THE IMPACT OF THE IMPLEMENTATION OF

“BALANCED SCORECARD” ON STRATEGIC DECISION

MAKING IN SAUDI UNIVERSITIES:
A CASE STUDY OF THE UNIVERSITY OF TABUK.

Al Khatatneh, Wahid Ratha'n.

University of Tabuk
&
Ibrahim, Zakaria Salem Soliman
1
University of Tabuk & OI

Khatatneh, Suliman, Tabuk UN 4/27/2019

2 INTRODUCTION

 Tabuk University was established in 2007.

It is accredited by the Ministry of Higher
Education in Saudi Arabia. Over the past
few years, there has been a growth in
the number of programs that the
University offered and un increase in the
students' number. The University has
adopted strategic plans since its
establishment until now and has involved
more shareholders in its Strategic Plans
development and Implementation

Khatatneh, Suliman, Tabuk UN 4/27/2019

3 Balanced Scorecard (BSC)

 The Balanced Scorecard (BSC) is one of

management accounting methods, which is used in
the industrial & service organizations, which is
developed by Kaplan & Norton .

 The concept of the (BSC) is translating the vision and

mission of the Organization to the a specific strategic
goals, to measure the performance, through four
dimensions.

Khatatneh, Suliman, Tabuk UN 4/27/2019

4
Balanced Scorecard dimensions

Khatatneh, Suliman, Tabuk UN 4/27/2019

5 Strategic decision-making

 Strategic decision-making research focus on the

processes through which firms take strategic decisions.
 Strategic decisions: are decisions implying high
uncertainty in the final outcomes, significant resource
commitment, and involvement of several decision
makers.

 Making decision can be more tasking than we

expect. There are many strategies used in choosing
the best choice or alternative.

Khatatneh, Suliman, Tabuk UN 4/27/2019

6

 Optimizing.
 Satisficing.
 Maximax.
 Maximin.

Khatatneh, Suliman, Tabuk UN 4/27/2019

7 Balanced Scorecard strategy map

 The strategy map has turned out to be as important an

innovative as the original Balanced Scorecard itself.
Executives find the visual representation of strategy both
natural and powerful. Strategy maps provide increased
division for executives to describe and manage strategy
at an operational level. A strategy map provides a visual
framework for an organization’s strategy – how it intends
to create value. Specifically, a good strategy map will link
together :
 . The desired productivity and growth outcomes.
 . The customer value proposition which will be needed.
 . Outstanding performance in internal processes.
 . The capabilities required from intangible assets.

Khatatneh, Suliman, Tabuk UN 4/27/2019

8 THE RESEARCH PROBLEM & PURPOSES

 The current research problem is determined by

answering the following questions:
 -What is the conceptual framework for Balance
Scorecard?
 -What is the conceptual framework for Strategic
Decision Making?
 -What are the implications of Balance Scorecard on
(SDM) at Tabuk University?

Khatatneh, Suliman, Tabuk UN 4/27/2019

 METHODOLOGY
9

 The research is based on the following main hypotheses:

 Ho: There is no statistically significant effect

at the level of (α ≤ 0.05) significance for the
application of the Balanced Scorecard
system to its different dimensions in strategic
decisions (improving the quality of outputs,
reducing cost and increasing production
capacity) in Saudi universities.

Khatatneh, Suliman, Tabuk UN 4/27/2019

10 Research Model

The dependent variable Independent variable

Strategic Decision Making Balanced Scorecard Method

Improving output quality

Financial dimension
internal processes
Reduce costs the customer
Learning and growth

Increase production capacity

Khatatneh, Suliman, Tabuk UN 4/27/2019

11 RESEARCH TOOL

 Being the most appropriate for this study, the research

adopts a descriptive approach to understanding and
analyzing the various aspects of the phenomenon and
to interpret the mutual relations between those aspects.
 The research tool was a developed questionnaire
consisting of two parts, Part 1 Includes demographic
variables, Part II deals with paragraphs that enable
participants to answer the research questions.

