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Balance Scorecard

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The Balanced Scorecard: Historical Development and Context, As Developed by Robert Kaplan & David Norton
Karl R. Knapp
Anderson University – Anderson IN

ABSTRACT
This paper discusses the general theory of the Balanced Scorecard and traces its historical origins. The Balanced Scorecard is based on three main areas: Measurement, Human Relations, and Customer Value Disciplines. The basis in measurement draws on Management by Objectives. The human relations school of management and open-book management theories are influential. The customer value discipline links the scorecard to the strategy of the firm.

The Balanced Scorecard
The Balanced Scorecard is a theory and management approach first proposed in the Harvard Business Review by Robert S. Kaplan & David P. Norton (1995). A subsequent book, The Balanced Scorecard, was published following this article (1996). The most recent refinement of this theory and management approach appears in Kaplan & Norton’s book, The Strategy-Focused Organization (2001). This paper attempts to present a high-level overview of this management theory, along with a description of its historical foundation and development.
As defined by Kaplan and Norton (1996), “The Balanced Scorecard translates an organization’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system”. This strategic management system measures organizational performance in four ‘balanced’ perspectives:
Financial – summarizes “the readily measurable economic consequences of actions already taken”.
Customer – contains measures that “identify the customer and market segments in which the business unit will compete and the measures of the business unit’s performance in these targeted segments”.
Internal Business Process – measures the “critical internal processes

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