Balanced Scorecard and Competitive Strategies of Small and Medium

Manufacturing Organizations

ABDEL-AZIZ AHMAD SHARABATI1*, ASSAD ADNAN GHAITH1, AMER MORSHED1,

HESHAM ABUSAIMEH2, SHAFIG AL-HADDAD3

1Business Faculty, Middle East University,

Amman,

JORDAN

2Faculty of Information Technology, Middle East University,

Amman,

JORDAN

3King Talal School of Business Technology, Princess Sumaya University for Technology,

Amman,

JORDAN

*Corresponding Author

Abstract: - The competition between Jordanian Small and Medium Manufacturing Enterprises (SMMEs) and

imported products from foreign countries especially from China is increasing, so Jordanian SMMEs have to use

different strategic tools to be able to compete with imported products. Therefore, this research purpose is to

explore the effect of using a Balanced Scorecard (BSC) as a strategic tool on Jordanian SMMEs' competitive

strategies. The study uses a quantitative descriptive and cause-effect approach, and it is cross-sectional

research. Exactly 120 managers and owners from 100 SMMEs completed a questionnaire. Then questionnaires

were checked and coded against SPSS. The results show that implementing the BSC affects the competitive

strategies of Jordanian manufacturing SMMEs, where the BSC has assigned the greatest weight to the focus

strategy, the cost leadership strategy, and finally the differentiation strategy. Moreover, the customer

perspective has the highest impact on competitive strategies, then the financial perspective, followed by the

learning and growth perspective, and finally the internal processes perspective. This article illustrates how

using a BSC is essential to measure and manage organizational performance via analyzing weaknesses and

strengths, which helps to achieve competitive strategies. Therefore, owners and managers should use BSC as a

strategic tool before setting strategic goals and objectives to achieve a competitive strategy. Finally, this

research will help managers and owners of SMEs to improve their competitive position compared to foreign

companies.

Key-Words: - Balanced Scorecard; Competitive Strategy; Small and Medium-Sized Manufacturing Enterprises;

Amman; Jordan.

Received: March 2, 2023. Revised: August 19, 2023. Accepted: September 17, 2023. Available online: November 2, 2023.

1 Introduction

Jordan’s Small and Medium Manufacturing

Enterprises (SMMEs) are suffering from high

competition with imported products, especially

issues related to quality and price, [1]. According to

the statements of many executives and owners of

SMMEs, China is the biggest danger since

Jordanian merchants may purchase products from

China at reduced costs and approved quality versus

local goods, which generates strong rivalry, [2].

According to the Oxford Business Group (2017),

about 91% of Jordan's businesses are categorized as

small or medium-sized (SMEs), and more than 70%

of those are struggling in some way, [3]. The

directors and owners of industrial companies have

identified a wide range of difficulties, including

declining sales, a quality-to-price ratio that is too

low, a lack of agility in meeting the demands of the

market, as well as an unknown sales outlook.

Several academics and practitioners have stressed

the importance of having a clear strategic plan and

the ability to transform that strategy into actionable

practices with a reliable measuring tool for firms to

face such difficulties. This might be accomplished

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DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

through the utilization of a wide range of

techniques, including the Balanced Scorecard (BSC)

and many other tools. The BSC is useful for

analyzing both the micro and macro environments,

coming to appropriate decisions, taking on new

obstacles, successfully competing in the current

marketplace, and ultimately improving the

company's competitive position, [4]. Finally, every

organization has to develop its strategy to be able to

cope with the fast-changing market environment,

because no single strategy can fit all organizations,

[5].

In 1996 Norton and Kaplan developed the

balanced scorecard and stated it depends on four

elements to align short-term processes with long-

term goals: Translate the vision (develop

measurements and metrics), communicate and link

(disseminate and link to individual performance and

compensation), business planning (planning,

budgeting, creating discipline, define drivers for

intended outcomes), and feedback and learning

(cause-effect analysis) [6]. BSC is divided into

perspectives as follows the financial, customer,

internal business processes, and learning and

growth, [6], [7]. In 1997, Grembergen and

Timmerman adapted BSC to IT and called it as IT

Balanced Scorecard (IT BSC), [8]. BSC is a tool

used to develop, implement, and measure

organizations' strategies' performance and success,

[9]. To enhance organizational efficiency, the BSC

has to be used as a strategic tool. It directs managers

to identify the most effective resources for using

different competitive strategies and applying the

best investment, [10]. BSC is used as a performance

measurement tool to help in developing plans,

management, and performance evaluation. It is a

tool used to transfer strategic goals into performance

measures, [11]. As for strategic performance

measurement, a BSC is used as a framework. This

scorecard transfers the company's goals and

objectives into suitable performance indicators,

[12]. The BSC ideas and tools are contributing to

the overall organizational success, [13]. The BSC

helps organizations match their goals and objectives

with daily activities, [14]. As a tool of strategic

control, the BSC is crucial to the organization's

continuity and prosperity, [15]. The BSC can be

used as a competitive tool to measure performance

for internal factors, [16]. The concept of BSC

directs organizations to understand their competitive

position and directs them to use the most important

success measures. Both intangible and intangible

assets are very important to increase organizations’

