Product diversification: The need for innovation and the role of the balanced scorecard
Faculty of Business and Law
School of Accounting, Finance and Economics
This paper tests the benefit of contemporary approaches to performance measurement systems represented by the Balanced Scorecard (BSC) to diversified organisations. Product diversification relationships, embracing both innovation and performance, were examined in a structural equation model, where the BSC is treated as an endogenous variable. We find product diversification to be significantly associated with the use of the BSC. The BSC is shown in turn to significantly associate with organisational innovation, the use of management initiatives of total quality management (TQM) and just in time (JIT) and performance.