sustainability

Article
The Assessment of Internal Indicators on The Balanced
Scorecard Measures of Sustainability
Funda Gazi 1, * , Tarık Atan 2 and Mahmut Kılıç 1

1 Business Management, Cyprus International University, Via Mersin 10, Northern Cyprus,
Nicosia 99258, Turkey; [email protected]
2 Faculty of Economics & Administrative Sciences, Cyprus International University, Via Mersin 10,
Northern Cyprus, Nicosia 99258, Turkey; [email protected]
* Correspondence: [email protected]

Abstract: Background: Performance evaluation has become an essential tool for managers in the
banking sector, which is undergoing frequent and rapid changes. It allows banks to maintain a
high level of returns and reach their targets while staying competitive. In this context, sustainable
performance management has emerged as essential for the banking sector. Indeed, the sustainable
management of performance, while increasing the efficiency and effectiveness of organizations, also
ensures sustainable measurement based on balanced scorecard practices. Purpose: This study aims
to examine the assessment of internal indicators on the balanced scorecard of sustainability in the
banking system in North Cyprus, which is one of the sustainable performance evaluation methods.
Moreover, it aims to evaluate and reveal the effects of innovation performance, organizational culture,
intrapreneurship, and the efficiency and effectiveness of the accounting information system on
overall business performance in terms of the performance scorecard to achieve sustainable balanced
scorecard systems. Design/Methodology/Approach: This study (BSC), which focuses on the banking
industry in North Cyprus, was motivated by the recent and limited usage of a balanced scorecard. The
questionnaire was used to gather data from 350 employees and managers of 21 banks in North Cyprus.
Citation: Gazi, F.; Atan, T.; Kılıç, M.
Analyses of the collected data were conducted using structural equation modeling (SEM, AMOS
The Assessment of Internal Indicators
25). Findings: The findings of the research established that organizational culture, intrapreneurship,
on The Balanced Scorecard Measures
and accounting information system effectiveness have positive effects on a balanced scorecard and
of Sustainability. Sustainability 2022,
14, 8595. https://doi.org/10.3390/
its sub-dimensions. Innovation performance does not affect the balanced scorecard and its sub-
su14148595 dimensions. Originality/Value: In identifying the advantages and contributions in BSC introduction
and implementation, the study contributes to the current state of knowledge, enabling organizations
Academic Editor: Antonio Messeni
which intend to use this tool to adopt it and develop it. This study takes organizations’ culture,
Petruzzelli
innovation and intrapreneurship performance, and development on accounting and information
Received: 14 June 2022 systems into consideration in relation to the implementation process of BSC.
Accepted: 11 July 2022
Published: 14 July 2022 Keywords: performance management; balanced scorecard; organizational culture; innovation perfor-
Publisher’s Note: MDPI stays neutral
mance; intrapreneurship; accounting information systems
with regard to jurisdictional claims in
published maps and institutional affil-
iations.
1. Introduction
Today’s businesses operating in a globally competitive environment need to evaluate
their performance accurately to survive and gain a competitive sustainable advantage
Copyright: © 2022 by the authors.
over their competitors. Accordingly, businesses need to determine a set of performance
Licensee MDPI, Basel, Switzerland.
indicators that can reveal their real situation and analyze them correctly [1].
This article is an open access article
Creditors, investors, and other stakeholders give great importance to the performance
distributed under the terms and
evaluation of banks since it defines banks’ capabilities and limits to compete in the sector
conditions of the Creative Commons
and has significance for the development of the sector. Knowledge-based economies today
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
create value mostly through intangible assets. Intangible assets are extremely difficult to
4.0/).
evaluate. Intangible assets such as employee capabilities, IT systems, and organizational

Sustainability 2022, 14, 8595. https://doi.org/10.3390/su14148595 https://www.mdpi.com/journal/sustainability

Sustainability 2022, 14, 8595 2 of 19

culture are more valuable to companies than tangible assets. Intangible assets are more dif-
ficult for competitors to imitate, thus helping to achieve sustainable competitive advantage.
Managers seek ways to value their intangible assets to manage their position effectively,
and easily [2]. As a result, organization performance evaluation and management have
been affected. An analysis of organizational performance compares the expected with
the actual results, such as a company’s performance against its goals and objectives. The
purpose of measuring organizational performance is so that the organization can improve,
just as it does after measuring any other type of performance.
As a result, organizations choose to adopt multidimensional and strategy-compatible
evaluation approaches [3]. An organization’s strategic goals are translated into performance
objectives by using a balanced scorecard. The balanced scorecard aims to evaluate a
company’s performance from a customer perspective, a financial perspective, an internal
process perspective, and a learning–growth perspective [4].
Until the end of the 1980s, organizations had used performance evaluation methods
based on accounting data and using only financial criteria. The significant issue that
occurred in this situation was that the intellectual assets that generate value and the
competitive advantage could not be quantified in terms of financial measures. Therefore,
these methods could not offer the chance to be aware of issues or opportunities relating to
customers, quality, and staff in advance [5]. Therefore, it is necessary to measure intangible
assets using non-financial criteria [6].
As technology and economic developments have developed over the last three decades,
the share of intangible assets in the structure of business assets has increased, and per-
formance evaluation has become highly dependent on the measurement of these assets.
Currently, these methods are no longer sufficient, and multidimensional evaluation meth-
ods are used based on cause-and-effect relationships appropriate to the business strategy.
Thus, organizations have been able to measure and evaluate their actual performance
thanks to performance evaluation methods suitable for their asset structures and diver-
sity [7].
Some of the multidimensional performance evaluation methods used since the 1990s
have been Performance Prism, Performance Pyramid, Performance Measurement Matrix,
Skandia Guide, Integrated Performance Evaluation System, and Performance Report (Bal-
anced Scorecard). The performance report entered the literature with an article written by
Kaplan and Norton in 1992; in business performance, it has been used as a performance
evaluation method that includes a customer dimension, an internal processes dimension,
and learning development dimensions besides the financial dimension [4]. Later on, it was
observed that the performance scorecard could not only be used as a performance evalua-
tion method, but also as a strategic management model. There are studies on its effects on
business performance as a result of its use as a performance measurement method and as
a strategic management model in parallel with the phases of the performance scorecard.
However, the number of studies addressing the impact of various factors on business
performance in terms of dimensions of the performance scorecard is limited [3].
Therefore, the current study aimed to create an awareness of the companies that use
non-financial criteria in addition to financial criteria in the evaluation of general business
performance using balanced scorecard systems and to contribute to creating sustainable
balanced scorecard systems.
The recent and restricted use of a balanced scorecard inspired this research (BSC) in
the banking sector in North Cyprus. The banks use different techniques to measure their
corporate performance and the performance of their employees in realizing their goals cre-
ated in line with the vision and goals of the institution. These different techniques present
difficulties in the comparative analysis of the performance realization performance of the
same bank over time, and also employees find it difficult to comprehend. This research
attempts to fill the identified scientific and applied gaps in the literature. There is a gap in
the research on the relationship between organizational culture, intrapreneurship, and the
effectiveness of accounting systems and BSC in banks in North Cyprus. This paper exam-
Sustainability 2022, 14, 8595 3 of 19

