2. Literature Review
2.2 Balance Scorecard Related Literature
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and delivery. The most successful companies at repeating value innovation were the ones that took advantage of all the three platforms. Thus, they could stretch the value innovation cycle over time.
2.2 Balance Scorecard Related Literature
Research on the Balanced Scorecard has been done for a long time, and rich data on the various aspects of BSC has been accumulated. The literature sources were selected according to two criteria:
a) Description of the general principles of BSC, that allow us to see the whole picture of BSC’s interconnections. The key research in this area was conducted in the book “The strategy focused organization. How Balanced Scorecard companies Thrive in the New Business Environment” (Kaplan and Norton 2001).
b) Balanced Scorecard in SMEs. “Why the Balanced Scorecard Fails in SMEs: A Case Study” is a very interesting study (Rompho 2011). It explains the main reason of BSC failure in small enterprises. The most reliable source is “Performance Measurement with the Balanced Scorecard” (Biazzo and Garengo 2012). The book covers the whole process of BSC development in a small enterprise.
1) Kaplan and Norton (2001). “The strategy focused organization. How Balanced Scorecard companies Thrive in the New Business Environment.” Harvard Business School Press.
[Research Themes]
The book proposes methods of strategy implementation. This goal is achieved by presenting a clear Strategy Map, equally accessible for the organizational staff from top to bottom, and thus allowing aligning of the goals, actions, and motivations of the employees. The proposed method of Balanced Scorecard helps control the mentioned above factors, by measuring the related indicators and identifying pitfalls in implementation. The key principle of the proposed method is that the financial indicators are lag indicators, and the performance results of an outfit can be influenced only from the perspectives of customer orientation, internal business processes, and learning and growth.
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The two main advantages of the Balanced Scorecard tool, applied for the implementation of Blue Ocean strategies, is that 1) it makes it possible to describe knowledge-based assets and the value-creating process that these assets make possible, and that 2) it can make the strategy everyone’s everyday job, which is translated into making innovative thinking everyone’s everyday job.
These objectives can be approached through the perspective of learning and growth of the Blue Ocean strategic thinking frameworks, and the Blue Ocean Strategy execution techniques, implemented with the help of the Balanced Scorecard “change through executive leadership”
concept.
2) Biazzo and Garengo (2012). “Performance Measurement with the Balanced Scorecard. A Practical Approach to Implementation within SMEs”. Springer.
[Research Themes]
The book is dedicated to the Balanced Scorecard adoption to small and medium enterprises.
Its theoretical concepts mainly address the concepts and tools, necessary for establishing a management dashboard on the basis of BSC, that is: 1) the design of a system of indicators, that is strategically aligned and balanced, 2) the new “circular” approach to the implementation of the BSC in SMEs, 3) the problem of performance measurement in SMEs.
[Implication of this Research]
The book has important implications for the current thesis, for the following reasons: 1) it introduces the new “circular” system of BSC implementation, specially designed for SMEs. The authors argue that the top-down approach, mentioned by Kaplan and Norton, may serve just as a general framework, and that the difference of SMEs need a new approach in the implementation of the BSC. This new approach manages the little interest that SMEs have in rationalizing their activities. In this way it reverses the top-down logic. 2) the book proposes the measurement systems adapted to SMEs. 3)Most importantly, the research is supplemented with the real successful case
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studies (SMEs) that implemented the BSC concept, and that can serve as an example for the fabric dying Taiwanese case study.
3) Nunes and Johnson (2002). Consumer Demand Through Meaningful Innovation. Accenture Institute for Strategic Change.
[Research Themes]
The research addresses the problem of companies’ behavior and consumers’ inclinations in during economic downturns. The research clarifies, whether it is right for companies to sacrifice initiatives towards developing innovative products in order to save short-term earnings. The answers are gained through the close investigation of the consumers’ opinions.
[Research Data]
3,500 consumers in North America and Europe (USA, UK, France, Germany, Spain).
[Research Results]
The research showed that the consumers are not buying because they think that only few companies have given them a compelling reason to do so. They said that they were disappointed by the level of innovation they perceived in products. The survey found that the consumers felt strongly that most products had no valuable innovations in the past two years (survey, 2002).