competitiveness and market value, [17]. The BSC is

a tool that is used to convert an organizational

mission and strategy into quantifiable measures for

activities and tangible goals, [18]. The BSC is a tool

to manage and evaluate strategic performance to

reach competitive advantages to align with the

increasing market dynamics and competitive

environment to preserve the organization's

competitiveness, [19]. Organizational performance

can be evaluated and a competitive edge established

with the help of the BSC, [20]. The BSC measures

the ability of organizations to convert the

organization's mission and strategies into reality,

[21]. The perspectives of BSC are utilized to

develop a strategic map for using resources. It is

also used for organizations' infrastructure and

resources analysis and to measure their competitive

advantage., so it is a tool used to develop strategic

management processes, [22]. The BSC helps top

management maximize organizational performance

by implementing strategic plans and goals

successfully, [23]. A BSC is a crucial tool to

achieve a competitive advantage and enhance

performance, [24]. Both creativity and innovation

are key for financial and physical assets to create

competitive advantages, [25]. Focusing on

organization’s resources and their potential, BSC

can be used as strategic management tool that direct

organizations performance to gain a market

advantage, [26]. BSC is utilized for managing,

designing, continuous planning, maintaining, and

evaluating projects, [27]. A BSC is a method used

for measuring the business competition and

attaining business competitive advantage, [28]. A

BSC approach is used to evaluate climate change

which is critical for business and organizational

competitiveness, [29]. A BSC is an important tool to

improve performance and create a competitive

advantage, [30]. BSC is a tool to analyze strengths

and weaknesses and to manage costs to be able to

survive, It is required to establish and preserve a

competitive edge, [31].

As mentioned above, it seems that there is a

consensus among all academicians and practitioners

on the benefits of BSC for all organizations

including SMMEs designed for strategic usage in

managing and assessing organizational performance

and developing competitive advantages that inform

strategic decision-making. Therefore, the purpose of

this research is to discover whether or if small and

medium-sized (SME) firms in Jordan may benefit

from using a BSC to increase their productivity and

competitiveness. This research shows how the

viewpoints and techniques the BSC employs to

compete may be applied in the real world, helping to

close the disconnect between theory and reality.

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Therefore, the following are the primary

concerns that this investigation attempts to address:

Q1: Does implementing the BSC affect competitive

strategies (differentiation strategy, cost leadership

strategy, and focus strategy) of the Jordanian small

and medium manufacturing enterprises?

Q2: Does implementing the BSC perspectives

(financial, customer, internal business processes,

and learning and growth) affect the Jordanian small

and medium manufacturing enterprises’ competitive

strategies?

The answers to these questions will help SMME

managers and owners define the best competitive

strategy and the best BSC perspective to be used to

achieve the intended objectives.

2 Problem Formulation

2.1 Balanced Scorecards (Independent

Variable)

The (BSC) is a useful strategic planning tool for all

institutions; it incorporates the institution's goal,

objective, and strategic plan into four categories of

performance indicators (both quantitative and

qualitative), [32]. A company's strategy can be

turned into a consistent set of performance

indicators using (BSC), a comprehensive

framework. This is because it successfully conveys

the plan's implementation while also taking into

account financial and non-financial issues within

and beyond the scope of management, [33].

Focusing on the information needs of planning and

management, a good BSC also characterizes the

basic managerial information, and it should also

boost the organization's adaptability to changes or

shifting models of managerial decisions by helping

managers better understand the external and internal

environments in which their business operates, [34].

Short-term and long-term financial goals are both

considered within a BSC's framework for measuring

performance, [35]. The four BSC perspectives are

used to evaluate a business's performance, [36].

BSC includes four perspectives: financial, customer,

internal processes, and learning and growth as

follows:

Financial Perspective: The financial perspective

is the material results that an organization should be

achieved, [37]. The financial perspective is how the

organizations presented to shareholders; financial

statements, balance sheets, and current ratios can do

it, [38]. There are many ways to evaluate a

company's financial performance, such as return on

capital, contribution margin, and income, and firms

need to understand where their money is most

effectively utilized. However, it is unwise to focus

solely on monetary indicators and ignore everything

else, [39].

Customer Perspective: An approach taken from

the customer's point of view prioritizes the needs

and expectations of the customer while developing

performance measurements to ensure that

production facilities are neither exceeding nor

falling short of the mark, [40]. Indicators of

customer satisfaction and market share can only be

achieved once manufacturers have developed

meaningful connections with their ideal clients,

[41]. There are several approaches, like secret

shopper programs and customer satisfaction

surveys, to gauge the level of customer service. To

achieve a plan or develop a strategy that works for

the target customers, understanding customers is

helpful, [42].

