Balanced Scorecard and its effects on firm performance of non-financial firms in Istanbul Stock Exchange (ISE)

In the recent years, research on performance has been increasing in number. Performance concept is developing as performance measurement frameworks, performance measurement systems and performance management systems in order to satisfy the needs of complex organizations. Balanced Scorecard, developed by Robert Kaplan and David Norton, performance management system is seen one of the most preferred management systems according to previous literature. Balanced Scorecard, being composed of four perspectives; financial, customer, internal, business process and, learning and growth is employed for increasing firm performance. The study investigates Balanced Scorecard?s effect on financial performance. Previous research is indicated to be lack of proving the statistical evidence that Balanced Scorecard improves performance. This is due to the use of case studies and implementation plans based on survey results in previous studies. This study uses objective numeric data to analyze effect of Balanced Scorecard on financial performance. The questionnaire used in the study which has been sent to 195 non-financial companies listed in Istanbul Stock Exchange (ISE) was responded by 35 firms as 20 companies using Balanced Scorecard and 15 companies not using Balanced Scorecard. Also adding 20 companies as a control group, it is found that Balanced Scorecard user companies perform better than non-user companies. They have higher return and sales growth and lower production costs. However, no statistical difference between Balanced Scorecard user companies and non-respondent companies is observed. As another result of the study, it is seen that Balanced Scorecard user companies improve their return on assets and return on equity measures. Keywords: Balanced Scorecard, firm performance, Istanbul Stock Exchange, performance management, performance measurement.