Rethinking balanced scorecard (BSC) measures: formative versus reflective measurement models

A formative measurement model and development of quality of work-life scale based on two-factor theory: evidence from Indian private industries

Purpose

This study examines the quality of work-life (QoWL) as a formative construct and validates the scale in an Indian context. Taking a cue from the two-factor (Herzberg) theory, the study developed and validated a formative assessment model of QoWL in the current scenario.

Design/methodology/approach

Cross-sectional data and a self-administered questionnaire were used to analyze the QoWL scale based on a sample of 841 respondents from IT/ITES, BFSI, CPG and manufacturing sectors. Indicators/items of QoWL were considered a first-order reflective construct, and factors of QoWL were considered second-order formative construct in the study. Embedded two-stage approach was used to assess the antecedent construct in the model in which QoWL was measured with seven formative indicators in stage one, and all the constructs of the QoWL are measured with a single item (Global_QWL, i.e. the essence of all constructs) in stage two.

Findings

The study found QoWL as a formative construct with seven significant dimensions; namely, hygiene factors included fairness in compensation (FC), job security (JS), interpersonal relationship (IR), health and wellbeing (HWB), where motivational factors had rewards and career growth (RG), work-life balance (WLB) and learning and development (LD). The study also indicated the strong association of a single item (global_QWL) with all constructs of QoWL. The study findings conceptualize a QoWL as a formative construct within the mentioned sector and can be generalized and extended to other sectors of the economy as well.

Research limitations/implications

Future researchers can take guidance to deal with the formative construct in the development and validation of scale in various topics in the field of HRM. Future researchers can extend the study across cities and different sectors.

Practical implications

In this VUCA world, employees have to be constantly on their toes to ensure their organization remains relevant. In this context, the least organization can do for their employees is to offer a conducive environment and favorable QoWL. This study aims to assist the key decision-makers in applying the QoWL index as a formative construct and aiding them in improving the quality of their decisions.

Social implications

Researcher believes that applying the QoWL index as a formative construct can aid decision-makers in improving the quality of their decisions by equipping them with relevant inputs and knowledge. Government can focus on the employees' welfare and introduce the current motivational and hygiene factors in the area of quality of life of the Indians.

Originality/value

Formative assessment measurement of QoWL model was validated with the two-factor theory to understand the work environment of India in the private sector across different sectors. The unique finding of the study was a single item (global_QWL) to conclude the QoWL index as a formative construct by redundancy analysis.

The Impact of Entrepreneurial Optimism and Labor Law on Business Performance of New Ventures

The purpose is to study the internal relationship between entrepreneurial optimism and business performance of new ventures, and the impact of entrepreneurial optimism on the business performance of new ventures. Based on the literature review, the hypotheses that entrepreneurial optimism has a positive impact on the business performance of new ventures and that labor law plays a mediating role in the impact are put forward. Then, the questionnaire is designed according to the maturity scale, and 200 questionnaires are collected. Finally, the descriptive statistical analysis, reliability analysis, exploratory factor analysis, confirmatory factor analysis, correlation analysis, and regression analysis of the theoretical model and hypothesis are carried out by using the statistical analysis software spsss22.0. The results show that each dimension of entrepreneurial optimism has a significant positive impact on the business performance of new ventures, and labor law plays a mediating role between them. This study provides a new idea for the establishment of the performance impact mechanism of new ventures and helps new entrepreneurs realize the importance of maintaining an optimistic attitude, improving the business performance of new ventures.

Monetary value of human capital disclosure for predicting future business earnings

Orientation: Human capital (HC) is a key dimension of intellectual capital (IC) that creates shareholder value when integrated with structural capital (SC) and relational capital (RC). The disclosure of HC reveals how the human resource (HR) practices support business growth.Research purpose: The primary focus of this study was to investigate the extent of how human capital disclosure (HCD) could predict organisational performance (expected future earnings) of the Johannesburg Stock Exchange (JSE)-listed companies.Motivation for the study: Human capital disclosure reduces information asymmetry, predicts future business performance and improves the investors’ buy-sell-hold decisions.Research approach/design and method: A causal, comparative design was applied quantitatively in a cross-sectional survey of 150 top- and low-performing JSE-listed companies sampled based on their market capitalisation. A self-constructed disclosure index with a seven-point scoring system was developed to examine the extent of disclosure across 81 items. Subsequently, multiple regression analysis was computed to test the relationship between the dependent and independent variables.Main findings: Human capital disclosure was associated with both the market capitalisation and book value. Overall, no mediation of human resource risk disclosure (HRRD) against organisational performance was found. Lastly, information disclosed on gender diversity yielded the interaction effect with both structural capital disclosure (SCD) and relational capital disclosure (RCD) but not with HCD.Practical/managerial implications: Human capital disclosure identifies key HR practices that drive organisational performance and create shareholder value. This information can potentially improve benchmarking and support investor decision-making.Contribution/value-add: The study provides a novel contribution to IC theory by demonstrating how HCD can be used to identify HR practices that leverage the monetary value of HC for business improvement.

Enhancing business performance through green human resource management practices: an empirical evidence from Malaysian manufacturing industry

Purpose

The purpose of this study is to assess the key determinants of green human resource management (GHRM) and investigate its impact on environmental performance (EP) and business performance (BP).