Internal Business Processes Perspective:

Focusing on areas of expertise, decisions, and

processes that will provide significance to both

external and internal customers is the way to

customer satisfaction, which is reflected by an

internal perspective that informs managers of how

these strengths or internal processes are developed

to achieve the organization's objectives, [43].

Internal business procedures by learning the most

important tasks that contribute to the success of the

company, [44]. Internal processes answer the

question of what the firm must succeed at, such as

time, cost, or perhaps even new products, by

focusing on the underlying abilities, decisions, and

activities that have the greatest impact on customer

satisfaction, [45]. Definition of internal business

processes as those that add value for shareholders

and customers, [46].

Learning and Growth Perspective: Focusing on

employee happiness, training, and development, the

learning and growth perspective considers how

factories can respond to changes in the external

environment, such as the introduction of new

products or new markets.

The organizational transformation that fosters

growth and innovation can be facilitated by

adhering to the principles outlined by the learning

and growth perspective, [41]. One way in which

collaboration can help people adapt to and thrive in

their environments over time is through the lens of

learning and growth, [38]. Those working for the

company should be given the tools and resources

they need to think creatively. Due to the

interconnected nature of innovation and internal

processes, it is essential to cultivate and learn to

ensure the success of mission-critical operations.

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Given the rapid pace of change, the ability to adopt

a growth mindset through training is essential, [47].

2.2 Competitive Strategy (Dependent

Variable)

Competitive Advantages and Strategy: Gaining and

maintaining a competitive advantage requires an

organization to adapt to shifting external and

internal conditions to capitalize on possibilities,

[15]. Products and services can be differentiated by

being superior to those offered by competitors, with

further differentiation possible through novel

approaches, [48]. When a company has limited

resources, it may adopt a focus strategy in which the

market is segmented into a select few target markets

rather than the entire market, [49]. To achieve cost

leadership, you must be able to produce your goods

or services for a more affordable price than the

competition, [50]. When it comes to organizational

success and peak performance, the competitive edge

is tied to both internal and external influences, [26].

Cost leadership, differentiation, and a laser-like

focus on one area of the market are all components

of this long-term approach, [51].

Differentiation Strategy: As a business, you can

gain an edge over the competition by differentiating

your goods from those of other companies. To do

this, focus on changing the one feature that matters

most to the majority of customers while keeping the

remaining features and their associated prices

constant, [52]. Differentiation, in the form of

specialty, is essential for new businesses to gain a

marketable advantage, [53]. When a company

differentiates itself, it offers customers something

that other offerings do not. Making products or

services more appealing than the competition is

crucial. Research and development (R&D) and

innovation-based design are two areas where

businesses must devote significant time and money.

Consumers invest in sorts when they are prepared to

pay more for a different product because they

recognize its significant importance, [50].

Cost Leadership Strategy: A protracted strategy

necessitates the company becoming capable of

gaining a competitive edge over its rivals. By

having the lowest prices, standing out, or focusing.

This gives the company an edge over its

competitors, [54]. How can you compete with

reduced costs than your competitors but still make

money? You can do this by lowering your operation

costs or making your employees more productive,

[55]. To achieve cost leadership, one must provide

consumers with higher quality at cheaper prices than

competitors, [56].

Focus Strategy: Differentiation strategy, low-

cost strategy, or a combination of the two; market

segmentation, regional targeting, and business-to-

customer focus; these are all examples of focus

strategies, [57]. Organizations with fewer resources

can still compete successfully by narrowing their

focus to a certain market niche rather than the entire

market as a whole, [58].

2.3 Previous Studies

Previous research on the connection between BSC

and Competitive strategies is briefly discussed here.

These researches have been arranged in

chronological order, beginning with the most recent

ones:

The four BSC business dimensions are

innovation and learning, internal business process,

customer, and financial perspectives, [10]. The four

perspectives of BSC (financial, internal business

process, learning and growth, and customer) have to

be measured and aligned with corporate social

responsibility to create competitive advantage, [12].

A BSC system measures performance through a

customer-focused strategy that concentrates on

using assets and internal processes strategy to adapt

to market changes and create a competitive

advantage, [11]. The application of the BSC

facilitates the use of a quality management system

for quality management and business excellence to

achieve a competitive advantage and improve

business performance, [13]. BSC improves

profitability and financial performance, [14].

Several organizations use the BSC to implement

their strategies which is a valuable system for

satisfying customers’ needs as well as shareholders'

requirements, [40]. BSC is used to evaluate the

environmental changes that accelerate creativity and

innovation. Updating knowledge improves

performance through learning. Environmental

changes lead to internal structure changes.

Organizations use the BSC to measure

transformation processes, [15].

Top marks went to internal business processes,

next to customer perspective, then to financial

perspective, and finally to learning and growth, [43].