Khatatneh, Suliman, Tabuk UN 4/27/2019

12 The Cronbach’s Alpha test

Sequence of
No Variable α
paragraphs

1 the customer dimension 1-8 0.877

2 Learning and growth dimension 9-12 0.772

3 internal processes’ dimension 13-16 0.827

4 Financial dimension 17-20 0.852

5 Reduce costs 21-23 0.807
6 Improving output quality 24-26 0.858
7 Increase production capacity 27-29 0.803

Cronbach's Alpha 1-29 α=0.945

Khatatneh, Suliman, Tabuk UN 4/27/2019

13 presentation of study results

 The following is a statistical analysis of the demographic

variables, the study questions and their hypotheses according to
the answers of the study sample for the questionnaire:
 Statistical Analysis of Demographic Variables
 The population of the research consists of all (1800) faculty
members at Tabuk University.
 A random sample was selected of (377) faculty members.

Khatatneh, Suliman, Tabuk UN 4/27/2019

 Respondent's demographic variables:
14 Academic Rank
Frequency Percent Rank
Professor Dr 9 2 4
Associate Professor 3 1 5
Assistant Professor 209 55 1
lecturer 126 33 2
Teaching Assistant 30 8 3
Total 377 100
Work experience
Frequency Percent
Less than 2 years 35 9 3
Between 2 and 5 148 39 2
More than 5 194 51 1
Total 377 100
qualification
Frequency Percent
Ph.D. 225 60 1
Master 141 37 2
BA 11 3 3
Total 377 100
Age
Frequency Percent
30 And he was reduced 77 20 3
From 31 to 40 135 36 2
Greater
Khatatneh, Suliman, than
Tabuk UN 40 165 44 1 4/27/2019
Total 377 100
15

Std.
variable CV Mean Deviation
the customer dimension 17.64 3.4171 0.60274
Learning and growth dimension 20.54 3.2878 0.67541
internal processes’ dimension 19.95 3.437 0.68551

Financial dimension 17.83 3.4383 0.61292

Reduce costs 18.09 3.954 0.71517
Improving output quality 15.97 3.9717 0.63425
Increase production capacity 16.35 3.8647 0.63183
Valid N (list wise) 377

Khatatneh, Suliman, Tabuk UN 4/27/2019

 Constructs
Operationalization
λ t-test CR AVE H
of the constructs
16 Customer dimension C3 .711 -- 0.857 0.545 0.863
C4 .698 12.559***
C5 .813 14.406***
C6 .761 13.582***
Q7 .705 12.657***
learning and growth L1 .652 -- 0.716 0.457 0.717
L3 .692 11.245***

L4 .683 11.260***

internal processes I1 .843 -- 0.821 0.605 0.831

I2 .731 15.676***

I3 .755 16.280***

financial dimension F1 .723 -- 0.854 0.594 0.858

F2 .823 14.923***
F3 .753 13.729***
F4 .780 14.197***
reducing cost R1 .619 -- 0.749 0.504 0.794
R2 .642 14.982***

R3 .847 12.161***

improving the quality Q1 .803 -- 0.856 .666 0.860

of outputs Q2 .854 18.460***

Q3 .789 16.821***

increasing production P1 .850 -- 0.807 0.677 0.812

capacity
P2 .795 17.370***

Normed Khatatneh,
Chi-Square=3.6 RMR=0.047
Suliman, Tabuk UNGFI=0.856 AGFI= 0.80 NFI=0.873 RFI=0.839 IFI=0.905 TLI=0.878 CFI= 0.904 RMSEA=0.083
4/27/2019
 17 According to Table (-), the researchers
concluded the following:
 All standardized regression weights (factor loading) are greater than 0.50,
which means that all measured variables are statistically significant,
 the measured variables represent the constructs, this showing that there
exists some common points of convergence.

 T-test for all measured variables is significant at a level of significance less

than (0.001), which means that the importance of the observed variables
in measuring the effect of the constructs of the Balanced Scorecard
system on the constructs of strategic decisions.

 The CR shows results, which are greater than 0.70, which means that the
variables did converge at some point.

 The average variance extracted for the constructs of all scales turned out
to be greater than the cut-off values (0.50), except the construct of
learning and growth near to minimum value (0.50).
Khatatneh, Suliman, Tabuk UN 4/27/2019
18

constructs Customer learning internal financial improving reducing increasing

dimension and processes dimension the quality cost production
growth of outputs capacity
Customer 1
dimension
learning ***0.522 1
and growth
internal ***0.548 ***0.456 1
processes
financial ***0.581 ***0.499 ***0.648 1
dimension
improving ***0.497 ***0.533 ***0.551 ***0.534 1
the quality
of outputs
reducing ***0.463 ***0.535 ***0.516 ***0.567 ***0.488 1
cost
increasing ***0.568 ***0.571 ***0.577 ***0.660 ***0.650 ***0.619 1
production
capacity

Khatatneh, Suliman, Tabuk UN 4/27/2019

19

 From table (---)

 the researchers revealed that, there are

significant positive linear relationships
between the constructs of the Balanced
Scorecard system in terms of Customer
dimension, learning and growth, internal
processes, and financial aspects and the
constructs of strategic decisions in terms of
improving the quality of outputs, reducing
cost, and increasing production capacity,
at Significant at a level less than (0.001).

