Balanced Scorecard Adoption Rationale and Organizational Performance of State Corporations in Kenya

Abstract

State corporations in Kenya have in the recent past experienced reduced funding from the government and are getting pressure from stakeholders and general public to deliver higher quality services at the lowest cost possible. This has resulted in them exploring new performance management tools. Balanced scorecard is one of the management tools that has been embraced by several state corporations in Kenya. Balanced scorecard is an integrated performance management and measurement tool that was developed to overcome the inadequacies of the traditional financial-based performance measurement tools. Balanced scorecard adoption is affected by diverse rationales which cover rational, emotional and socially conditioned responses. The purpose of this study was to examine the relationship between rationale for balanced scorecard adoption and organizational performance of state corporations in Kenya. This study specifically looked at the relationship between rational choice rationale, institutional rationale, management fashion rationale and the moderating effect of organizational culture on organizational performance of state corporations in Kenya. The research design employed in this study is descriptive design. A systematic explanatory cross- sectional survey design was used using two stages, stage one involved administering a survey questionnaire while stage two secondary data collection, using a secondary data collection tool. For stage one, semi-structured questionnaires were administered to three senior managers in human resource, finance, operations or their equivalent in the 32 organizations making a sample size of 96. In stage two, secondary data collection schedule was used to collect performance data in 20 organizations to corroborate performance data from stage one since performance cannot be perceptual. SPSS Version 22 software was used to analyse quantitative data.The relationship between individual independent variables and dependent variable was analysed using t- test. Hypothesis was tested using ANOVA F-test, and a multiple regression analysis for the combined effect of rationale for BSC adoption on organizational performance. Regression analysis was conducted on secondary data to corroborate the findings in stage one. The findings indicated that the overall model was statistically significant. Further, the findings indicated that rational choice, institutional and management fashions rationales of BSC adoption are good predictors of organizational performance of state corporations in Kenya. The effect of the moderator variable on the relationship between rational choice, institutional and management fashions rationales and organizational performance was tested in three hierarchal stages, first is simple regression, then moderated regression and finally multiple regression. The findings from stage one and stage two showed that the moderation was significant for all the variables, however the only interaction term that became significant was the one for rational choice rationale and culture. This implies that culture is a significant moderator of the relationship between rational choice rationale and organizational performance. Regression of actual data in stage two also confirmed that culture is a significant moderator of the relationship between rational choice for BSC adoption and organizational performance. The overall coefficient of determination 0.561.However culture is not a significant moderator of the relationship between institutional rationale for BSC adoption and organizational performance neither is it a significant moderator of the relationship between management fashion rationale for BSC adoption and organizational performance of state corporations in Kenya.