Higher use of BSC in market competition improves

business performance, [16]. Healthcare

organizations use the four BSC perspectives

(Customer, Financial, Innovation, Learning Growth,

and Internal Business Perspectives) to evaluate

performance, which affects the organization's

competitiveness. The price, quality, and image of

healthcare services affect the competitiveness of

healthcare organizations in the local and global

markets Financial Perspective creates value for the

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shareholder. The customer Relationship Perspective

defines the customer and market strategies. Internal

business perspective determines the best processes

to satisfy customers and shareholders. The

innovation and learning growth perspective is

related to implementing objectives and measures of

learning and growth. These are the most important

factors to maintain a competitive position and

increase the organization’s market value, [17]. BSC

helps to apply a quality management system and

focus on long-term financial efficiency which

impacts organizations' competitiveness, [59]. The

BSC is significantly and positively correlated with

cost, quality, and flexibility, [19]. The IT BSC

consists of four new perspectives: corporate

contribution, customer (user) orientation,

operational excellence, and future orientation, [18].

A large number of Jordanian pharmaceutical

manufacturers use the BSC factors, and there is a

robust correlation between the BSC factors and the

financial success of these companies, [60]. Activity-

based Costing (ABC) and the BSC both are used to

measure performance and cost management, which

improve organizations performance of

manufacturing organizations. The ABC helps

managers to make suitable decisions regarding

profitability, while BSC facilitates its

implementation to improve organizations'

performance, [61]. To strengthen the company's

standing in the market and its financial prospects,

BSC can be used as a useful tool. Applying the BSC

impacts the organization's performance and

sustainable competitiveness, [20]. All of the BSC's

perspectives work together to boost quality and

gratify the needs of all stakeholders, both internal

and external, [44]. BSC is viewed as a performance

measurement system, which leads to success better

competitive position, [62]. All of the BSC's

perspectives work together to boost quality and

gratify the needs of all stakeholders, both internal

and exterior, [49].

BSC factors (financial, customer, internal

processes, learning, and growth, Social and

environmental) affect marketing competitive

strategies (differentiation, focus, and price

leadership), which in turn affect marketing

competitive strategy. Financial factors rated the

highest priority and the differentiation strategy

scored the highest marketing competitive strategy,

[63]. BSC improves competitive priorities (value,

delivery, flexibility, and innovation), which

influence organizations' performance, [21]. Total

quality management and the four BSC perspectives

are interrelated in a way that helps businesses

succeed, [41]. Successful implementation of a

corporate strategy requires the use of a BSC, which

is a measuring performance system that necessitates

the buy-in of managers and employees at all levels,

[64]. For cooperatives, a BSC can serve as a

mechanism for measuring performance, which

should lead to noticeable gains. The four tenets of

the BSC that constitute the foundation of

cooperative performance measurement are

coherence, balance, completeness, and

quantifiability, [38]. A positive relationship between

a BSC and competitive strategy. Using BSC as a

tool helped organizations to improve the

performance of the financial sector 3.5 times over

the last five years, while from the customer’s

perspective, it reduces waiting time by 30% and

complaints were zero claims, the flow of goods

increased by 4%, and the growth rate due to the

human resource was 6%, [22]. The competitive

advantage of Jordanian telecommunications firms is

affected by the use of BSC perspectives (Financial,

Customer, Internal processes, and Learning and

growth), [23]. There is a strong relationship between

BSC and bank performance, where BSC affect the

learning and innovation performance, process

performance, finances, and competitiveness of

Egyptian bank, [24]. Organizational performance

can be enhanced by the use of a BSC as it facilitates

communication of the organization's plan to all

members, encourages the feedback process, links

short-term activities with a long-term strategy, and

raises strategic employee awareness, [65]. A BSC

positively affects an organization’s competitive

advantage, and both affect the organization’s

performance, [36].

It is recommended that the particular

performance measures defined by the f BSC aspects

(learning and growth, internal process, external

stakeholders, and finance and carbon performance)

be utilized as a functional framework for

competitiveness indicators and to assess the success

of the adoption and implementation of

competitiveness strategies, [29]. There is a positive

correlation between a BSC and financial

performance and innovation outcomes, [66]. The

perspective on learning and growth was given the

highest rating, second by the perspective on the

company's internal business operations, and then the

perspective on the consumer, in that order, [67].

Implementing the four BSC perspectives (financial,

internal business process, learning & growth, and

customer) affects international competitiveness. The

growth and learning perspective and financial

perspective showed high performance while the

customer and internal business perspectives showed

poor performance, which indicated a shortage in

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E-ISSN: 2224-2899

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achieving international competitiveness as planned,

[68]. BSC analysis showed that relational capital has

the most effect on organizational performance and

competitive advantage, [25]. BSC perspectives

(customers, internal processes, finance, and learning

and growth) are used to evaluate competitive

factors, [27]. The BSC is used to evaluate the effect

of technology applications on organizations. When

the BSC is utilized, the source of the competitive

advantage comes from the effective utilization of

all assets, [26]. BSC utilizes Information

Technology to achieve a competitive advantage,

which includes quality, response, cost, and

uniqueness. Both Information Technology and

innovation lead to uniqueness, [28].