ines the effect of innovation performance, organizational culture, intrapreneurship, and

the effectiveness of accounting systems as conditional variables on the balanced scorecard
to solve the problems mentioned above and assist banks to improve the implementation
of BSC.

2. Theoretical Background and Literature Review

2.1. Performance and Performance Evaluation Concepts
Almost every type of management uses the term performance. Most studies identify
performance as or as equivalent to efficiency and effectiveness [8,9]. Performance is a
topic that has attracted much discussion, but the term has not been well clarified, even
when the core point of the article or book is performance evaluation or the management of
performance [10,11].

2.1.1. Performance
According to Otley (1999), the act of staging or presenting a play, concert, or another
type of entertainment is a performance [12]. In addition, it is possible to describe an
action as the act or process of performing an action, task, or function. Performance is thus
considered an uncertain concept without a simple definition.
According to Euske, Lebas, and McNair (1993), terms such as performance manage-
ment, and according to Bruns (1992) terms such as performance measurement, evaluation,
or appraisal are used in the management control area [13]. Additionally, performance is an
expression that can be measured with numbers or, by establishing relationships between
transactions, may be considered the ability to obtain a certain result which is extraordinary
relative to that which was expected [13,14].
Didier (2002) argues that performance is achieved by means “of achieving the goals
that were given to you in the union of the initiating directions”. Moreover, Didier stated
that performance is not a simple finding of an outcome, but is the result of a comparison
between the outcome and the objective [15].
Furthermore, according to Meyer (1998), performance is the success of the action of
people or machines on a particular subject, and it might be the start of a new managerial
discipline. Economically, performance is the value of expected revenues reduced to their
present value [16].
In addition, Austin and Jody (2002) define performance as the effectiveness of a system
that produces desired results [17].
Moreover, Baird (1986) argues that performance is a guided action [10]. On the other
hand, the noun performance is an event. Generally, however, the word “performance”
refers either to action or results, and in several cases it refers to both cases. Many researchers
have discussed the point that “performance” has three meanings: action, the result of the
action (through comparison with a benchmark), and success, e.g., [10,18–20].
Performance means action. Performance is an ongoing process but not an outcome.
Performance is a process, not a goal, and its content becomes nearly secondary to its
dynamics. The outcomes of an action are referred to as performance that is evaluated by
an ex-post review of the findings. The performance aims for success. Performance is a
measure of how successful different sorts of accounting information consumers are [19].
As discussed by Verboncu and Zalman (2005), performance is a measure of the com-
petitiveness, efficiency, and effectiveness of the organization and its components obtained
from management, economics, marketing, etc. Competitiveness can be thought of as the
inverse of performance [21].
Therefore, responsible accounting systems should measure performance. The reason is
that individuals, organizations, and systems can improve accordingly and keep improving
in the long term to achieve sustainable performance development [22].
Sustainability 2022, 14, 8595 4 of 19

2.1.2. Performance Evaluation

Performance evaluation and performance measurement are different tools. Perfor-
mance measurement has traditionally been used to track progress, assess performance, and
identify areas that require improvement [23]. Performance measurement enables managers
to attain performance indicators; on the other hand, performance evaluation involves a
broader understanding because it reveals the features of the outcomes it has received and
the cause-and-effect relationships in more detail. Therefore, in this study, it was preferred
to use the concept of “performance evaluation” instead of the “performance measurement”
concept [24].
Performance evaluation is a series of actions used to assess employees’ contributions
to the organization and the final scores or outcomes that an employee obtains at the end of
a predetermined period [24].
The most basic reason for conducting performance reviews is to increase perfor-
mance [25]. As a result of performance evaluation, performance can be improved in two
ways: through transformational feedback (which focuses on developing the ability to
perform) and through managerial decisions that link assessed performance to organiza-
tional rewards and punishments such as pay, promotion, and discharge (aimed primarily
at increasing motivation). In reality, however, psychological research on performance
evaluation has underlined the first direction to performance development (i.e., feedback)
significantly more than the ultimate rewards [26].
There are two dimensions to the concept of performance evaluation. The first dimen-
sion is organizational performance evaluation, where organizational goals and objectives
are specified, together with the resources allocated to them, and where the results of real-
ization are monitored and reported through a valuation set by top management. The other
one is that individual performance evaluation is remotely different and is generally in the
interest of human resources management [27].

2.1.3. Organizational Performance Evaluation

Organizational performance evaluation is a process that analyses and evaluates an
organization’s products, services, and/or results together according to pre-determined
goals and objectives for a certain period. In another respect, organizational performance
evaluation is defined as “the use of quantitative indicators to evaluate organizational
activities, efforts, and successes” [28] (p. 24).
Organizations have unique goals and objectives. As a result, any organization in any
sector requires an appropriate evaluation system to control and be aware of its organiza-
tional activities. The meaning of organizational performance evaluation concepts varies
depending on the business function. There are two perspectives for measuring strategic
control and organizational performance. On the one hand, it illustrates the actions that are
utilized to achieve the strategy within the organization and implemented from the top to the
bottom. On the other hand, it provides the necessary information for the validity of strategy
and content changes. Organizational performance evaluation systems, like budgeting and
planning management, are evaluated equally in management accounting [29].
Institutions, organizations, and executive agencies are responsible for accountability to
stakeholders with every mission, goal, or vision [30]. Banks are no exception; nonetheless,
available performance evaluation methodologies reveal that they are empirical and focus
solely on financial statistics, with little attention paid to the significance of non-tangible
features of organizational structure [31].

