Construction of the balanced scorecard by using structural equation models with latent variables

Abstract

The Balanced Scorecard is one of the most important quantitative tool for the business strategic planning. Its implementation usually concerns the construction and analysis of proper weighted averages of the so-called Key Performance Indicators (KPI); these are either objective or subjective evaluations of the performance levels attained by the various sub-systems constituting a business organization. Recent evolutions of the model are considered and a particular version of the Balanced Scorecard, based on Structural Equation Models with Latent Variables, is introduced.