The use of BSC did not affect the performance

as well as the competitive advantage of private

universities, [69]. BSC is a strategic tool that guides

SMEs to deal with knowledge, manage activities,

and direct decision-making to help organizations be

more competitive and profitable. It increases sales,

improves quality, reduces costs, reduces turnover

rate, and increases profitability, [70]. The BSC

significantly affects the bank's ability to learn and

innovate, as well as the bank's capability to manage

its activities, and improves its relationship with

customers. The BSC indicates that a bank's

competitiveness is related to the level of the bank's

performance, [30]. The BSC helps as a tool for

competition and comparison between organizations

in the market, [71], so the BSC directly affects

competitive advantage, [72], also it helps

organizations to differentiate their products from

competitors. This may be accomplished by altering

the product in a way that appeals to the majority of

buyers while keeping the price and other features

constant, [73]. There are various implementation

challenges to adopting BSCs in SMEs, such as a

lack of staff and financial constraints, although these

do not prevent their use in large enterprises. Small

and medium-sized businesses need less time to

complete their projects than giant corporations do.

In the end, large businesses benefit more from

implementing a BSC than small and medium-sized

enterprises, [74]. The organizational learning,

financial perspective, customer focus, and internal

business process affect the competitiveness of

microfinance institutions in Kenya. The financial

perspective increases financial capability. The

internal business process increases the smooth

efficient operation. Organizational learning

enhances knowledge sharing, while customer focus

helps to understand and satisfy customers’ needs,

[75]. Finally, the BSC reduces the cost and lowers

turnover, [31].

As mentioned above, all previous studies

indicated that using BSC as a tool for measuring and

managing organizational performance would help

organizations achieve a competitive strategy. BSC

consists of four perspectives customer perspective,

internal processes perspective, learning and growth

perspective, and financial perspective, while

competitive strategies include differentiation

strategy, cost leadership strategy, and focus strategy.

Therefore, the current study is dedicated to

answering the research questions stated in the

introduction through the following hypotheses:

H1: Implementing the BSC affects competitive

strategies (differentiation strategy, cost leadership

strategy, and focus strategy) of Jordanian small and

medium manufacturing enterprises, at (α≤0.05). As

shown in Figure 1.

H2: Implementing the BSC perspectives (financial,

customer, internal business processes, and learning

and growth) affect the competitive strategies of

Jordanian small and medium manufacturing

enterprises, at (α≤0.05). As shown in Figure 1.

Fig. 1: Study Models

3 Problem Solution

3.1 Methodology

The current research can be categorized as both a

descriptive and a cause-and-effect study. The study's

stated objective is to investigate the effectiveness of

business strategy conceptualizations (BSC) in

helping small and medium-sized manufacturing

enterprises (SMMEs) in Jordan develop successful

differentiation strategies. The research process

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E-ISSN: 2224-2899

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begins with a review of the relevant literature and

in-depth interviews with subject matter experts to

define the research topic and inform the

development of the questionnaire. The questionnaire

has been developed based on previous literature, it

includes three sections: Demographic dimensions

(Company name, capital of the company, number of

employees, gender, age, experience, education, and

position). The independent variable (Balanced

Scorecard) includes financial perspective, customer

perspective, internal business processes perspective,

learning, and growth perspective. The dependent

variable (Competitive Strategy) includes

differentiation strategy, cost leadership strategy, and

focus strategy. Five items and a five-point Likert-

type scale measured each sub-variable of

independent and dependent variables; from strongly

not agree to strongly agree.

After completing the survey, checking, and

coding the obtained data in SPSS, we ran many

statistical tests, including a validity and reliability

analysis, a correlation analysis, and the multiple

regression analysis was used to test the study

hypothesis:

H1: Implementing the BSC affects competitive

strategies (differentiation strategy, cost leadership

strategy, and focus strategy) of Jordanian small and

medium manufacturing enterprises, at (α≤0.05).

H2: Implementing the BSC perspectives (financial,

customer, internal business processes, and learning

and growth) affect the competitive strategies of

Jordanian small and medium manufacturing

enterprises, at (α≤0.05).

As for the study's demographic and sample, they

included all small and medium-sized manufacturing

organizations in Jordan's Sahab Industrial Area. At

least 206 companies will have enrolled with the

Jordan Investors Association by the end of 2021.

There was no need to sample because the survey

included all of these companies. These businesses

are broken down into their owners and managers.

The questionnaires were distributed to

organizations’ managers and owners who are

located in the Sahab Industrial Area and registered

at the Jordan Investors Association. Two hundred

questionnaires were distributed to managers and

owners, and 120 were returned, which covers 100

companies. All of them were appropriate for further

analysis and coded on SPSS.

