A balanced scorecard analysis of performance metrics. (English) Zbl 1146.91326

Summary: Many organizations have invested substantial resources in recent years to implement a balanced scorecard of performance metrics. From a historical focus exclusively on financial metrics of performance, the emphasis has shifted recently to a consideration of a portfolio of nonfinancial performance metrics related to customers, business process and technology. In this paper, we investigate the best practice frontier relationship between a financial performance metric (return on assets – ROA) and three nonfinancial performance metrics (number of access lines per employee, percentage of digital access lines and percentage of business access lines) reported and used in the US telecommunications industry. Analyzing detailed data from over fifty local exchange carriers for a period of five years (from 1993 to 1997), we find that managers must tradeoff contemporaneous ROA when increasing the percentage of business access lines. We also find that managers do not have to trade off ROA with the other two nonfinancial performance metrics because these metrics are contemporaneously congruent.


91B06 Decision theory
91B28 Finance etc. (MSC2000)
Full Text: DOI


[1] Amir, E.; Lev, B., Value-relevance of nonfinancial information: the wireless communications industry, Journal of accounting and economics, 22, 3-30, (1996)
[2] Banker, R.D., Selection of efficiency evaluation models, Contemporary accounting research, fall, 343-355, (1992)
[3] Banker, R.D., Maximum likelihood, consistency and data envelopment analysis: A statistical foundation, Management science, 1265-1273, (1993) · Zbl 0798.90009
[4] Banker, R.D., Hypothesis tests using data envelopment analysis, Journal of productivity analysis, 7, 139-159, (1996)
[5] Banker, R.D.; Charnes, A.; Cooper, W.W., Models for the estimation of technical and scale inefficiencies in data envelopment analysis, Management science, 30, 1078-1092, (1984) · Zbl 0552.90055
[6] Banker, R.D.; Chang, H.; Majumdar, S.K., A framework for analyzing changes in strategic performance, Strategic management journal, 17, 693-712, (1996)
[7] Banker, R.D.; Chang, H.; Majumdar, S.K., Economies of scope in the US telecommunications industry, Information economics and policy, 10, 253-272, (1998)
[8] Banker, R.D.; Potter, G.; Srinivasan, D., An empirical investigation of an incentive plan that includes nonfinancial performance measures, The accounting review, 75, 65-92, (2000)
[9] Charnes, A.; Cooper, W.W.; Rhodes, E., Measuring the efficiency of decision making units, European journal of operational research, 429-444, (1978) · Zbl 0416.90080
[10] Dodd, A.Z., The essential guide to telecommunications, (1998), Prentice Hall PTR Upper Saddle River, NJ
[11] Flamm, K., Technological advances and costs: computers versus communications, ()
[12] Grover, K., Vaswani, J., 2000. Partnerships in the US Telecommunications Industry. Communications of the ACM, February, 81-86
[13] Kaplan, R.S., Measuring manufacturing performance: A new challenge for managerial accounting research, The accounting review, 58, 686-705, (1983)
[14] Kaplan, R.S., Implementing the balanced scorecard at FMC corporation: an interview with larry D. brady, Harvard business review, 71, 143-147, (1993)
[15] Kaplan, R.S.; Norton, D.P., The balanced scorecard–measures that drive performance, Harvard business review, 70, 71-79, (1992)
[16] Kaplan, R.S.; Norton, D.P., The balanced scorecard: translating strategy into action, (1996), Harvard Business School Press Boston
[17] Porter, M.E., Capital disadvantage: america’s failing capital investment system, Harvard business review, 70, 65-82, (1992)
[18] Shephard, R.W., Theory of cost and production functions, (1970), Princeton University Press Princeton, NJ · Zbl 0052.15901
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.