Relation Between Company Performance And The Four Perspective Of Balanced Scorecard Accounting Essay

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Chapter 3

The data used in this project was gathered by sending the hard and soft copy of questionnaires to 100 respondents limited in Singapore. These respondents are working people from different type of organizations in Singapore. Questionnaires were produced only in English language and the data are covered only for year 2010.

3.2. Methodology

There are two research questions that would be considered to carry out the research method for this paper. These research questions will be tested later on using different statistical test which is appropriate to each research questions. The three research questions are:

Is there any relation between company performance and the four perspective of balanced scorecard?

Do all of the 4 perspectives of balanced scorecard give the same influence to the level of manager job satisfaction?

By using these research questions, several questions in the questionnaire had been made to gather answers from the respondents which then will be linked back to answer the research questions.

There are 10 questions in the questionnaire. Firstly, questions that being asked to the respondents are basic questions which asking about the respondents themselves, like category of occupation that they are belong to, position in the company and their highest level of education.

As for the following questions in the questionnaires, respondents will be asked about questions which are mostly related to the research questions.

3.2.1. Research Question 1

Is there any relation between company performance and the four perspective of balanced scorecard?

As concluded by Manoj Aanand, B S Sahay, and Subhashish Saha (2005), among the four perspective of balanced scorecard, financial perspective was the most important perspective followed by customer perspective, shareholder perspective, internal business perspective, and learning and growth perspective.

Based on the study by Manoj Aanand, B S Sahay, and Subhashish Saha in India in 2005, this paper will test whether the statement stated by them is valid in Singapore today.

These are the hypotheses according to the research question:

H0: There is no correlation between company performance and the four perspective of balanced scorecard

H1: There is a correlation between company performance and the four perspective of balanced scorecard

The statements above will be tested as hypotheses in order to get an answer to the research question 1. The question is trying to draw the fact that there is a correlation between the company performance and the four perspective of balanced scorecard. Moreover, I would like to find out whether the correlation is positive or maybe negative. From these four balanced scorecard I would also examine which perspective is affecting the company performance the most. This analysis will help the company to focus on the most significant perspective of balanced scorecard to get the full benefit of it.

Research Question 1 will be tested by using Pearson product-moment correlation coefficient (PMCC).

Pearson product-moment correlation coefficient (PMCC)

Later on, the test will be conducted on 2 questions in the questionnaire which are Q5 and Q6. Those questions in the questionnaire will be designed in such a way that used 5 points scale.

This test is used to describe the relationship between variables. The coefficient of the correlation may range from -1.00 to +1.00 where the exact amount of -1.00 or +1.00 indicates a perfect relationship. Positive result (from 0 to +1.00) tells us that there is a direct relationship between the variables, when one variable increases, the other will also increase. On the other hand, negative result (from 0 to -1.00) tells us that there is an indirect relationship between the variables, when one variable increases, the other will decrease. This correlation test conducted in this study will be generated using SPSS statistic program.

H0: ρ = 0 (There is no correlation between company performance and the four perspective of balanced scorecard)

H1: ρ ≠ 0 (There is a correlation between company performance and the four perspective of balanced scorecard)

Sample correlation coefficient, commonly denoted r, is calculated as following:

Where X and Y are the sample means.

T-test for correlation formula:

In conclusion, if the value of the test statistic (p-value) is lower than the significance level, the null hypothesis will be rejected, indicating that there is a significant relationship between company performance and the four perspective of balanced scorecard.

3.2.2. Research Question 2

Do all of the 4 perspectives of balanced scorecard give the same influence to the level of manager job satisfaction?

As argued by Laurie L. Burney and Nancy J. Swanson (2010) by implementing balanced scorecard in the company, managers that worked in the company will feel more satisfied towards their own job. Those managers will feel that they become better informed about the actions wanted by the firm.

Based on the study by Laurie L. Burney and Nancy J. Swanson, this paper will test whether each of the balanced scorecard perspectives give the same influence to the satisfaction level of managers.

These are the hypotheses according to the research question:

H0: All of the 4 perspective of balanced scorecard give the same influence to the level of manager job satisfaction.

H1: Not all of the 4 perspective of balanced scorecard give the same influence to the level of manager job satisfaction.

The statements above will be tested as hypotheses in order to get an answer to the research question 2. The question tries to draw a fact that the level of manager's job satisfaction is directly influenced by the 4 perspectives of balanced scorecard equally.

Job satisfaction is one critical issue to understand overall organization effectiveness. Basically, job satisfaction refers to how an individual worker feels about their particular job in the firm where they worked in. Through balanced scorecard system, it is expected that managers would understand more about the behaviours desired by the firm. Moreover, usually company would face problem such as not having enough information to perform their job which is negatively related to job satisfaction (Penney and Spector, 2005; Spector, 1997). As an outcome from this project, BSC may give positive effect to manager's work satisfaction through its 4 perspective.

Research Question 2 will be tested by using One -Way Anova (Parametric Test).

One -Way Anova (Parametric Test)

This test will be conducted on 4 questions in the questionnaire which are Q7, Q8, Q9 and Q10. The question will be design in such a way that respondents are asked to rate the influence of every balanced scorecard perspectives toward their job satisfaction level.

This test is used to test the equality of 3 or more means by using the variances.

H0: µ1= µ2= µ3= µ4 (All of the 4 perspective of balanced scorecard give the same influence to the level of manager job satisfaction)

H1: µ1≠ µ2≠ µ3≠ µ4 (Not all of the 4 perspective of balanced scorecard give the same influence to the level of manager job satisfaction)

The formulas for the various sums of squares are as follows:

SSE = SST - SSA

X = sample value ith item in the jth sample

n = total sample size

Xj = sample value of jth sample

nj = size of the jth sample

We will get the respective variances if we divide the sum of squares of SSA and SSE which are as follows:

F-test formula:

P-value:

Degrees of freedom = k-1

Degrees of freedom = n-k

These two values will be used to find the critical values for the F statistic and helps us to know whether the p-value is less than or more than the significance level.

Conclusion:

Null hypothesis will be rejected if significant value from the test is lower than 5 percent.

3.2.3. Limitation

There are some limitations exist in this paper. The sample size of this paper might be too small to reflect the actual perception of balanced scorecard practice in Singapore work life. Moreover, the data collected from this study are limited for year 2010 and all the answer from the respondents are deemed to be truth since they were the only source this paper could get.