3.2 Validity Test

Some authors indicated that factor loading of more

than 0.50 is accepted while others mentioned 0.40 is

accepted, [37], [76]. KMO between 0.8 to 1 shows

high adequacy and harmony, the Chi2 shows the

fitness of the model, and then the variance shows

the explanation percentage of the variables. Finally,

if the significance of Bartlett's Sphericity is less than

0.05 at 0.95, then using factor analysis is suitable

[37], [77], [78], [79]. Table 1 demonstrates that the

loading factor of BSC dimensions scored between

0.620 and 0.801. The Chi2 for KMO is 129.198, and

the variance is 58.059, which means that 58.1% of

the BSC can be explained by the variance. Lastly,

Bartlett's Sphericity has less than 0.05 importance at

0.95. Based on the results mentioned above, it is

assumed that the construct is valid. Moreover, the

competitive strategy sub-variables factor loading

has ranged from 0.901 to 0.947. With a rating of

73.2%, a Chi2 of 252.130, and a variance of 85.057,

KMO has a competitive advantage of 85.1%. Lastly,

Bartlett's Sphericity does not matter more than 0.05.

3.3 Reliability Test

A dependable instrument has a Cronbach's alpha of

0.70 or higher, while one that is just above 0.60 is

considered valid, [37], [76], [80], [81]. Table 1

shows that BSC dimensions Cronbach’s alpha range

between 0.741 and 0.795, competitive strategy sub-

variables between 0.875 and 0.907, and all sub-

variables and dimensions are above 0.60.

Table 1. Validity and Reliability Tests

Persp./ Strat.

Items

KMO

Chi2

BTS

Var%

Sig.

F. P.

0.741

0.620

0.696

129.198

58.059

0.000

C. P.

0.795

0.837

IBP P.

0.742

0.773

L&G P.

0.768

0.801

BSC

0.757

CL S.

0.878

0.919

0.732

252.130

85.057

0.000

Diff. S.

0.875

0.901

Focus S.

0.907

0.947

Comp S.

0.912

3.4 Demographic Characteristics of

Respondents

Table 2 shows that most owners and managers are

more than 40 years old, the majority have more than

10 years of experience, 45.8% have only a Diploma

degree, and 54.2% have a higher degree. Finally,

54.2% are managers and 45.8 are owners.

Table 2. Demographic Analysis

Dimension

Frequency

Percentage

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

Age

Less than 30

19.2

Bet. 30-40

25.0

Bet. 41-50

29.2

More than 51-

26.7

Total

120

100.0

Experience

Less than 10

15.0

Bet. 11-20

45.0

Bet. 21-30

27.5

More than 30

12.5

Total

120

100.0

Education

Diploma

45.8

Bachelor

18.3

Master

21.7

Ph.D.

14.2

Total

120

100.0

Position

Manager

54.2

Owner

45.8

Total

120

100.0

3.5 Descriptive Statistical Analysis

Table 3 demonstrates that respondents think that

BSC aspects are important, with means ranging

from 3.79 to 4.07 and standard deviations from 0.71

to 0.55. The average mean of BSC dimensions is

3.98 with a standard deviation of 0.48, indicating

that respondents esteem the BSC highly. The t-

value=20.2 is higher than the t-tabulated=1.96.

Financial, internal business procedures, customer,

and learning and growth perspectives are ranked

highest in the table. Table 4 demonstrates that

respondents think that competitive strategy sub-

variables are important. The means vary from 3.66

to 3.95, with a standard deviation of 0.83 to 0.79.

The average mean of competitive strategy sub-

variables is 3.85, with a standard deviation of 0.75,

indicating that respondents agree on their high

importance since t-value=11.38 is more than t-

tabulated=1.96. The table reveals that the focused

approach is most important, followed by cost

leadership and distinctiveness.

Table 3. Mean, Standard Deviation, t-value,

Ranking, and Importance of Sub-Variable

T-tabulated=1.960

3.6 Relationships between Dependent and

Independent Variables

The results are shown in Table 4, where the

correlations between the various aspects of BSC and

competitive strategy range from 0.295 to 0.661, and

where the correlation between BSC and competitive

strategy is 0.823, indicating a strong association

between the two.

Table 4. Bivariate Pearson Correlation between all

Variables and Sub-Variables

**. Correlation is significant at the 0.01 level (2-tailed).

3.7 Hypothesis Testing

Multiple regression was employed to evaluate the

hypotheses of the study after validity, reliability,

and the correlation between the BSC and

Competitive Strategy variables were established;

additionally, the normality, linearity, independence

of errors, and multi-collinearity of the data were

examined, [76], [82].

Normality: As can be seen in Figure 2, the data

histogram shape is normally distributed, indicating

that the residuals do not affect the normal

distribution.

Fig. 2: Normality Test

Linearity Test: Observe in Figure 3 how the

independent and dependent variables line up in a

straight line.

No.

Dimensions

S.D

Sig.

Rank

F. Perspective.

4.056

0.554

20.851

0.00

C. Perspective.

3.967

0.660

15.957

0.00

IBP Perspective

4.088

0.571

20.883

0.00

L&G Perspective.

