Balanced Scorecard in SMEs: Effects on Innovation and Financial Performance

38 Pages Posted: 3 Oct 2017

See all articles by Ricardo Malagueño

Ricardo Malagueño

University of East Anglia (UEA)

Ernesto Lopez-Valeiras

University of Vigo

Jacobo Gomez-Conde

Universidad Autonoma de Madrid

Date Written: June 1, 2017

Abstract

Empirical research on the consequences of the use of the balanced scorecard (BSC) has mostly been conducted in large firms. Previous findings are not easily applied to the small business literature, and assumptions about the benefits of BSC for small- and medium-sized enterprises (SMEs) are not based on quantitative empirical evidence. We investigated the effects of SME’s use of BSC in terms of financial performance and innovation outcomes. Our arguments are based on the efficiency gains and potential flexibility losses associated with formalizing managerial practices in SMEs. We propose that the developmental stage of the firm may influence this trade-off. Based on a survey of 201 SMEs in Spain, we found that firms using BSC for feedforward control obtained better financial performance and presented higher levels of exploitative innovation. We also found that the positive effect of BSC on perceived and attained financial performance is stronger in more established SMEs.

Keywords: Balanced Scorecard, Financial Performance, Innovation, Small Business, Efficiency, Flexibility

JEL Classification: L25, M10, O31, M40, L21

Suggested Citation

Malagueño, Ricardo and Lopez-Valeiras, Ernesto and Gomez-Conde, Jacobo, Balanced Scorecard in SMEs: Effects on Innovation and Financial Performance (June 1, 2017). Small Business Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3046188

Ricardo Malagueño (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

HOME PAGE: http://https://www.uea.ac.uk/norwich-business-school/people/profile/r-malagueno

Ernesto Lopez-Valeiras

University of Vigo ( email )

Business and Tourism Faculty
Ourense, Ourense E-32004
Spain

Jacobo Gomez-Conde

Universidad Autonoma de Madrid ( email )

Campus de Cantoblanco
Madrid, 28049
Spain

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