2.1.4. Individual Performance Evaluation

Developing legitimate and accurate performance measuring methods in the workplace
is a never-ending task for any business, involving concerns of the time, assessment unit,
target, fulfilled, and performance evaluation system needs [32].
Sustainability 2022, 14, 8595 5 of 19

According to Scholtes (1987), the work schedule of an employee, including man-

agers, is linked to numerous systems and processes that directly affect individual perfor-
mance [33].
Furthermore, the unit of analysis is required to address the assessment unit analysis
or the performance evaluation target to make early management decisions. The majority of
performance evaluation systems assume that individuals work alone. In actuality, individ-
uals in production work in groups. Additionally, Scholtes (1987) argued that performance
evaluation encourages “lone rangers” and keeps individuals away from working together
regularly over time. Managers must decide if a performance review should emphasize the
individual or teamwork, whether the person should be evaluated at all, and, if so, whether
individual and team criteria should be defined independently [33]. Organizations that
maintain individual assessments may be used to help individual employees set and achieve
their own professional goals rather than as a technique of discriminating among employees
for rewards and promotions [32].

2.2. Sustainable Performance Management

Sustainable development was created 30 years ago to address the problems related to
the environment and resources in the world, particularly energy. There has been a growing
awareness of sustainable development over the past 10–15 years. In addition, ensuring a
sustainable performance involving all stakeholders has become increasingly evident for
the concerned organizations.
In developed countries, economic changes have led to the need for new guidelines
focusing on sustainable development and business management. As a result of the release
of new editions of international standards and the evolution of organizations that provide
services in this area, progress has been made. For example, the ISO 9004 series of standards
was released in 2009, and the new EFQM excellence models were released in 2010 [34].
It has been acknowledged by theorists and practitioners that performance evalua-
tion needs to take place in contexts other than financial. Therefore, Peter Drucker first
introduced the concept of management by objectives in 1954 in his book “The Practice of
Management” [35].
Additionally, current performance assessment is used to enhance organizational per-
formance, such as assisting the organization in tracking its progress toward its objectives,
comprehending its current state, and addressing the main problems and potential solu-
tions [36]. According to Ghosh [37], effective performance measurement can inform us of a
course of action, the accomplishment of the objectives, customer happiness, control of the
job, and the need for improvements.

2.3. Balanced Scorecard (BSC)

According to Kaplan and Norton (1996), a balanced scorecard is a management tool
that helps a company put its strategy and vision into action. It translates an organization’s
vision and strategy into a broad set of performance indicators that serve as the backbone
of a strategic measurement and management system. Because the BSC contains a mixture
of financial and non-financial variables, it has a balanced nature. This strategy promotes
organizational improvement toward pre-determined objectives, using carefully chosen
metrics to track progress. A BSC assists management by aligning specific business activities
with the organization’s vision and strategy [3].
Chaudron (2003) indicated that the BSC is a tool for measuring an organizational or
business unit, and/or departmental success, as well as achieving a balance between long-
and short-term goals and the various indicators of progress, such as financial, customer,
internal operations, and human resource systems and development (educational and
growth) [38]. Moreover, according to Bourne (2002), the scorecard’s success is largely
determined by how the measures are decided, carried out, and acted upon [27]. In general,
employees neither comprehend the organization’s plan nor focus on the correct things; they
also do not understand their role in achieving the goal, and as a result, they simply perform
Sustainability 2022, 14, 8595 6 of 19

what is asked of them rather than what is required [39]. Moreover, employees strive to
accomplish personal rather than organizational goals, because of the lack of harmony
between employees and the organization’s strategies and goals. This also happens because
of actual reward systems that concentrate on individual or sub-unit success rather than the
accomplishment of organizational goals [40].
According to Frigo and Krumwiede (2000), the BSC can assist in relieving this condition
because it demands organizations to be interrelated in several beneficial activities that
describe the main strong suits of the BSC [41]. Interest in performance assessment systems
among academics and practitioners as a tool for achieving strategic objectives has become
well-established in the management literature [4,42].
Robert Kaplan and Davis Norton undertook a nearly year-long research effort with
12 cutting-edge performance assessment organizations in 1990. Finally, traditional perfor-
mance measures are based on control difficulties and contain financial biases. They also
overlooked the crucial problem of connecting operational performance to the firm’s strate-
gic objectives and interacting with these objectives and performance outcomes at all levels
of the organization. They also discovered that no individual statistic could establish an
apparent performance target or monitor all of the company’s critical areas. They proposed
the concept of a balanced scorecard as a clearer strategy for meeting these deficiencies [4].
Organizations are increasingly competing for survival and success in today’s sustain-
able competitive environment. Because of this fact, they must employ mechanisms for
measurement and administration tightly linked to their capabilities and strategies. Using
a balanced scorecard, organizations can bridge the gap between strategic objectives set
at the top, and their operational performance [3]. Long-term goals can be successfully
achieved by converting an organization’s vision and strategy into objectives and metrics,
creating a framework for communicating this vision and strategy to all employees, and
transferring people’s abilities, expertise, and know-how throughout the organization. To
accomplish this translation, BSC creates a set of metrics that provide managers with a quick
and comprehensive perspective of the company [43]. On the other hand, the balanced
scorecard has a severe issue in that if a manager implemented a set of metrics purely based
on it, the manager would be unable to answer one of the most basic questions of all, namely:
what are our competitors doing (from the competitor perspective) [11]?