3.755

0.715

11.55

0.00

BSC

3.965

0.478

22.1256

0.00

CL Strategy

3.902

0.836

11.813

0.00

Diff. Strategy

3.645

0.828

8.531

0.00

Focus Strategy

3.930

0.819

12.440

0.00

Comp. Strategy

3.826

0.763

11.849

0.00

Fin P

Cus. P

.303**

IBP P

.429**

.504**

L&G P

.295**

.661**

.419**

BSC

.633**

.831**

.754**

.813**

CL S

.469**

.711**

.480**

.649**

.768**

Diff. S

.477**

.619**

.573**

.512**

.715**

.712**

Foc. S

.465**

.690**

.620**

.634**

.795**

.828**

.786**

.510**

.730**

.604**

.649**

.823**

.919**

.903**

.945**

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

Fig. 3: Linearity Test

Independence of Errors: The scatterplot of

standard deviations around the mean is shown in

Figure 4; the use of Durbin-Watson was

implemented to guarantee the errors' independence.

Fig. 4: Scatterplot Test

Multi-Collinearity: The Collinearity model does

not break this assumption since, as shown in Table

5, the VIF (Variation Inflation Factor) value is less

than 10 and the tolerance is greater than 10%. When

compared to 2, Durbin-Watson is significantly

lower at 1.988.

Table 5. Collinearity Statistics

Sub-Variables

Collinearity Statistics

Tolerance

VIF

Cost Leadership Strategy

0.304

3.285

Differentiation Strategy

0.370

2.701

Focus Strategy

0.236

4.245

3.7.1 Main Hypothesis: Multiple Regressions:

H1: Implementing the BSC affects competitive

strategies (differentiation strategy, cost leadership

strategy, and focus strategy) of Jordanian small and

medium manufacturing enterprises, at (α≤0.05).

Table 6 demonstrates that the study model is

appropriate by calculating an f-value of 83.362

when the BSC viewpoints are regressed against the

three Competitive Strategies and that R2

demonstrates the independent variable's explanatory

power on the dependent variable. Model results

indicate that the BSC may account for 68.3% of the

variance in Competitive Strategy (R2=0.683,

f=83.362, Sig. =0.000). Therefore, the null

hypothesis that no significant difference exists

between the groups before and after BSC

implementation (differentiation strategy, cost

leadership strategy, and focus strategy) is accepted

at (α≤0.05).

Table 6. Multiple Regression Analysis of Balanced

Scorecard against Competitive Strategy

Model

Adjusted R2

Sig.

0.827a

0.683

0.675

83.362

.000b

a. Predictors: (Constant), Focus Strategy,

Differentiation Strategy, Low-Cost Strategy. b.

Dependent Variable: Balanced Scorecard.

Table 7. Multiple Regressions Analysis of Balanced

Scorecard against Competitive Strategy (ANOVA)

Model

Unstandardized

Coefficients

Standardized

Coefficients

Sig.

Std. Error

Beta

(constant)

1.983

0.128

15.514

0.000

CL. S.

0.178

0.054

0.311

3.285

0.001

Diff. S.

0.107

0.050

0.185

2.152

0.033

Foc. S.

0.229

0.063

0.392

3.643

0.000

T-tabulated=1.960

According to Table 7, the BSC has the greatest

effect on the focus strategy (Be-ta=0.392, t=3.643,

Sig. =0.000), followed by the cost leadership

strategy (Beta=0.311, t=3.285, Sig. =0.001) and the

differentiation strategy (Beta=0.185, t=2.152, Sig.

=0.033).H2: Implementing the BSC perspectives

(financial, customer, internal business processes,

and learning and growth) affect the competitive

strategies of Jordanian small and medium

manufacturing enterprises, at (α≤0.05).

Table 8 displays the results of regression

analysis between the four BSC viewpoints and the

average of Competitive Strategies. The f value of

62.844 indicates that the study model is appropriate,

and the R2 value indicates the explanatory power of

the independent variable on the dependent variable.

Results from the model suggest that the four BSCs

can account for 68.6% of the variance in

Competitive Strategy (R2=0.686, f=62.844, Sig.

=0.000). Thus, at (0.05), it is concluded that small

and medium-sized manufacturing firms in Jordan

can benefit from adopting the BSC viewpoints

(financial, customer, internal business processes,

and learning and growth) to improve their

competitive strategies.

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

Table 8. Multiple Regression Analysis of Balanced

Scorecard against Competitive Strategy

Model

Adjusted R2

Sig.

0.828a

0.686

0.675

62.844

.000b

a. Predictors: (Constant), Learning and Growth,

Financial Perspective, Internal Business Processes,

Customer Perspective. b. Dependent Variable:

Competitive Strategy.

Table 9. Multiple Regressions Analysis of Balanced

Scorecard against Competitive Strategy (ANOVA)

Model

Unstandardized

Coefficients

Standardized

Coefficients

Sig.

Std. Error

Beta

(constant)

-1.361

0.356

-3.818

0.000

Fin. P.

0.319

0.080

0.232

3.969

0.000

Cus. P.

0.471

0.085

0.407

5.514

0.000

IP P.

