Interrelationships Between Non-Financial Perspectives of Balanced Scorecard: Evidence from Sri Lankan Public Listed Companies

Abstract

The objective of this study is to examine the interrelationship among the non-financial perspectives of the Balanced Scorecard. Out of 285 PLCs listed, 102 PLCs in the Colombo Stock Exchange; Sri Lanka have responded in this study and data collected with a standard questionnaire. Respondents were from the managerial capacity of the companies. The questionnaire captures all aspects that construct each non-financial perspective of the Balanced Scorecard using 5-point Likert scale. Two factors under each non-financial perspective, totaling to six factors were found through a factor analysis and the factors were used in finding the interrelationship between non-financial perspectives. Results reveal that the learning and growth perspective has a relationship with the internal business process perspective where both internal oriented learning and external oriented learning are highly correlated with collaborative process efficiency. The relationship between internal business process perspective and customer perspective is evidenced by the strong correlation that customer satisfaction has with both product delivery process efficiency and collaborative process efficiency. Learning and growth perspective reveals a relationship with the customer perspective having internal oriented learning strongly correlated with customer satisfaction. This study contributes to the body of knowledge by confirming the underlying assumption in the Balanced Scorecard and notifying firms that have or haven’t adopted the Balanced Scorecard approach with a general conclusion to focus on the non-financial perspectives by understanding the interrelationship between them.