3. Hypotheses Development and Research Model

In line with the purpose of the research, the model and research hypotheses created to
determine the effect of organizational culture, innovation performance, intrapreneurship,
and the effectiveness of the accounting information system on the performance scorecard
and its sub-dimensions are as follows:
H1. Organizational culture has a positive effect on the scorecard.
The literature on culture in organization studies has evolved through several interest-
ing stages since the early 1980s when it first emerged [44].
Literature has shown that any accomplishment in BSC practice is, somehow, linked
with corporate culture. Certainly, Kaplan noticed that organizations that used BSC success-
fully “had a culture in which people were deeply aware of and internalized the mission,
vision, and core values needed to execute the company’s strategy”. As a result, information
turned into a source of rivalry, which might be considered a sign of corporate culture [2]
(p. 4).
As a result of considering BSC in terms of monetary and nonmonetary measurements,
the social typologies of organizations can be observed and evaluated, as well as the manner
in which top managers use these measures. In this precise position, it is reasonable to
contend that BSC has a positive relationship between the culture of the organization and
traditional PMS [40].
Sustainability 2022, 14, 8595 7 of 19

Carmona (2011) and Woodley (2006) highlight that when it comes to implementing
BSC, business culture is crucial [45,46]. The researchers also found that an organization’s
culture has a significant impact on its success [2,12]. The culture in which mission, vision,
and objectives are converted into actions is critical to the successful implementation of
BSC [46].
Researchers have also discovered that an organization’s culture has a direct impact
on BSC implementation [47,48]. According to Barney (1986), firms that have cultures with
the required attributes can obtain sustained superior financial performance from their
cultures [49] (p. 656). Additionally, according to Soleimani (2012), company culture has an
influence on the success of a balanced scorecard, and employee involvement is critical [50]
(p. 117). Hence, the following sub-hypothesis has been developed on the corporate culture
and use of BSC.
H1.1. Organizational culture has a positive effect onthe financial dimension of the scorecard.
H1.2. Organizational culture has a positive effect on the customer dimension of the scorecard.
H1.3. Organizational culture has a positive effect on the internal processes dimension of the scorecard.
H1.4. Organizational culture has a positive effect on the learning and development of the scorecard.
H2. Innovation performance has a positive effect on the scorecard.
The use of information and communication technology and innovations in a company
has a significant impact on the performance of corporate operations in today’s economic
and political globalization. The level of application has a substantial effect on the decision-
making process in firms by smoothing and speeding up the process, changing the corporate
direction and strategy, and increasing profits [51].
BSC is essentially a new organizational approach. It is about embracing new ways of
thinking and methods, as well as innovation and change. As a result, employee training
and education efforts may aid in the facilitation of this transition by providing employees
with the knowledge and skills needed to adapt to and lead this change. The BSC team, the
role employees play in exercising good business judgment, and the precise procedures for
implementing BSC should all be included in training [52].
Innovative companies encourage experimentation, reward both success and failure,
celebrate mistakes, enjoy taking risks, and actively assist their employees’ training and
growth while providing high job security, with the result that their employees are not
afraid of being fired for making mistakes [53] (p. 604). Innovative organizations allow their
employees freedom and encourage risk-taking and making mistakes [54]. According to
previous research [55,56], there is a positive relationship between innovation performance
and a balanced scorecard. On this basis, we developed the following sub-hypotheses:
H2.1. Innovation performance has a positive effect on the financial dimension of the scorecard.
H2.2. Innovation performance has a positive effect on the customer dimension of the scorecard.
H2.3. Innovation performance has a positive effect on the internal processes dimension of
the scorecard.
H2.4. Innovation performance has a positive effect on the learning and development dimension of
the scorecard.
H3. Intrapreneurship has a positive effect on the scorecard.
Antoncic and Hisrich (2001) define intrapreneurship as involving not only new busi-
ness investments, regardless of their size, but also investments in new products, services,
technology, and management techniques, and as a process leading to other innovative
activities and changes, such as in the competitive structure [57] (p. 498).
Sustainability 2022, 14, 8595 8 of 19

Zahra (1995) considers intrapreneurship as corporate entrepreneurship in a company

as a combination of innovation, entrepreneurial efforts, and innovation activities [58].
The achievement of intrapreneurship is a complicated process with long-term advan-
tages for firms. Changing the culture of an existing organization by defining new goals and
policies, enhancing cross-feedback, and devising and implementing result-oriented rewards
can all be utilized to gradually but firmly build the spirit of intrapreneurship [59]. Accord-
ing to the previous research, there is a positive relation between intrapreneurship and a
balanced scorecard. On this basis, we developed the following sub-hypotheses [60,61]:
H3.1. Intrapreneurship has a positive effect on the financial dimension of the scorecard.
H3.2. Intrapreneurship has a positive effect on the customer dimension of the scorecard.
H3.3. Intrapreneurship has a positive effect on the internal processes dimension of the scorecard.
H3.4. Intrapreneurship has a positive effect on the learning and development dimension of
the scorecard.
H4. The effectiveness of the accounting information system has a positive effect on the scorecard.
A company or organization’s accounting information system keeps track of its financial
transactions. These systems are designed to mix IT sector technology, including user
interfaces, computers, and complex software, with methodology, control, and accounting
approaches. Internal reporting data, external reporting data, financial statements, and trend
analysis capabilities are all available through the software used to manage transactions [62].
Improved adjustment to a changing environment, improved management of infor-
mation production and distribution, and a high degree of competition attainment are the
major benefits of efficient accounting information system use. There is also an increase in
the flow of information between different levels of staff and the potential for new business
on the network, as well as enhanced external ties for the company, namely, with overseas
clients who browse the company’s website. Due to increased intercommunication within
the company, traditional businesses have more opportunities to diversify [48,63,64].
According to Ditkaew (2013), there is a significant and positive relationship between
the quality of the accounting information system and the internal control and decision-
making systems of enterprises, and the quality of the accounting information system
indirectly affects business performance [65]. On this basis, we developed the following
sub-hypotheses:
H4.1. The effectiveness of the accounting information system has a positive effect on the financial
dimension of the scorecard.
H4.2. The effectiveness of the accounting information system has a positive effect on the customer
dimension of the scorecard.
H4.3. The effectiveness of the accounting information system has a positive effect on the internal
processes dimension, which is one of the sub-dimensions of the scorecard.
H4.4. The effectiveness of the accounting information system has a positive effect on the learning
and development dimension of the scorecard.
The research model is shown in Figure 1.
 H4.3. The effectiveness of the accounting information system has a positive effect on the internal
processes dimension, which is one of the sub-dimensions of the scorecard.

H4.4. The effectiveness of the accounting information system has a positive effect on the learning
and development dimension of the scorecard.
Sustainability 2022, 14, 8595 9 of 19
The research model is shown in Figure 1.

