Strategic Performance Management Using the Balanced Scorecard in Educational Institutions

1 Introduction

Educational institutions have been experiencing challenges such as increasing competition, resource constraints, accountability requirements, ethical concerns, globalization, and environmental uncertainties (Beard, 2009; Pires da Rosa, Saraiva, & Diz, 2001; Taylor & Baines, 2012; Yüksel & Coşkun, 2013). Recent COVID-19 crises increased these challenges for educational institutions and added more concerns like sustainability (Al-Bahi, Abd-Elwahed, & Soliman, 2021) and made it necessary to reorganize their strategic management approaches including performance measurement and management systems to satisfy all stakeholders, such as students, alumni, parents, faculty, employees, public authorities, and the community under any conditions. Since the primary mission of educational institutions is to serve the community by creating social value and supporting long-term social development, they need to give more importance to nonfinancial performance rather than financial. The balanced scorecard (BSC), as a comprehensive strategic performance management tool, helps educational institutions serve their missions and focus their strategies by providing a balanced performance system. Unlike traditional corporate performance measurement techniques, which mainly use financial indicators, the BSC complements financial measures with operational measures on customer satisfaction, innovation and learning, and internal process activities that are the main drivers of future financial performance (Kaplan & Norton, 1992, 1993, 1996). Therefore, since its initiation and introduction, many public and private educational institutions have implemented the BSC in the last three decades. The BSC has not only taken the attention of practitioners and administrators but also scholars worldwide have been interested in the topic and published papers on different aspects of the BSC implementation in the education sector.

In this study, we conducted a systematic literature review analysis on the BSC in educational institutions. First, we provided a comprehensive literature review for strategic performance management and BSC implementation in educational institutions, including universities, schools, and other educational services. Then, we analyzed the documents published in the sources indexed by Scopus. Even though some studies review the literature on the BSC, such as Hansen and Schaltegger (2016), Hoque (2014), and Kumar, Prince, and Baker (2021), this study contributes literature by conducting a systematic literature review analysis by focusing on the BSC in educational institutions.

2 Performance Management and the BSC in the Educational Institutions

The transformation of organizations and management practices as a response to the dramatic evolution of the business environment (Taylor & Baines, 2012) triggered the discussion on performance management systems in recent years (Storey, 2002), both in business and in academia. Defining performance measures explicitly enables the organization to establish a position, communicate direction through targeting when and what is to be achieved, stimulate action by identifying what should be done by whom, to facilitate learning by explaining why it is measured (Amaratunga & Baldry, 2000). Over the last three decades, traditional performance management and control systems have been criticized; some of the views debated include misleading conventional performance information control for rational decision-making, failures to consider requirements of today’s organization and strategy, encouragement of sub-optimization, and mainly short-term goals, and others (Amaratunga & Baldry, 2000). Measuring firm performance with financial indicators worked well in the industrial era, but nowadays, they are out of step with the skills and competencies companies seek to advance (Kaplan & Norton, 1992). Accordingly, several performance management and measurement approaches have been developed; some are still prominent and used in public organizations and business enterprises. Although in earlier years, the financial figures were the leading indicators of performance measurement, later, more comprehensive techniques that consider other dimensions of measurement were developed. Matching the companies’ threats and opportunities with their weaknesses and strengths and systematically identifying the relationship between these factors, basing strategies on them, was a rational approach to remaining effective (Weihrich, 1982). However, the absence of matching between internal factors and items within external factors creates strategies that do not make sense (Lee, Lo, Leung, & Ko, 2000). As a performance measurement approach that aligns financial, customer, internal growth, and organizational capacity perspectives within strategic goals, vision, and mission of organizations, the BSC enables managers to track and revise their goals and strategies (Camilleri, 2021). Palmer and Short (2008) used BSC in analyzing the relationship between the mission statements of business schools and performances and found that the performance of schools depends on the content of their mission contents.