Consumers especially singled out clothing and apparel.
[Research Implications]
The research provides a fundamental understanding of consumers’ attitude towards innovative products: readiness to spend money on them during economic downturns, particular kinds of innovation most valued by the consumers. The survey suggests particular action plans for different areas of innovation supported by the statistical results.
4) Jin and Yang (2006). A Framework for applying Balanced Scorecard to Chinese SMEs.
Management School of Wuyi University, Guangdong.
[Research Themes]
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The paper seeks to identify the applicability of BSC to Chinese SMEs. To do that, the researchers showed the characteristics of Chinese SMEs, and came up with a special framework of BSC application to the SMEs that fits the conditions of the Chinese marketplace. Such additional perspective as the relationship financing and government support were added.
[Research Results]
A BSC framework was created, that emphasized strengthening of the Chinese SMEs weak points: strategy execution, capital problems, R&D innovations’ implementation, as well as speed and efficiency of service. The other problem tackled by the paper is the BSC flexibility and adaptability for each and every SME that is going to implement it.
5) Johanson, Skoog, Backlund and Almqvist (2006). Balancing Dilemmas of the balanced scorecard. School of Business, Malardalen University.
[Research Theme]
The paper debates different critical issues of using BSC as a management control tool. All of those issues deal with the problem of balancing different perspectives. The first issue is how to implement BSC correctly and mobilize employees. The second issue is the variability of BSC model, applied to organizations of different types, and sizes. The third issue is the time frames, in which BSC is implemented. The fourth issue is difference between implementation of BSC in public and private organizations.
[Research Data]
Authors used more than seventy research papers in the field of BSC for the current analysis.
[Research Results]
The researchers found that a too-close focus on measures selection instead of emphasizing understanding and learning of the strategy, might alienate employees. At the same time, using BSC without measures is also very hard to achieve. Second, most probably there can’t be a standardized BSC for all sizes and types of companies. Third, management control activities are connected to the strategic objectives, related to specific periods; without any timing of these activities, their effects
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might fade in the future. Fourth, when implementing in public organizations, political interests of different groups should be considered.
6) Rompho (2011). Why the Balanced Scorecard Fails in SMEs: A Case Study. Thammasat University.
[Research Theme]
The study investigates why and how BSC fails when implementing in SMEs.
[Research Data]
The questions above are answered on the basis of a single case study where BSC implementation failed. It is a Thai SME in the electrical appliance business. Data was collected from interviews and researcher observation.
[Research Results]
The study shows, that an important cause for failure of BSC implementation in SMEs is frequent strategy changes.
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3. Textile Finishing Industry Background
Textile finishing industry covers bleaching, dyeing, printing and finishing fabrics. Fabrics are finished to raise their performance characteristics. Majority of the companies do at least some commission work, which means dyeing and finishing fabrics, owned by other companies. Finished fabrics mainly satisfy the demand of three markets: apparel, home furnishings, and industrial.
Textile finishing industry has gone through hard times on the market, which associated with increased competition worldwide over the last twenty years.
EPA (Environmental Protection Agency) has determined that textile finishing industry is a source of severe pollution.
Since the last decade of the twentieth century, with the increase of labor costs and pollution control In the USA and Europe, the finishing industry moved both from western countries and Japan to the developing countries of the Asia-Pacific region.
In 2006-2012, China’s printing and dyeing cloth output maintained a compounded average growth rate (CAGR) of 4.7%, and reached 56.6 billion meters in 2012. China’s printing and dyeing cloth production is very concentrated with the top five producing regions (Zhejiang, Fujian, Jiangsu, Guangdong and Shandong) accounting for more than 90% of the national output.7
China’s printing and dyeing industry engages many enterprises, so the market competition is very intense. Since 2010, China has sped up the elimination of small and backward printing and dyeing manufacturers, gradually raising the industry concentration.
7 http://www.prnewswire.com/news-releases/china-printing-and-dyeing-auxiliary-industry-report-2012-2015-203758991.html. PR Newswire, 19.04.13
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