Figure 1. The research model

Figure 1. The is developed
research model isbased on literature
developed research
based on literature to support
research to supportthe
thehypothesis.
hypothesis.

4. Methodology 4. Methodology
4.1. Setting and Sample
4.1. Setting and Sample
The study utilizedThe astudy utilized a judgmental
judgmental samplingsampling
method method
duringduring
thethe collection of
collection ofthe
thedata.
data.
The questionnaire was distributed to a selected sample of respondents via the internet site
The questionnairecalled
was“Google
distributed to a selected sample of respondents via the internet
Forms”. Data were collected from 21 banks in North Cyprus having the
site
called “Google Forms”.
largest employment capacity. Collected data were analyzed with a structural equationthe
Data were collected from 21 banks in North Cyprus having
largest employmentmodel capacity.
(SEM, AMOS Collected
25). data were analyzed with a structural equation
model (SEM, AMOS The 25).target population included 173 managers, 40 supervisors, and 137 further em-
ployees (Table 1). The majority of the variables from the earlier studies were used to meas-
The target population included 173 managers, 40 supervisors, and 137 further employ-
ure the survey’s variables. Instruments developed by Kaplan (1996) were used to measure
ees (Table 1). TheBSC
majority
[2]. of the variables from the earlier studies were used to measure
the survey’s variables. Instruments developed by Kaplan (1996) were used to measure
BSC [2].

Table 1. Demographic breakdown of the respondent sample (n = 350).

Frequency Percent
Sex 350 1
Male 100 0.286
Female 250 0.714
Education 350 1
High School 57 0.163
Bachelor’s Degree 264 0.754
Master’s Degree 20 0.057
Doctoral Degree 9 0.026
Age 350 1
18–30 74 0.211
31–40 62 0.177
41–50 184 0.526
51 and above 30 0.086
Tenure 350 1
0–5 134 0.383
6–10 86 0.246
11–15 73 0.209
16–25 37 0.106
26 and above 20 0.057
Source: authors’ research.
Sustainability 2022, 14, 8595 10 of 19

4.2. Instrumentation
This study aimed to explore the effects of sustainable organizational practices on BSC.
The questionnaire form consists of five sections and a total of ninety-three questions. There
are nine questions in the first part of the questionnaire, which contains general information
about the organization and demographic data about the participants. In the second part,
thirty-three questions are included to determine the organizational culture and innovation
performance; in the third part, there are eighteen questions to define intrapreneurship, and
the fourth part contains twelve expressions for determining the efficiency of the accounting
information system. In the fifth section, there are twenty questions for determining the
business performance with the dimensions of the scorecard.
The scales for the variables in the research model are as follows:
Organizational Culture Scale: The scale was initially developed by Cameron and
Quinn (1999) to measure organizational culture, and it was translated into Turkish in
the study “The Impact of Organizational Culture on Innovation Performance Effects [66]:
Application in Kayseri Manufacturing Sector.” by Kurt, T. (2010) [67]. This scale was
used also by Karcıoğlu and Timuroğlu in their study named “Organization Culture and
Leadership” (2004) [68]. The scale consists of 24 questions and is organized based on a
5-point Likert Scale (1—strongly disagree, 5—strongly agree) and has a Cronbach’s alpha
value of 0.703. Expressions such as “The leader in this business is generally seen as a
guide, assistant, or trainer”, “The management style in my business is characterized by the
concepts of teamwork, consensus, and participation”, and “My business defines success
with the development of human resources, teamwork, employee commitment and attention
to people”, can be shown as examples of the expressions directed to the participants within
the organizational culture scale [60].
Innovation Performance Scale: The scale was developed by (Calantone; Cavusgil;
Zhao, 2002; Janssen, and Yperen, 2004) to measure innovation performance [51,69]. It was
translated into Turkish by Kurt (2010) [67]. The scale consists of 10 questions and was
created according to a 5-point Likert Scale (1—strongly disagree, 5—strongly agree) and
has a Cronbach’s alpha value of 0.750. “In my business, new ideas are tried frequently”,
“New product initiative in my business has increased over the past 5 years” and “In my
company, innovative ideas are systematically put into practice” are some of the expressions
included in the scale [51,69].
Intrapreneurship Scale: The Intrapreneurship Scale was developed by Antoncic and
Hisrich, 2001; Zahra and Covin, 1995; Zahra and Garvis, 2000; Zahra; Neubaum and
Huse, 2000; Azulay et al., 2002; Naktiyok, 2004. It brings together different dimensions
and was used in this study [57,58,61,70–72]. There are 18 questions in the scale that were
developed according to a 5-point Likert Scale (1—strongly disagree, 5—strongly agree),
with a Cronbach’s alpha value of 0.846. Statements such as “differentiating products and
production processes and systems”, “Searching for new business/business opportunities
for existing products”, and “Taking decisions by acting boldly instead of waiting when the
decision-making situation involves uncertainty” are some of the statements directed at the
participants within the scope of the scale by the same authors [57,58,70–73].
The Effectiveness of the Accounting Information System Scale: This scale, which
was first developed by Nicolaou (2000) to measure the effectiveness of the accounting
information system and was adapted into Turkish in the study entitled “Effectiveness of
Accounting Information System: A Research on Small and *Medium-Sized Businesses”,
was used in this study [74,75]. There are twelve questions on the scale, arranged according
to a 5-point Likert Scale (1—strongly disagree, 5—strongly agree), with a Cronbach’s alpha
value of 0.946. “Do you think that the reports received from the accounting information
system are presented in a useful way?”, “Is it possible to get up-to-date information from
the accounting information system?” and “Is the accounting information system easy to
use?” are examples of the statements in the scale [74].
Scorecard Scale: A compilation was made from the most used criteria for dimensions
in the literature, adhering to the scale format first developed by Kaplan and Norton (1992)
Sustainability 2022, 14, 8595 11 of 19

to measure business performance [4]. As suggested by the performance scorecard, the

business performance was evaluated in four dimensions: the financial dimension, the
customer dimension, the internal processes dimension, and the learning and development
dimension. On a scale of 0–100, participants answered the performance requirements
within each dimension, taking into account both the desired and actual outcomes. The scale
has 20 questions, five of which fall under each dimension: financial, customer, internal
business process, and learning and growth [4]. Dimensions and expressions within the
dimensions are weighted equally with each other. Every dimension has a Cronbach’s value
above the lower threshold value of 0.7, which is recommended in the literature as shown in
Table 2.

