The Influence of Balanced Scorecard Perspectives on Firm Performance: Evidence from the Service Industry in Dhangadhi Sub-Metropolitan City, Nepal

Abstract

Background: The service sector plays a vital role in economic development, making effective performance measurement essential for organizational success. Traditional performance measurement systems primarily focus on financial indicators while often overlooking important non-financial factors that contribute to long-term performance. The Balanced Scorecard (BSC) provides a comprehensive framework by integrating financial and non-financial perspectives. However, limited empirical evidence exists regarding the application of the BSC framework among service firms in Nepal, particularly at the regional level.
Objective: This study examines the influence of the four Balanced Scorecard perspectives—financial, customer, internal business process, and learning and growth—on firm performance in the service industry of Dhangadhi Sub-Metropolitan City (Wards 1-7), Nepal.
Methodology: A quantitative cross-sectional research design was employed. Data were collected through structured questionnaires administered to managerial, supervisory, and administrative personnel working in various service organizations. Out of 350 distributed questionnaires, 258 valid responses were used for analysis. Descriptive statistics, Pearson correlation, and multiple regression analysis were conducted using SPSS.
Results: The findings revealed that the Balanced Scorecard perspectives jointly have a significant influence on firm performance. The regression model explained 51.8% of the variation in firm performance (R² = 0.518, p < 0.05). Financial perspective, internal business process perspective, and learning and growth perspective were found to have positive and significant effects on firm performance. Among these, the learning and growth perspective emerged as the strongest predictor. However, the customer perspective did not show a statistically significant direct effect on firm performance.
Conclusion: The study concludes that both financial and non-financial factors are important determinants of firm performance. Service organizations should prioritize employee development, continuous improvement of internal processes, and strategic performance management practices to achieve sustainable growth and competitive advantage.