Knowledge Management and Balanced Scorecard Outcomes

Exploring the Importance of Interpretation, Learning, and Internationality

Today’s firms are confronted with a vast set of competitive challenges that include the ongoing internationalization of markets, rapid advancements in information technology, and the emergence of new organizational forms. To achieve better competitive and financial performance, companies with operations in multiple countries seek to be globally integrated. In particular, global marketing strategy plays a critical role in determining worldwide performance of the multinational corporation (MNC). However, assessing MNC performance requires more than financial performance measures. The benefits of a global strategy include cost reduction, improved quality of products and programs, enhanced customer preference, and increased competitive leverage. Additionally, with diverse nationalities involved, implementing a global strategy often requires changes that are disruptive and difficult. As such, knowledge management and organizational learning are seen as critical for adopting a global marketing strategy, although limited empirical studies examine this relationship.

We use the balanced scorecard as a framework for assessing how organizational learning and sense-making influence actions relating to a global marketing strategy and subsequent financial performance. Using data from 169 MNCs, findings indicate that a specific set of knowledge activities is related to balanced scorecard outcomes (e.g. customer performance, innovation and learning performance, and internal process performance). The importance of customer performance is confirmed as the only balanced scorecard outcome significantly related to financial performance. These results suggest that firms can improve their competitive position by emphasizing shared interpretation within the organization and including balanced scorecard elements when assessing performance.