Table 2. Reliability analysis results.

Scales Number of Questions Cronbach’s Alpha

Organizational culture 24 0.703
Innovation performance 10 0.750
Intrapreneurship 18 0.846
Accounting information system effectiveness 12 0.946
Performance scorecard 20 0.964
- Financial 5 0.807
- Customer 5 0.945
- Internal business 5 0.917
- Innovation learning 5 0.905
Source: authors’ research.

Some of the performance criteria in the scale are for the financial dimension (cash
flow, profitability, and the efficient use of assets); the customer dimension (customer
satisfaction, customer continuity); and internal processes (product/service quality level
and capacity utilization rate, training and development of the employees for the learning
and development dimension, and the satisfaction of the employees). This performance
appraisal approach is similar to perceptual performance appraisal, one of the performance
appraisal approaches frequently used in the literature [76].

4.3. Analysis
The SPSS 24 and AMOS 25 software were used in the analysis of the data. First of all,
validity and reliability analyses of the scales used in the research were conducted. Then,
the direction and severity of the relationship between the variables were determined by
performing correlation analyzes. Finally, regression analyzes were performed using SSPS
24 to test the research hypotheses.

5. Results
5.1. Reliability and Validity Analysis
Cronbach’s alpha coefficients were taken into account to judge the reliability of the
variables in the study. Reliability analysis results are shown in Table 2.
According to Table 2, the Cronbach’s Alpha values for organizational culture, in-
novation performance, intrapreneurship, accounting information system effectiveness,
performance scorecard, and sub-dimensions were between 0.703 and 0.945. These values
were above the lower threshold value of 0.7, which is recommended in the literature [77].
Confirmatory factor analysis was performed using the AMOS 25 software to evaluate
construct validity (CFA). The results on CFA showed that the model had good fit indices
(CMIN/DF = 2.879, GFI = 0.921, NFI = 0.877, TLI = 0.903, RMSEA = 0.048). The find-
ings show that reliability and validity are good and provide the necessary conditions for
research [70].
Sustainability 2022, 14, 8595 12 of 19

5.2. Descriptive Statistics and Correlations

The distribution of the data has a very important effect on the determination of the
analyses to be made [78]. Skewness and kurtosis values were checked to verify whether
the data fit the normal distribution. The results of the descriptive statistical analysis
showed that the skewness and kurtosis values were between the values suggested by Hair
(2010) [79]. This demonstrates that normal distribution conditions are provided and that
the data collected can be used for reliability and validity analyses [80].
The results of the analysis performed to determine the relationship between the
variables are presented in Table 3. Due to the normal distribution of the data, the Pearson
correlation coefficient was taken into account in the correlation analysis.

Table 3. Descriptive statistics and correlations among constructs.

Variable Mean Sd. 1 2 3 4 5 6 7 8

1. Organizational culture 3.47 0.29 1
2. Innovation performance 3.22 0.52 0.455 ** 1
3. Intrapreneurship 3.41 0.46 0.469 ** 0.355 ** 1
4. AISE 3.85 0.55 0.258 ** 0.120 ** 0.174 ** 1
5. Financial 4.30 0.54 0.366 ** 0.297 ** 0.531 ** 0.310 ** 1
6. Customer 4.18 0.836 0.411 ** 0.299 ** 0.609 ** 0.192 ** 0.679 ** 1
7. Internal business 4.02 0.706 0.415 ** 0.286 ** 0.530 ** 0.339 ** 0.658 ** 0.787 ** 1
8. Innovation learning 4.12 0.738 0.406 ** 0.291 ** 0.583 ** 0.295 ** 0.671 ** 0.849 ** 0.935 ** 1
AISE: accounting information system effectiveness; ** p < 0.05; source: authors’ research.

Table 3 shows that there was a significant positive correlation between the variables
and that the p-significance value reached the 0.05 significance level. The value range of the
correlation coefficient between the variables was between 0.120 and 0.935.

5.3. Hypotheses Testing

Regression analysis was performed using the SPSS 24 software to test the research
hypotheses. The results obtained are presented in Table 4.

Table 4. Hypotheses testing.

Hip. Path B SE T Sig.

H1 Organizational culture → Performance scorecard 0.271 0.103 2.643 0.009
H1.1 Organizational culture → Financial 0.145 0.100 1.449 0.148
H1.2 Organizational culture → Customer 0.354 0.138 2.558 0.011
H1.3 Organizational culture → Internal business 0.321 0.122 2.627 0.009
H1.4 Organizational culture → LAD 0.264 0.121 2.178 0.030
H2 Innovation performance → Performance scorecard 0.063 0.053 1.194 0.233
H2.1 Innovation performance → Financial 0.088 0.051 1.702 0.090
H2.2 Innovation performance → Customer 0.054 0.071 0.768 0.443
H2.3 Innovation performance → Internal business 0.054 0.063 0.859 0.391
H2.4 Innovation performance → LAD 0.055 0.062 0.887 0.376
H3 Intrapreneurship → Performance scorecard 0.656 0.060 10.920 0.000
H3.1 Intrapreneurship → Financial 0.504 0.059 8.572 0.000
H3.2 Intrapreneurship → Customer 0.872 0.081 10.759 0.000
H3.3 Intrapreneurship → Internal business 0.557 0.072 7.783 0.000
H3.4 Intrapreneurship → LAD 0.691 0.071 9.729 0.000
H4 AISE → Performance scorecard 0.123 0.055 2.225 0.027
H4.1 AISE → Financial 0.163 0.054 3.017 0.003
H4.2 AISE → Customer 0.005 0.075 0.063 0.950
H4.3 AISE → Internal business 0.199 0.066 3.017 0.003
H4.4 AISE → LAD 0.125 0.065 1.918 0.056
LAD: learning and development; AISE: accounting information system effectiveness. Source: authors’ research.
Sustainability 2022, 14, 8595 13 of 19

The regression results show that organizational culture had a positive and meaningful
effect on performance scorecard (β = 0.271, p < 0.05) and its sub-dimensions, customer
(β = 0.354, p < 0.05), internal business (β = 0.321, p < 0.05), and LAD (β = 0.264, p < 0.05).
Therefore, H1, H1.2, H1.3, and H1.4 are supported. In addition, the effect of AISE on
performance scorecard (β = 0.123, p < 0.05) and its sub-dimensions, financial (β = 0.163,
p < 0.05), internal business (β = 0.199, p < 0.05), and LAD (β = 0.125, p < 0.05), was also
significant and positive. Therefore, H4, H4.1, and H4.3 are supported.
Finally, while intrapreneurship has a significant and positive effect on the performance
scorecard and all its sub-dimensions, innovation performance does not have any effect on
the performance scorecard and all its sub-dimensions. Therefore, H3, H3.1, H3.2, H3.3, and
H3.4 are supported but H2, H2.1, H2.2, H2.3, and H2.4 are not supported.

