Balancing the Firm's Scores: A Performance and Control Study in Indonesian Financing Industry

Abstract:     
Given the nature of today’s business dynamics, and to keep the sufficient survival rate, businesses have to focus on various factors, such as; visionary top management, labor skills improvement, best product’s quality, efficient production process and advance systems. External forces portray another set of impediments by themselves. It is certainly a major task to maintain and balance these requirements.

Traditionally, firms have paid closer attention to financial performance indicators only. It was, then, believed that good financial performance was the key success factor toward potential growth. However, as time passes, combinations of measurements ought to be incorporated to evaluate all aspects of the firms. Financial indicators may guarantee shortterm profitability, but those same measurements may ignore the longer term. The movement toward intangible assets may have to be taken into account as the new drivers in cash flow generation. The intangible assets and the intellectual assets of the company, 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 may have to be included in the firms’ performance indicators (Anantadjaya, 2007; Kaplan and Norton, 2004).

Concentrating on the publicly listed financing firms in the Bursa Efek Indonesia (“BEI”), this paper attempts to use the Balanced Scorecards (“BSC”) in noting the performance of firms in such an industry sector (Anantadjaya, 2007; Kaplan and Norton, 2005). It is expected that the BSC is able to provide a clear picture on firms’ performance, including the communication channel, and control systems, not only from the financial perspective, but also from other relatively intangible perspectives (Anantadjaya, 2007; Kaplan and Norton, 2005).

Number of Pages in PDF File: 27

Keywords: balanced scorecard, performance, control, intangible assets, financial indicators, Indonesia, publicly listed firms, financing firms

JEL Classification: M10, L20, L80

Accepted Paper Series