A BSC complements traditional financial measures with operational measures on customer satisfaction, internal process, and innovation and improvement activities of companies that are also considered drivers of future financial performance (Kaplan & Norton, 1992). Since recently many firms increased their commitment to the environment and corporate social responsibility has become an integral part of corporate strategy, environmental measures were also included in the BSC (Wynder, Wellner, & Reinhard, 2013). So, the BSC allows managers to draw the full portrait of the companies’ current position from four perspectives. Kaplan and Norton (1992) stated that according to companies’ experiences, an adopted scorecard combines many different measurement elements into a single management performance report and meets several organizational needs simultaneously. Furthermore, an effective BSC retains a balance between diagnostic measures and strategic measures, where the former assists in monitoring whether the organization is in control, and the strategic measures help evaluate if the strategic goals are achieved (Chang & Chow, 1999).

Researchers all around the world have been interested in the application of BSC at educational institutions. Several case studies and research on BSC implementation in educational institutions in different countries have been published, including both developed and developing countries such as Lithuania (Ambras & Tamošiūnas, 2010), the Philippines (Anastacio, 2016), Taiwan (Chen, Wang, & Yang, 2009), Thailand (Rompho, 2020), Indonesia (Amin, 2021), Malawi (Chimtengo, Mkandawire, & Hanif, 2017), Oman (Alani, Khan, & Manuel, 2018), Lebanon (Al Jardali, Khaddage-Soboh, Abbas, & Al Mawed, 2021), Jordan (Al Frijat, 2018), Iran (Bakhtiari, Bakhtiari, Jamei, & Jamshidi, 2012), Saudi Arabia (Alolah, Stewart, Panuwatwanich, & Mohamed, 2014), Latin America (Peris-Ortiz, García-Hurtado, & Devece Carañana, 2019), Austria-Germany (Hladchenko, 2015), the United States (Beard, 2009; Brown, 2012), and the United Kingdom (Cullen, Joyce, Hassall, & Broadbent, 2003; Taylor & Baines, 2012).

The BSC is a mission-oriented and strategy-focused performance management tool. Each organization has different strategic objectives, depending on its mission and priorities (Coskun, Dinc, & Tetik, 2021). Therefore, the strategic performance objectives of an ivy university, a community college, a state university, or a liberal arts college are entirely different. Primary and secondary education, distance education, and vocational education have other missions, strategies, and objectives. The literature shows the BSC implementation in various educational services, such as universities, schools, vocational, primary, and distance education. Some studies presented or developed a BSC for a university (Alani et al., 2018; Al Jardali et al., 2021; Chimtengo et al., 2017), and some studies focused on a unit of the university, such as the Faculty/College of Business and Management (Cullen et al., 2003; Papenhausen & Einstein, 2006), Engineering (Al-Bahi et al., 2021), Social Sciences Faculty (Ambras & Tamošiūnas, 2010), Department of Nursing (Brown, 2012), Department of Anesthesiology (Rimar & Garstka, 1999), University Libraries (Taylor & Heath, 2012), and Accounting departments (Al Frijat, 2018). Hladchenko (2015) and Peris-Ortiz et al. (2019) compared the BSC implementation at universities operating in similar cultures. Comparing the studies on the BSC at higher educational institutions, there are fewer studies related to the implementation of the BSC in primary or secondary education: Anastacio (2016) studied BSC in Catholic schools, Amin (2021) discussed the BSC for Islamic Primary schools, Yüksel and Coşkun (2013) developed a BSC for schools, Gündüzalp and Arabacı (2017) developed a BSC for primary schools, and Rompho (2020) developed and tested BSC for public schools. Yaakub and Mohamed (2019) developed 22 items for all four dimensions of BSC and suggested the methodology as an alternative approach for university ranking systems.