Design/methodology/approach

The research employed SmartPLS 3 and follows a cross-sectional research design. Data from 179 employees were collected using a convenience sampling technique from the firms that adopted GHRM practices.

Findings

The research found a significant relationship of GHRM with EP and also reported the significant relationship between EP and BP. Moreover, EP significantly mediates the relationship of GHRM with BP.

Research limitations/implications

A relatively small sample size of employees was used that may suggest the need for a diverse and more representative sample. The paper is based on data collected from the Malaysian manufacturing industry – other economic sectors and Asian countries may offer different results.

Practical implications

The paper identifies the need for incorporating GHRM practices and culture at the workplace to encourage positive green behavior in employees which will increase the EP and BP of the firm.

Originality/value

This paper reported the initial empirical findings after the March 7th incident on EP of businesses in Malaysia, where businesses have initiated the adoption of GHRM practices.

Quantitative target setting in balanced scorecard method using simultaneous equations system and goal programming

Purpose

The purpose of this paper is to identify the accurate cause and effect relationships among strategic objectives and also to demonstrate how decision makers can be guided in the process of defining quantitative strategic target values in the framework of balanced scorecard (BSC) and performance measurement system.

Design/methodology/approach

Based on the proposed method in this research, after determining strategic objectives and developing an initial strategy map according to decision makers’ opinions, simultaneous equations system (SES) was used to determine the significance of the relationships among strategic objectives in higher perspectives of the BSC and corresponding strategic objectives in lower perspectives. Afterward, desirable values for performance measures were determined based on the equations and relationships obtained through SES and were optimized by goal programming method.

Findings

By applying the proposed method, a clearer picture of the associations among strategic objectives is obtained and the influence of strategic objectives on one another is determined. Afterward, optimal values for strategic objectives are determined to achieve the organization’s goals.

Research limitations/implications

This paper proposes a framework for constructing a strategy map and setting quantitative targets in the framework of BSC. Indeed, this paper presents a case study to demonstrate the applicability and effectiveness of the proposed approach. However, SES technique requires a greater amount of data to generate more accurate results. Although the advent of the Information Age has forced organizations’ decision makers to provide sufficient information and data for business analysis, the data requirements are met.

Practical implications

The presented quantitative approach is a supporting approach for improving decision makers’ opinions and enabling them to reach a more accurate picture of the relationships, valuing strategic objectives and achieving strategic goals. This research also presents a case study to demonstrate the applicability of the proposed approach. The application and implication of the proposed method in banking services show that the contributions of the paper are not only theoretical, but also practical.

Originality/value

The proposed method provides a novel approach for determining the most appropriate targets and applies a comprehensive and scientific model together with decision makers’ opinions and experiences and has two main contributions: first, the associations among strategic objectives are investigated and obtained in an effective way by conducting the SES for the first time in the framework of BSC. Second, quantitative targets have been determined to help in achieving the long-term goals. This task has been accomplished through a combination of SES, the three-stage least squares regression analysis and optimization by using weighted goal programming method.

Measurement and management of competences by enterprise social networking

Purpose

Literature describes the transformation process of employees’ individual competences into firm-specific competences as a great challenge in the performance management and management field. Recently, to favor the transformation of competences, some companies have adopted enterprise social networking (ESN). However, not enough studies support the understanding of its role in performance management and measurement and scant attention is given to the inclusion of competences in a holistic performance measurement and management system (PMMS). To help close this gap, the purpose of this paper is to develop knowledge on the role of ESN in measurement and management of competences to favor the development of a holistic PMMS.

Design/methodology/approach

The research adopts a multiple case study methodology using a qualitative meta-analysis. It investigates 32 multinational companies by case studies available in the scientific literature.

Findings

The results highlight the use of ESN as a relevant support for the development of a holistic PMMS based on a high maturity in performance measurement and a democratic and participative approach in performance management. ESN provides real-time data collection, analysis and reports that encourage a democratic and participative performance management. It facilitates relationships, knowledge sharing and favors a high maturity performance measurement.

Originality/value

The paper provides implications for theory, practice and society. First, the paper rationalizes the impact of ESN usage on performance measurement and management. Second, it offers new knowledge supporting practitioners in the development of holistic PMMS. Third, it highlights that ESN favors people in self-expression of own capacity, sharing artwork and knowledge on specific topics.

Effects of strategic information systems on competitive strategy and performance

Purpose

This study argues that strategic information systems (SISs) are necessary for organizations’ survival and corporate performance in turbulent economic environments. Applying Miles and Snow’s strategy typology, the purpose of this paper is to explore how SIS supports business strategy and corporate performance.

Design/methodology/approach

This study uses quantitative survey data from 389 Brazilian companies during economic crises and analyzes them using structural equation modeling.

Findings

There is strong evidence that SIS promotes capacity and flexibility to create competitive strategies in response to environmental changes. SIS significantly and positively predicts firms’ use of prospector strategies, reducing the need to sacrifice efficiency for innovation. SIS can predict corporate performance more strongly than firms’ strategic orientations can.

Practical implications

The results provide organizations insights on how SIS enables strategic planning processes to create competitive strategy and improve performance during economic turbulence.

Originality/value

This research demonstrates SIS’s positive effects during economic turbulence on competitive strategy and performance, revealing that corporate performance is influenced more by SIS (strategic process) than strategic orientation (content). Hence, this study fills a research gap in the information systems strategy literature by contributing new insights about SIS.