6. Discussion and Implications

6.1. Discussion
As mentioned by Atan (2014), in the world of business, the rapid rate of change, which
is growing faster and faster, appears to be here to stay and to dominate the understanding
of how to conduct business [81]. In this rapidly changing business environment, the assets
that create value in the economy of today founded on knowledge are largely intangible.
The evaluation and management of organizational performance have also been affected by
this fact. As a result, organizations have begun to adopt multi-dimensional and strategy-
compatible evaluation methodologies, as opposed to traditional methods. The balanced
scorecard is the most essential of these techniques.
According to Kılıç and Uludağ (2021), organizations’ eventual objective is to improve
their performance to become more effective and efficient. Organizations’ current perfor-
mance levels are consistent with the levels of information they have accumulated and the
methods through which they have applied that knowledge. One of the purposes of the
balanced scorecard is to measure how organizational performance is affected individually.
Organizations that seek to increase their performance must adapt to the information age’s
environment in which individuals can develop knowledge [82].
Balanced scorecard usage is a new concept for the banking sector in North Cyprus. It is
now widely accepted that creditors, investors, and other stakeholders give great importance
to the performance evaluation of banks since it defines banks’ capabilities and limits to
compete in the sector and is seriously significant for the development of the sector. The
financial perspective, customer perspective, internal processes perspective, and learning–
growth perspective are all considered in the balanced scorecard evaluation. Because of this
fact, this survey was conducted on the banks operating in North Cyprus.
The survey contains the organizational culture, the innovation performance, and the
efficiency of the accounting information system variables. According to the findings, among
these variables, the most effective variable was intrapreneurship. The organizational culture
and efficiency of the accounting information system also positively affect the performance
score. It is recommended to discuss these results to show that innovation performance does
not positively affect the performance of the balanced scorecard.
According to the results of the regression models established between the organi-
zational culture and the scorecard and its sub-dimensions, organizational culture has a
significant impact on both the overall scorecard and its dimensions except financial di-
mension (β = 0.145, p > 0.05). According to the dimensions of the scorecard, this effect is
most notable in the customer dimension (β = 0.354). The customer perspective of BSC is
concerned about how the company appears to customers. Customers are one of the three
groups of strategic individuals who demand quality in the products and services offered,
and they are the drivers that increase the competitiveness of the organization. The other
two groups are the investors and the employees of the company. According to Kaplan and
Norton (2004), for many companies, organizational culture can end up being more valuable
than its own tangible assets, and these results also support their discussion [2].
Sustainability 2022, 14, 8595 14 of 19

When the relations between the efficiency of the accounting information system and
the performance scorecard and its sub-dimensions are examined, it is seen that three of the
established models are meaningful and valid models. They are financial, internal business,
and LAD dimensions of the scorecard. Among these three, AISE has the most significant
impact on internal business (β = 0.199).
Regression analysis also establishes a positive relationship between intrapreneurship
(β = 0.656) and the performance scorecard and its sub-dimensions.

6.2. Managerial Implications

As mentioned above, different banks are at various stages of implementing the bal-
anced scorecard into their organizations. The goal of this study was to give managers
some guidelines about the implementation of the balanced scorecard to achieve sustainable
appraisal management systems. Furthermore, this study contributes significantly to the
theory and practical applications of balanced scorecards. The survey experimentally as-
sesses how the organization’s culture, its approach to intrapreneurship, and investment in
AISE have a positive impact on the balanced scorecard and, therefore, the success of the
bank in reaching its goals.
In this study, organizational culture was assessed as having a positive effect on the per-
formance scorecard, and it has a more noticeable positive effect on the customer dimension.
Therefore, businesses, in this case especially banks, aiming to have a better performance
scorecard need to create an effective organizational culture environment. In this context,
banks should:
• Provide a more dynamic and entrepreneurial environment;
• Have a guiding and unifying leadership structure;
• Give importance to entrepreneurial, innovative leadership;
• Establish loyalty, bond, and mutual trust among the employees;
• Give importance to the self-development of employees, support trust and openness
among employees, and also enable participation in decisions;
• Enable and encourage employees to share;
• Create a competitive and success-oriented working environment among the employees;
• Ensure continuity and stability in the working environment;
• Have an organizational culture where new sources are reached and new developments
are followed and implemented.
The findings obtained from the analyses have proven that the effectiveness of the
accounting information system has a positive effect on the performance scorecard as a
whole. However, when we evaluate it in terms of the dimensions of performance, it is seen
that it does not affect the customer dimension. It has an impact on the financial dimension,
the intrapreneurship dimension, and the learning and development dimension. Therefore,
to have performance improvement in the financial dimension, the internal business dimen-
sion, and the learning and development dimension, the accounting information systems in
the enterprises should be as follows;
• In a clear and understandable format;
• Able to meet the need;
• Of such a nature as to produce information in a timely manner.
The findings obtained from the analyses have proven that intrapreneurship has the
most evident positive effect on the performance scorecard as a whole. It has an impact on
all sub-dimensions of the scorecard, especially the customer dimension. Banks, in order to
have performance improvement on all sub-dimensions of the scorecard, should
• Be a pioneer in technology;
• Support new ideas, against mistakes;
• Be encouraged;
• Not make priority opportunity evaluations;
• Create an environment where resources are easily accessible and available;
Sustainability 2022, 14, 8595 15 of 19