The original BSC developed by Kaplan and Norton (1992) has four classical perspectives: Customer perspective (how do customers see us?), internal business perspective (what must we excel at?), innovation and learning perspective (how can we continue to improve and create value?), and financial perspective (how do we look to shareholders?). While some researchers such as Alani et al. (2018), Al Jardali et al. (2021), Amin (2021), Chen et al. (2009), and Cullen et al. (2003) used the traditional four perspectives of Kaplan and Norton (1992), some researchers adopted the BSC perspectives to educational institutions. For example, Al-Bahi et al. (2021) added a sustainability dimension to the educational BSC and included sustainable development goals. Some researchers limited the customer perspective and used students (Al Frijat, 2018), clients (Ambras & Tamošiūnas, 2010), or students and community (Brown, 2012) perspectives instead. Camilleri (2021) kept three perspectives but replaced the organizational capacity perspective with the learning and growth perspective. Ambras and Tamošiūnas (2010) also limited the learning and growth perspective and called it the personnel perspective. McDevitt, Giapponi, and Solomon (2008) suggested that the following perspectives are suitable for an academic unit: growth and development, scholarship and research, teaching and learning, service and outreach, and financial resources. Since Alolah et al. (2014) only focused on school safety performance, they used six unique perspectives: safety management and leadership, safety learning and training, safety policy, procedures and processes, workforce safety culture, and safety performance perspectives. Anastacio (2016) developed the BSC for Catholic Schools with five perspectives: spirituality, internal processes, learner and external community, learning organization, and fiscal resources. The spirituality perspective was placed in the middle of the scorecard and linked to all other perspectives. Rompho (2020) proposed four perspectives for public schools: student, internal process, learning and growth, and resources perspectives.

3 Methodology

We applied a systematic literature review approach which consists of several steps that follow an iterative nature. As a first step, we identified keywords such as “balanced scorecard,” “scorecard,” “strategy map,” “education,” “school,” “university,” “college,” “academic,” and others. Subsequently, the selected keywords were used to construct a search string which was applied to the title, abstract, and keywords of the documents in the Scopus database. For the purpose of this study, we limited the studies that undertook the BSC in education institutions. We found documents published by authors from various disciplines, including business, education, economics, computer science, social sciences, medicine, and engineering, in several sources which are in different subject areas.

As for data extraction, all found documents were listed in a data extraction form, including author information, publication year, source title details, abstracts, etc. Since the implementation of BSC in education institutions is a relatively new field, we did not apply the time bound to data extraction. In addition, we did not focus on investigating the quality of individual papers but instead relied on the quality screening approach used by the Scopus database.

We analyzed the documents based on the publication trends during the years, authors’ affiliations by countries, sources that the documents have been published, most frequently used keywords in the documents, and the highest cited documents in Scopus. We also implemented bibliometric mapping analysis using VOSviewer software to construct and visualize the bibliometric networks, including journals, authors, countries, keywords, and sources (Van Eck & Waltman, 2010; VOSviewer, 2022). Because we only found strong network relationships in the keywords of the documents, we visualized them.

4 Results of the Analysis

We found 267 documents published in the sources indexed in Scopus, including 188 articles, 61 conference papers, and 18 review papers and other documents, as of July 1, 2022. Totally 256 of the 267 documents were published in English. The documents by year are given in Figure 1. The number of documents was moderate between 1998 and 2005, then increased between 2005 and 2012. After that, the number of documents fluctuated and decreased in the last 3 years after reaching a peak in 2019 with 21 documents in a year. The results show that there has been a continuing interest in the authors to publish on the topic for 25 years.

Figure 1

Number of documents in Scopus by year.

The authors with affiliations from the United States, Indonesia, and the United Kingdom have published the highest number of documents related to the BSC in educational institutions (Table 1). The authors with affiliations from Iran, Malaysia, Taiwan, and China followed them. The results show an interest in authors from developing and developed countries to publish on the topic.

The sources of the documents and their subject areas show considerable diversity, including 218 sources, 119 in the social sciences, 100 in Business, Management, and Accounting, 65 in computer sciences, and 54 in the engineering subject areas. International Journal of Educational Management, Journal of Education for Business, and Measuring Business Excellence are the sources that have published the highest number of documents. In Table 2, the title of the sources, the total number of citations in those sources, and the average number of citations per document are summarized. The results show that researchers, not only in business and education but also in engineering and medicine, are interested in this topic. The editors and reviewers of the sources in all fields found the topic interesting to their readers.