Khatatneh, Suliman, Tabuk UN 4/27/2019

 Figure (2):
structural equation modeling for testing the effect of
20 constructs of the Balanced Scorecard system on the
constructs of strategic decisions

Khatatneh, Suliman, Tabuk UN 4/27/2019

 21

Standardized Unstandardized
Path estimate estimate S.E. C.R. SIG.
improving the quality Customer
<--- .121 .104 .045 2.323 0.020*
of outputs dimension
increasing Customer
<--- .140 .111 .036 3.123 0.002**
production capacity dimension
improving the quality learning and
<--- .272 .260 .046 5.689 0.001***
of outputs growth
reducing cost learning and
<--- .303 .316 .048 6.569 0.001***
growth
increasing learning and
<--- .252 .221 .037 5.921 0.001***
production capacity growth
improving the quality internal
<--- .256 .223 .047 4.789 0.001***
of outputs processes
reducing cost internal
<--- .188 .179 .050 3.585 0.001***
processes
increasing internal
<--- .160 .128 .038 3.365 0.001***
production capacity processes
improving the quality financial
<--- .162 .143 .049 2.913 0.004**
of outputs dimension
reducing cost financial
<--- .294 .283 .052 5.462 0.001***
dimension
increasing financial
Khatatneh, Suliman, Tabuk UN 4/27/2019
<--- .353 .286 .040 7.131 0.001***
production capacity dimension
 22

 There is a significant positive effect of the

Balanced Scorecard dimensions on the
variables of strategic decisions , at a significant
level less than (0.05).

 This validates all research hypothesizes; There is

statistically significant effect at the level of (α
≤0.05) significance for the application of the
Balanced Scorecard system to its different
dimensions in strategic decisions (improving the
quality of outputs, reducing cost and increasing
production capacity) in Saudi universities.

Khatatneh, Suliman, Tabuk UN 4/27/2019

23

5.760
Chi-Square
Degree of Freedom 2
Level of Significance 0.056
Normed Chi-Square 2.880
Root Mean Square Residual (RMR) 0.010
Goodness of Fit Index (GFI) 0.996
Adjusted Goodness of Fit Index (AGFI) 0.939
Normed Fit Index (NFI) 0.996
Relative Fit Index (RFI) 0.955
Incremental Fit Index (IFI) 0.997
Tucker Lewis Index (TLI) 0.970
Comparative Fit Index (CFI) 0.997
Root Mean Square Residual Approximation (RMSEA) 0.071

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24

 All the goodness of fit measures of the model

indicates that all indicators are at acceptable limits
or greater than cut-off values, especially GFI, AGFI,
NFI, RFI, IFI.TLI, and CFI close to one and Normed
Chi-Square with cut-off values less than (5), at a
significant level greater than (0.05).
 The fit measures indicate the goodness of fit of the
structural model and its ability to measure the
effect of constructs of the Balanced Scorecard
system on the constructs of strategic decisions.
 Both Root Mean Square Residual (RMR) and Root
Mean Square Residual Approximation (RMSEA) less
than (0.08), which indicates a close fit of the
theoretical model to the actual model.

Khatatneh, Suliman, Tabuk UN 4/27/2019

25 RECOMMENDATION
 Defining the vision, mission and strategy of the University.
 Providing technological resources to serve the faculty
members.
 Rationalizing expenses as much as possible.
 Reducing student costs to use available resources efficiently.
 Adopting technology in academic programs to reduce costs.
 Existence of a clear strategic plan to determine the actual
requirement of faculty members to reduce costs.
 Improving the skills of the faculty members to improve the
abilities of the academic students.
 Completing the construction of the facilities to increase the
number of students enrolled.

Khatatneh, Suliman, Tabuk UN 4/27/2019