• Support a teamwork approach;

• Have a reward system;
• Support all intrapreneurship activities by senior management;
• Enable employees to take the initiative by giving them responsibility and authority.
The results from this study enable drawing the conclusion that innovation perfor-
mance does not have a positive effect on the performance scorecard and its sub-dimensions.
Therefore, businesses, in this case especially banks, aiming to have better performance score-
card systems need to overcome the obstacles standing in front of innovation development
in banks. In this context, here are some problems banks have to deal with:
• Changes in the design of branches may not be welcomed by existing customers,
especially in rural areas.
• The implementation of new technology should be fast and should support innovation.
Basic technological services should be satisfactory and easy to use. Performance
measurement software, databases, and other systems should provide more support
for sales.
• Changing bank branches into sales-oriented financial stores. Finding strategies to
improve sales by taking advantage of sales opportunities that normal servicing
may present.
• The challenge is putting in place the essential human resource strategies to support
the new performance-oriented organization.

7. Conclusions
Organizations’ future depends on the decisions made by their managers regarding
their activities, the majority of which are directly related to their assets. Because of the
competitive environment banks operate in, they need to measure, evaluate, and manage
their organizational performance. In the literature, performance management is specified
as a method that undertakes activities to achieve the desired strategic objectives of an
organization by gathering, comparing, and initiating, new and necessary arrangements
that will secure the constant improvement of performance to gather information about how
the business is currently and will be in the future.
There are reasons why traditional appraisal has been criticized, such as for weighting
financial criteria such as return on assets (ROA) and return on capital employed (ROCE),
focusing on the short term, applying retrospectively, not supporting strategic applications,
being out of touch with the realities of the business world, and being irrelevant to many
parts of the business [83,84].
The performance scorecard term was introduced to the business world by Kaplan
and Norton (1992) as a concept to solve criticized problems and bring a new approach to
performance management [4]. The measurement and evaluation of performance are integral
parts of performance management. A performance scorecard is a dynamic performance
measurement, that provides strategic feedback; reaches the strategy from the data, and
develops the strategy, evaluation, or strategic management technique that aims to make it
applicable by making it a daily work.
Therefore, this study is conducted in this field to investigate the relationship between
organizational culture, innovation performance, intrapreneurship, and the effectiveness
of the accounting information systems of the organization and balanced scorecard and its
sub-dimensions—financial, customer, internal business, and learning and growth. The
results from this study show a strong positive relationship between intrapreneurship and
the scorecard as a whole. There is also a positive relationship between the organization’s
culture and the accounting information systems of the organization. Only the effectiveness
of the accounting system of the banks does not have a meaningful relationship with
the customer dimension of accurate and timely financial information for managers and
employees. The survey results indicate that there is no meaningful relationship between
the innovation performance of the banks and the performance of the balanced scorecard as
a whole.
Sustainability 2022, 14, 8595 16 of 19

Effective innovation development necessitates the involvement of nearly every depart-

ment inside the bank, from information systems to marketing to human resources, as well
as the reorganization of branch layouts. Looking at the distribution innovation becomes
costly. The basic performance-related innovation problems can be listed as:
1. The doubtful attitude of employees and customers and their resistance to change.
2. Technological infrastructure investments are both expensive and there are problems
with competent employees.
3. Considering the number of customers, balance sheet size, and thus the profitability
of banks in a small country like Cyprus, the physical renewal of branches and other
infrastructure investments are time-consuming and relatively slow.
4. Difficulties faced in terms of human resources, new job definitions, and difficulty in
defining authority and responsibilities.
5. The cultural diversity of Cyprus’ customers who receive service from banks. For
example, there are ex-pat branches and their customers have different demands and
expectations for innovation.
6. Challenges in technological investments related to the non-recognition of North Cyprus.
7. The fact that banking is a sector that is slowly being renewed due to laws and regula-
tions in general.
To analyze this result, a study was conducted based on sectoral information gathered
from the North Cyprus Central Bank’s bulletin (June 2021/II) [85]. The bulletin states that
the number of banks operating in the banking sector is 21. Among these 21 banks, 2 are
publicly managed banks, 14 are private banks, and 5 are foreign private banks. By the end
of June 2021, the total number of employees in the sector was 3104, and 509 of them were
employed in public-managed banks, 2067 in local private banks, and 528 in foreign banks.
In this survey, questionnaires were distributed randomly via the internet and respondents
were asked about the type of bank they were working for. The results were: 23 percent
in publicly managed banks, 60 percent in private banks, and the remaining 17 percent in
foreign banks.
When explaining the results of this survey, it is important to keep in mind certain limi-
tations. First of all, questionnaire data based on self-reported data may be affected by social
desirability bias (SDB), common method variance (CMV), and response distortion resulting
from ego-defensive responses [86]. Considering diverse cultures and organizational struc-
tures may lead to different results. Therefore, future studies should carefully investigate
the relationship between organizational culture, innovation performance, intrapreneurship,
and the effectiveness of accounting systems as variables and BSC with its sub-dimensions.
The same hypotheses should be tested in different organizations; in BSC, organizations
should be adopted that construct a causal model of their strategy in order to see the BSC
program as improving their company’s competitiveness.

Author Contributions: Conceptualization, F.G., T.A. and M.K.; methodology, F.G., T.A. and M.K.;
software, Lisrel 8.54; validation, F.G. and T.A.; formal analysis, F.G. and T.A.; investigation, F.G. and
M.K.; resources, F.G.; data curation, F.G. and T.A.; writing—original draft preparation, F.G. and M.K.;
writing—review and editing, F.G., T.A. and M.K.; visualization, F.G.; supervision, T.A. All authors
have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Ethical review and approval were waived for this study
based on the consent of the thesis advisor, which is acknowledged by the ethical committee of the
Cyprus International University.
Informed Consent Statement: Informed consent was obtained from all subjects involved in the study.
Data Availability Statement: The data will be made available upon request from the corresponding
author.
Sustainability 2022, 14, 8595 17 of 19

Acknowledgments: The authors thank the staff of the banks operating in North Cyprus and the head
managers of some of these banks for their helpful suggestions and for facilitating and supporting the
data collection process.
Conflicts of Interest: The authors declare no conflict of interest.

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