We grouped the most frequently used keywords in the documents and summarized them in Table 3. Most documents used the BSC, academic scorecard, or scorecard as keywords. After that, the most used keywords are “performance” related terms, such as performance measurement, performance management, performance evaluation, and performance appraisal. “University,” “higher education,” and “higher education institutions” are also very frequently used keywords. Since the BSC’s focus is the organization’s strategy, “strategy” related keywords such as strategic planning, strategic management, strategy map, and strategic development are very frequently given as a keyword in the documents.

We also implemented a bibliometric mapping analysis for keywords, affiliations, authors, countries, and sources. We only found strong relationships in the keywords of the documents and visualized them in Figure 2. Due to the high interdisciplinarity of BSC and educational services, the documents were published across various disciplines, including accounting, management, computer science, and engineering. Only a few authors have published multiple publications on this topic, and the sources published in the documents are highly diversified. Therefore, there is no strong network relation between journals, authors, countries, and sources.

Figure 2

Keyword network analysis.

We visualized the co-occurrence of the author keywords by limiting the minimum number of occurrences of a keyword to five times. Repeated keywords with different variants were merged. Out of 627 keywords, 33 keywords with the most significant link strength, which met the threshold, were selected. For each of the keywords, the total strength of the co-occurrence links with other keywords was calculated, and the network visualization map was prepared. Based on the links, 33 keywords fell into six cluster groups shown in different colors on the map.

Among the 267 documents related to the BSC in educational institutions, the most cited documents by the other sources in Scopus are listed in Table 4. Studies by Cullen et al. (2003), Lawrence and Sharma (2002), and Wu et al. (2011) are the most cited documents. Most of the highest cited studies are on implementing the BSC at universities.

5 Conclusion

The study was undertaken with the expectation that a wide range of reviews would reveal more specific results in different cases of BSC adoption. The review of literature on the BSC implies that, from the viewpoint of users, it can provide both prospective and retrospective performance evaluation opportunities for managers, unlike traditional financial indicators. The BSC lets universities clarify their missions and translate them into traceable measures. Accordingly, identifying and utilizing that performance measures consistent with the institution’s core objective creates educational value in education.

Even though the BSC has been implemented in developed countries, the method rarely has been used in other developing or least developed countries. This study found that supervisors must support the approach since correct implementation promises successful results that can create educational quality and competitive advantage.

In addition to perspectives in existing literature, universities may include corporate governance and social responsibility perspectives so that their involvement in social activities and regulatory compliance are seen. Moreover, educational institutions should consist of international student measures from their customer perspective since the globalization and increasing competitiveness are the main drivers of scorecard implementation. As observed from the review of the given literature, the target constituent of universities in society ought to consider donors as investors rather than a customer. Because the mission of universities is to enhance the welfare of society, then considering fund supporters as customers may be a confusing and ambiguous objective. Furthermore, universities should strengthen the support academic quality of their staff and consider it as one primary measure since the “publish” or “perish” (Lawrence & Sharma, 2002) principle is getting fierce.

6 Further Research Directions

Since the BSC is a relatively new approach and there are differences between the performance management of business enterprises and education institutions, further empirical, conceptual, and case studies that focus on the implementation of BSC in the education sector are needed. To better understand, the implementation of the BSC in education institutions requires going beyond and addressing questions related to designing BSCs that link the individuals and the different units of an organization, comparisons between countries, or similar institutions in the same country. As emphasized by Hoque (2014) too, the literature mainly focuses on the organizational effectiveness of BSC implementation, but little is known about the use of BSC measures to consider incentives for individual employees.

Regarding the research approaches, there is a lack of studies that develop quantitative models for evaluating BSC implementation outcomes and result performance. Also, we observed a focus on generic BSC architects implemented by education institutions; future conceptual research is recommended to develop additional perspectives or items under existing perspectives that are specific to the management of educational institutions.

Currently, there is a growing interest in sustainability and social responsibility. Therefore, it is important that future research examines existing frameworks on sustainability performance management and develops social responsibility measures, including environmental, social, governance, transparency, and other factors.