NGUYEN THI XUAN Applying Balanced Scorecard to analyze performance management system of a self- finance higher education institution in Vietnam: A case of International School, Vietnam National University Hanoi. Field: Financial Management Code: 8340202.01 Hanoi, 2024 NGUYEN THI XUAN Applying Balanced Scorecard to analyze performance management system of a self- finance higher education institution in Vietnam: A case of International School, Vietnam National University Hanoi. Field: Financial Management Code: 8340202. Nguyen Thi Kim Oanh Hanoi, 2024 Abstract This study aims to investigate the performance management systems at VNU-IS using the Balanced Scorecard (BSC) framework in the context of higher education.
The main objectives are to evaluate the current status of performance management systems at VNU-IS from a BSC perspective and to assess the impact of non-financial performance indicators on financial performance. The research is based on a survey questionnaire delivered to a sample of 74 VNU-IS respondents and Smart PLS is used for data analysis. The study's findings underscore the positive associations between Balanced Scorecard (BSC) perspectives in higher education institutions (HEIs) in Vietnam, using the International School of Vietnam National University, Hanoi as a case study. First, it confirms that investing in learning and growth positively influences internal business processes, emphasizing the importance of staff development and organizational capacity building.
Finally, sustainable development initiatives positively impact customer performance metrics, highlighting the value of integrating sustainability principles into organizational strategies to enhance customer satisfaction and loyalty in HEIs. Additionally, learning and growth initiatives also enhance customer performance metrics, emphasizing the importance of staff professionalism and infrastructure development to meet customer needs effectively. As a result, internal process and customer performance leads to higher financial performance. The research findings provide insights into practices of performance management systems in the HEI context, especially when the HEI transforming to self-financing their operations.
Key words: Performance Management System, Balance Scorecard (BSC), Stakeholder Theory, Financial performance, Customer performance, Internal process performance, Learning & Growth performance, Sustainability performance 1 Acknowledgement First and foremost, I would like to extend our heartfelt gratitude to Dr. Nguyen Thi Kim Oanh for her invaluable guidance throughout this project. Her enthusiasm, passion, and insightful feedback were instrumental in completing this endeavor within the given time constraints. I look forward to the opportunity to collaborate with her again in the future.
Additionally, I would like to extend my sincere appreciation to all the friends, professors, and students at the International School, Vietnam National University Hanoi, for generously offering their time and support during the data collection process. Without their assistance, this study would not have been possible. Lastly, I would like to express my deepest thanks to our families for their unwavering love, resilience, encouragement, and emotional support. Their presence has been a source of strength throughout this journey, and we are immensely grateful for their unwavering support.
2 Letter of Declaration I affirm that the Master Thesis entitled “Applying Balanced Scorecard to analyze performance management system of a self-finance higher education institution in Vietnam: A case of International School, Vietnam National University Hanoi” represents my original research. I have adhered to research ethics diligently, and the conclusions drawn in this study are based solely on my own data. The findings of this research have not been previously published elsewhere. I assume complete responsibility for the accuracy of the numerical data, information, and other aspects presented in this research.
Hanoi, 10/04/2024 Student (Signature and Full name) 3 TABLE OF CONTENT Abstract. 2 Letter of Declaration. 3 Table of Content. 4 Lists of figures.
6 Lists of tables. 7 CHAPTER 1: AN INTRODUCTION .1 Background of the study.2 Context of the study .3 Research objectives and research questions. 15 CHAPTER 2: LITERATURE REVIEW .1 Performance Mangement System in higher ducation .2 The Balance Scorecard in higher education .2 Internal business process perspective .3 Learning and growth perspective .5 Sustainable development perspective .3 Balance Scorecard and Stakeholder theory .4 Prior studies of Balance Scorecard in higher education .5 Hypothesis formulation and conceptual framework .1 Learning & Growth and Internal Business Process Performance .2 Internal Business Process and Financial Performance .3 Learning & Growth and Customer performance .4 Sustainable Development and Customer performance .5 Customer and Financial performance .6 Conceptual framework of the study. 28 CHAPTER 3: RESEARCH METHODS .1 Survey as a quantitative research method .2 Reliability and validity .2 Questionnaire design and pilot test .3 Sample and data collection.
32 CHAPTER 4: DATA ANALYSIS AND RESEARCH FINDINGS .1 Data analysis with PLS-SEM using Smart-PLS .1 Demographical Characteristics Analysis of Respondents .2 An evaluation of the measurement model .3 Structural model assessment for hypothesis testing. 40 CHAPTER 5: DISCUSSIONS, CONCLUSION AND LIMITATIONS .1 Discussions and conclusion .2 Contribution and Implications of the study .3 Limitations of the study. 53 5 LISTS OF FIGURES Figure 1 Conceptual framework of the study. 28 Figure 2 The measurement model.
38 Figure 3 Structural model for testing hypotheses. 41 6 LISTS OF TABLES Table 1 Measurements of constructs. 32 Table 2 Sample profile. 36 Table 3 Means, standard deviations, and outer loadings of construct items.
38 Table 4 Cronbach’s alpha, Composite reliability, and Average variance extracted. 39 Table 5 Discriminant validity among constructs. 40 Table 6 VIFs of exogenous variables. 40 Table 7 Results of hypothesis testing.
42 Table 8 f-square values. 43 7 CHAPTER 1: AN INTRODUCTION This study presents results concerning the existing performance management system at the International School, Vietnam National University Hanoi (IS-VNU) through the lens of the Balanced Scorecard. The chapter is divided into five sections. Initially, it provides background information for the study (section 1.1), followed by the introduction of research objectives and questions (section 1.
