INFLUENCE OF BALANCED SCORECARD IMPLEMENTATION ON ORGANIZATIONAL PERFORMANCE: THE CASE OF ETHIO TELECOM

Abstract

The BSC’s greatest strength for most business organizations comes from its innate ability to integrate financial and non-financial measures together by measuring both strategic and business performance across four interrelated perspectives. The purpose of this study; therefore, is to examine the influence of BSC implementation on organizational performance of Ethio Telecom. The study employed a five-point Likert-type structured questionnaire which was administered on a sample of 132 employees and interview with five higher-level managements. The researcher used SPSS and Stata for ease of data presentation and analysis. The type of research employed was a mixed research design and the basic research approach employed is explanatory research with regression analysis to examine the relationship between the two variables (BSC implementation and organizational performance). Findings indicated that there were significant and positive correlations between the independent (Predictors) and dependent variable. Despite the acceptable correlation between them, the results of linear regression analysis showed that only two indicators “Internal Business Process” and “Learning &Growth perspectives “considered as good predictors and therefore, significantly influence the performance of Ethio Telecom. The goodness of regression(R-squared) result of 0.756 indicates that 75.6% of the variation on the organizational performance can be accounted for “Internal Business Process and Learning & Growth Perspectives”. This implies the remaining 24.4% of the variation is explained by other factors that are not within the control of the study. The study concludes that the organization seeks new ways to increase customer satisfaction & Accessibility, increase financial strength, improve resource utilization, and clear financial initiatives that will enable it to meet its financial obligations and objectives. In the perception of the researcher, recommendations are made to reap the full-fledged benefits of BSC as a performance measurement system and for possible actions which will help further improvement.