategic decision making Insights from a case study

A “system dynamics‐based Balanced Scorecard” to support strategic decision making Insights from a... Purpose – This paper aims to focus on the development of a “dynamic Balanced Scorecard” and to demonstrate that matching the traditional Balanced Scorecard (BSC) architecture with system dynamics principles offers better support for strategic management decisions. Design/methodology/approach – The paper is based on a case study related to a service‐based business. The maps, the mathematical model and the BSC developed according to system dynamics modelling principles are discussed. Findings – A system dynamics‐based BSC, particularly if embedded into a management flight simulator, would allow exploration and understanding of features of complexity and dynamics, consideration of feedback loops rather than unidirectional causality, the use of mapping tools for a more comprehensive design of the strategy maps, the facilitation of a process of organisational learning; and support for policy design and strategic analysis performed by managers. Originality/value – The value of this paper is two‐fold: first, it shows that by using system dynamics modelling principles it is possible to overcome positively some limitations of the original BSC framework; second, the paper provides information and suggestions that are helpful for companies that are interested in developing strategic management systems based on both BSC architecture and on system dynamics principles and simulation tools (e.g. the management flight simulator). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Productivity and Performance Management Emerald Publishing

A “system dynamics‐based Balanced Scorecard” to support strategic decision making Insights from a case study

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1741-0401
DOI
10.1108/17410401111140383
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to focus on the development of a “dynamic Balanced Scorecard” and to demonstrate that matching the traditional Balanced Scorecard (BSC) architecture with system dynamics principles offers better support for strategic management decisions. Design/methodology/approach – The paper is based on a case study related to a service‐based business. The maps, the mathematical model and the BSC developed according to system dynamics modelling principles are discussed. Findings – A system dynamics‐based BSC, particularly if embedded into a management flight simulator, would allow exploration and understanding of features of complexity and dynamics, consideration of feedback loops rather than unidirectional causality, the use of mapping tools for a more comprehensive design of the strategy maps, the facilitation of a process of organisational learning; and support for policy design and strategic analysis performed by managers. Originality/value – The value of this paper is two‐fold: first, it shows that by using system dynamics modelling principles it is possible to overcome positively some limitations of the original BSC framework; second, the paper provides information and suggestions that are helpful for companies that are interested in developing strategic management systems based on both BSC architecture and on system dynamics principles and simulation tools (e.g. the management flight simulator).

Journal

International Journal of Productivity and Performance Management – Emerald Publishing

Published: Jun 21, 2011

Keywords: Balanced Scorecard; System dynamics; Feedback loop; Strategic management; Performance management (quality); Decision making

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