Analysing BSC and IC's usefulness in nonprofit organizations

Abstract

Purpose – The balanced scorecard (BSC) and intellectual capital (IC) concepts are two strategic management methods that help to identify and elevate organizations’ intellectual resources in the knowledge economy. However, very little research has examined the usefulness of the BSC and IC concept in nonprofit organizations. This paper aims to discuss these issues. Design/methodology/approach – This paper uses a critical analysis of current literature in relation to BSC and IC concepts within the social service nonprofit context. Findings – The findings suggest that BSC is less effective in social service nonprofit organizations (SSNPOs) because the model’s strategy, cause-and-effect relationships and its four linked perspectives are incompatible to the unique social service nonprofit environment. IC, however, can be harnessed to co-ordinate with the values and core character of SSNPOs. Research limitations/implications – The paper contributes a new dimension to the body of literature; raising critical questions as to the usefulness of the BSC in SSNPOs and theoretically arguing that IC is an alternative strategic management framework in the social service nonprofit sub-sector. The increased awareness of the IC concept in SSNPOs, as a result of this paper, likely generates further research from both nonprofit practitioners and scholars. Originality/value – The paper is considered as a starting point and serves as a milestone in applying IC as a strategic management conceptual framework in the nonprofit sector. Also, the paper informs nonprofit leaders that IC is a more appropriate strategic management concept in the nonprofit sector.