Subsequently, a concise overview of the research methods is outlined (section 1.3), followed by the presentation of research findings (section 1. Finally, the chapter concludes with an overview of the thesis structure (section 1.1 Background of the study In today's competitive world, people are increasingly focused on how well they manage their performance; This has brought about many different approaches, models and frameworks to evaluate the business performance of the organization. While traditional methods mainly looked at financial and operational results, now there's a shift towards more thorough assessments that consider the overall strategy of the organization. The Balanced Scorecard (BSC) has become widely utilized for assessing organizational performance and has gained significant acceptance across various organizational levels since its introduction during the initial years of the 1990s by Kaplan and Norton, serves as a strategic instrument utilized for assessing the performance of an organization (Yaakub & Mohamed, 2019).
As per Istiarsono (2022), the Balanced Scorecard (BSC) aids organizations in addressing two primary challenges: accurately gauging organizational performance and effectively executing strategies. The BSC facilitates institutions in gaining deeper insights into the prerequisites essential for establishing a competitive edge. Moreover, it assists in crafting and refining the organization's strategy for competitiveness (Yaakub & Mohamed, 2019). 8 The Balanced Scorecard has been applied as a tool for strategic management across various settings, including both for-profit and non-profit organizations, with a notable presence in the field of education (Kaplan, 2001).
This idea is supported by Binden et al., (2014), who say that The adoption of performance management systems has emerged as a prevalent trend within higher education institutions. Rollins, as cited in Alani et al. (2018), suggests that the BSC serves as a valuable instrument for educational institutions seeking to enhance efficiency and accountability. Similarly, Yusof (2020) posits that implementing the BSC framework in education facilitates the streamlining of management processes and directs the institution towards the realization of long-term strategic goals.
Additionally, Kaplan (2001) highlights that the BSC can serve as a means for Educational establishments to articulate their vision and mission, translating abstract objectives into tangible strategies. Rompho (2020) asserted that BSC is mainly used in higher education institutions (HIEs) due to its adaptable nature. The flexibility of the BSC permits customization to address the unique requirements of educational organizations. Supporting this assertion, Brown (2012) also concurred that the BSC framework serves as an effective strategy-based management system applicable to HIEs aiding them in elucidating their mission and vision, and subsequently converting their vision into actionable strategies.
Al-Zwyalif (2012) suggests that universities can gauge performance by implementing the Balanced Scorecard (BSC) to oversee and assess overall effectiveness. This methodical approach provides employees within the organization with a clear pathway to attaining annual objectives. Kaplan (2001) defines the Balanced Scorecard as a framework for evaluating strategies aimed at creating value, which provides a comprehensive equilibrium between: financial, customer, internal processes, and learning and growth. These perspectives assess how the organization satisfies shareholders, customers, prioritizes key processes for success, and fosters ongoing improvement and adaptability.
Both financial and non- financial metrics are crucial for organizational performance, and the BSC integrates these measures in a balanced manner (Reda, 2017) to align strategies with organizational objectives and aid top management in decision-making (Ahmad & Soon, 2015). Research 9 Abd Rahman Ahmad & Ng Kim Soon, 2015 Abd also emphasizes the importance of applying BSC in measuring organizational performance to integrate financial and non- financial aspects in their organization. The stakeholder theory, introduced by R. Edward Freeman in the 1980s, advocates for organizations to consider the concerns of all stakeholders, not just shareholders, when making decisions.
This theory underscores that stakeholders, such as employees, customers, suppliers, communities, and other individuals impacted by the organization's actions, have a valid stake in its operations and should be taken into consideration during managerial decision-making processes. Freeman asserts that by giving priority to the needs and interests of all stakeholders, organizations can generate enduring value sustainably and attain success that extends beyond pure financial gains. The Balanced Scorecard (BSC) is a powerful communication tool for higher education institutions, facilitating improved engagement with stakeholders and alignment of priorities. Its successful implementation fosters collaboration and trust, crucial for continuous quality improvement efforts (Rice and Taylor, 2003).
Therefore, in implementing BSC, it's essential to consider and address the requirements of stakeholders in a balanced manner. The four perspectives discussed previously exhibit a noteworthy correlation. For instance, Brown (2012) provides an illustration of how Bond University in Australia implemented the Balanced Scorecard approach to enhance performance. From a customer view, the university sought to prioritize customer satisfaction as its main goal.
Following this, the library outlined its particular objectives, with a focus on ensuring customer satisfaction through various approaches. These methods included maximizing existing resources and services, along with promoting productive collaboration and communication with academic staff. Businesses are increasingly considering sustainable development as a strategic approach, recognizing its potential advantages for stakeholders and its rising significance in both the market and broader society (Gholami et al. Sustainability efforts are 10 typically initiated from within the organization, as internal stakeholders tend to show greater concern regarding sustainability actions than external ones.
Universities, in particular, excel in promoting sustainable development as they critically examine societal trends and serve as role models for implementing eco-friendly practices in urban areas. According to Lidgren et al. (2006), Higher Education Institutions (HEIs) should actively engage in dialogues with both internal and external stakeholders to define institutional sustainability objectives and demonstrate their commitment to achieving them. Currently, the concept of university autonomy is widely recognized as a prevailing practice in the governance of higher education worldwide.
Particularly, implementing the Balanced Scorecard methodology in public universities is increasingly seen as an unavoidable trend, both globally and in Vietnam. Van, Hoang Khanh's research conducted in 2024 involved synthesizing documentation pertaining to the execution of the Balanced Scorecard in public universities spanning from 2014 to 2023. The findings consistently indicate that this subject has remained a focal point of interest and investigation among researchers over the past decade. Numerous educational institutions globally have adopted the Balanced Scorecard model and have seen initial success in its implementation.
Sayed (2013) has researched and listed several universities that have implemented a BSC system within their institution.