An empirical investigation on the links within a sustainability balanced scorecard (SBSC) framework and their impact on financial performance

Abstract

Purpose

This study aims to investigate the feasibility of integrating the social, environmental and innovation processes within the four-perspective sustainability balanced scorecard (SBSC) model by determining the extent of linkages between and within the four SBSC perspectives.

Design/methodology/approach

A survey collected responses from senior management and middle management of large Australian companies.

Findings

The findings support several positive significant associations. Direct associations are found between value-creating processes within the internal process perspective. These results support the feasibility of integrating environmental, social and innovation-orientated value-creating process into the internal process of the four-perspective SBSC model. The results also provide evidence about the extent to which direct or indirect associations exist between the four SBSC perspectives: first, direct association of human capital (learning and growth perspective) with value-creating processes (internal processes perspective); second, direct association of value-creating (internal processes perspective) with customer value (customer perspective); and third, direct and indirect associations of value-creating (internal processes perspective) with financial performance (FP; financial perspective).

Research limitations/implications

Several limitations are acknowledged related to cross-sectional data, senior and middle managers’ perceptions and assumptions underpinning structural equation modelling.

Practical implications

The implications for practice from this study concern how organisational management should relate to their stakeholders while providing value in their FP.

Social implications

These associations reflect the influence of stakeholders’ recognised needs on process and product innovation. These needs highlight the benefits of focusing on future-orientated environmental budgets and ongoing employee training that lead to customer value and FP.

Originality/value

This is an initial in-depth study of a four-perspective SBSC model that provides an effective means of integrating social, environmental and innovation processes within the traditional four SBSC perspectives.

Citation

Sands, J.S., Rae, K.N. and Gadenne, D. (2016), "An empirical investigation on the links within a sustainability balanced scorecard (SBSC) framework and their impact on financial performance", Accounting Research Journal, Vol. 29 No. 2, pp. 154-178. https://doi.org/10.1108/ARJ-04-2015-0065