Interrelationships among four Perspectives of BSC

Kaplan and Norton (1996) contend that employee moral would be positively affected on customer satisfaction and employee’s suggestion. Employee’s suggestion, however, would be negatively related to rework of internal business process. And customer satisfaction would be negatively related to account receivable which in turn positively related to return on capital employed. The rework of internal business process will be positively related to operating expense, which in turn would be negatively related to capital employee.

Fletcher and Smith (2004) suggest that learning and growth perspective is the leading indicator of internal business process, which is in turn the leading indicator of customer satisfaction. And degree of improvement of internal business process and level of customer satisfaction will in turn affect financial perspective. They develop a complemented system of matrices linking economic value added system to the BSC. These scholars suggest that BSC should be used as a vehicle for identifying value driver and drilling down interoperation of the firm. The BSC takes a balanced look at the firm because it focuses on leading and lagging indicators of performance measurement, financial management, and quantitative and qualitative measures of performance.

To achieve a synergetic effect, firms should emphasize on the cause and effect relationship among the BSC measures. Olve, Roy and Wetter (2000) argue that improved value in Human Resource and development capital should be the leading indicators of improvement in customer capital and also profitability. These authors develop a cause and effect relationship among the BSC measures. Their cause and effect model indicate that the measures of Human Resource development would influence on internal business process of the firm. The internal business process will influence on customer perspective and, eventually financial perspective. In addition, these authors also suggest that the measurement indicators of each perspective are also interrelated.

However, scholars seem do not reach a consistent agreement on the interrelationship among the four perspective of the BSC. This study would like to go further by integrating the opinions of previous studies to evaluate more specifically about the interrelationship among four perspectives of the BSC. These interrelationships are as follows: (1) the learning & growth perspective of the balanced scorecard impacts on the internal business process perspective of the balanced scorecard; (2) the internal business process perspective of the balanced scorecard has the influence on the customer perspective of the balanced scorecard; (3) the learning & growth, internal business process, and customer perspective of the balanced scorecard will significantly impact on the financial perspective of the balanced scorecard.