Balanced Scorecard in Business Dynamic Environments: Benefits Management Approach

Introduction

Organizations today face intense competitive pressure to do things better, faster and cheaper. Most markets are becoming increasingly dynamic; organizations cannot rely on an analytical approach to understanding their industry or market, since that market is changing in rapid and unexpected ways. Equally, they cannot rely on the collection of resources that have provided them with competitive advantage in the past. Rather, they must learn to develop capabilities that allow them to integrate, reconfigure, gain and release resources (Eisenhardt and Martin, 2000). If these resources, competencies and capabilities are valuable, rare, inimitable and non-substitutable they can be used to implement value creating strategies that will provide sustainable competitive advantage (Barney, 1991; Priem & Butler, 2001; Wernerfelt, 1984). “If the firm has a dynamic capability, it must perform well, and if the firm is performing well, it should have a dynamic capability” (Cepeda & Vera, 2007, p. 427).

With a shift from the industrial economy towards a new economy that is now predominantly characterized by intangible assets, such as knowledge and innovative capability, organizations must manage increasing levels of complexity, mobility and uncertainty (Voelpel et al. 2005). The ability to manage knowledge-based intellect is of critical important in this new environment (Quinn, 1992). The economic trends of the 21st century focus on the the value and importance that intangible assets, namely, knowledge can provide to companies. The importance of knowledge and information for economic prosperity has been recognized around the world (Cooke & Leydesdorff, 2006).

Competition in this new economy is now increasingly characterized by the rapid emergence of brand-owning companies that devote their energies to organizational fitness (Beer, 2002). The uncertainty and high turbulence of the environment have forced companies and organizations in general to pay special attention to those strategies or management processes that are most likely to guarantee their success and to help them achieve sustainable competitive advantages over time (Cepeda-Carrion et al., 2017).

For many companies’ competitive advantage is a continuous process of performance improvements and search for better practices and development of new capabilities. This includes a search for more efficient process technologies, new or improved products and procedures in the manufacturing process but also development of dynamic capabilities (Teece, Pisano and Shuen 1997) to respond and adapt to change and new trends in the sector. Prahalad and Hamel (1990) argue that sustainable competitive advantage is dependent upon building and exploiting core competences. For many organizations the competitive advantage is a continuous performance improvement in a search for best practices and the development of new capabilities (Vorhies & Morgan, 2005). Looking for higher efficiency organizations change and create new processes, produce organizational changes, implement new systems and technologies, introduce new products and services and also develop dynamic capabilities (Teece et al., 1997) to give a quick response to permanent market changes.

Porter's work emphasizes the need for firms and countries to broaden and upgrade their internal advantages to sustain and extend competitive advantages (Porter 1991, 1992).

Firms obtain sustained competitive advantage by implementing strategies that exploit their internal strengths through responding to environmental opportunities, improving internal weaknesses and eliminated the external threats (Barney, 1991).

For managers the challenge is to identify, develop, protect, and deploy resources and capabilities in a way that provides the firm with a sustainable competitive advantage and, thereby, a superior return on capital (Amit & Schoemaker, 1993).