0.274

0.086

0.205

3.182

0.002

L&G. P.

0.241

0.075

0.225

3.192

0.002

T-tabulated=1.960

Table 9 shows that the customer perspective has

the greatest effect on competitive strategies,

followed by the financial perspective (Beta=0.232,

t=3.969, Sig. =0.000), the perspective on learning

and development (Beta=0.225, t=3.182, Sig.

=0.002), and the perspective on internal processes

(Beta=0.205, t=3.182, Sig. =0.002).

4 Discussion

This study looked at how the balance-scored card

could enhance the Jordanian SMMEs' comparative

strategy. The issue arose when the owners and

managers began griping about the quality and cost

of the Chinese company's products and enquiring as

to how they might compete with them. The article

used a descriptive cause-effect quantitative method

and a questionnaire has been used to gather data

from the company’s managers and owners to

examine the hypotheses. Data were collected from

120 respondents representing 100 companies. The

data have been analyzed with SPSS, and hypotheses

have been verified using the results. According to

the findings, implementing the BSC affects the

competitive strategies of Jordanian small and

medium manufacturing enterprises, specifically

their differentiation strategy, cost leadership

strategy, and focus strategy. The results show that

the implementation of the BSC has the greatest

impact on the focus strategy, followed by the cost

leadership strategy, and then the differentiation

strategy. The results also show that implementing

the BSC perspectives (financial, customer, internal

business processes, and learning and growth) affects

the competitive strategies of Jordanian small and

medium manufacturing enterprises at (<0.05), with

the customer perspective having the greatest impact,

followed by the financial, learning and growth, and

internal processes perspectives.

These results are matching with most of the

previous research results such as the four

perspectives of BSC having to be measured and

aligned with corporate social responsibility to create

competitive advantage, [12]. A BSC system

measures performance and creates a competitive

advantage, [11]. The application of the BSC

improves performance and helps to achieve business

excellence and competitive advantage, [13]. BSC

improves profitability and financial performance,

[14]. Applying BSC encourages satisfying

customers’ needs and shareholders' requirements

[40]. BSC accelerates creativity and innovation,

[15].

The rating that was given to internal business

processes was the highest, followed by the customer

perspective, the financial perspective, and then

learning and growth, in that order, [43]. Higher use

of BSC in market competition improves business

performance, [16]. Healthcare organizations use the

four BSC perspectives to affect the organization's

competitiveness, [17]. BSC impacts organizations'

competitiveness, [59]. When considering price,

quality, and adaptability, BSC is relevant, [19].

There is a robust correlation between BSC variables

and Jordanian pharmaceutical manufacturing

organizations’ business performance, [60]. BSC

both are used to measure performance and cost

management, which improve organizations

performance of manufacturing organizations, [61].

To strengthen the company's standing in the market

and its financial prospects, BSC can be used as a

useful tool, [20]. A successful business strategy

results when all of the BSC's vantage points meet

the needs of the company's constituents, both

internal and external, [44]. BSC leads to success and

a better competitive position, [62]. A sustainable

BSC is significantly related to competitive strategy

in a good way, [49].

BSC factors affect marketing competitive

strategies. Financial factors rated the highest priority

and the differentiation strategy scored the highest

marketing competitive strategy, [63]. BSC improves

competitive priorities (value, delivery, flexibility,

and innovation), which influence organizations'

performance, [21]. The four perspectives of the BSC

enhance organizational performance, [41]. A

positive relationship between a BSC and

competitive strategy, [22]. Using BSC perspectives

affects the competitive advantage of Jordanian

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

telecommunications organizations, [23]. BSC has a

significant effect on the success and competitiveness

of banks, [24]. A BSC helps to improve

organizational performance [65]. A BSC positively

affects an organization’s performance and

organization’s competitive advantage, and both

affect the, [36].

The four BSC dimensions define specific

performance indicators, which should be used as a

practical guideline for competitiveness indicators,

[29]. Having a BSC is associated with better

financial results and more creative solutions to

problems, [66]. The perspective on learning and

growth received the highest rating, followed by the

perspective on the company's internal business

operations, and then the perspective on the

consumer, in that order, [67]. Implementing the four

BSC perspectives affects international

competitiveness. The growth and learning

perspective and financial perspective showed high

performance while the customer and internal

business perspectives showed poor performance,

which indicated a shortage in achieving

international competitiveness as planned, [68]. BSC

analysis showed that relational capital has the most

effect on organizational performance and

competitive advantage, [25]. BSC perspectives are

used to evaluate competitive factors, [27]. When

using the BSC the competitive advantage is derived

from the efficient use of fixed capital and intangible

assets, [26]. BSC uses Information Technology to

create a competitive advantage, which includes cost,

rapid response, and uniqueness, [28].

The BSC implementation does not affect the

competitive advantage and performance of private

universities, [69]. BSC is a strategic approach that

facilitates decision-making to be more competitive

and profitable, [70]. According to the BSC system,

the level of the bank's performance influences the

bank's competitiveness, [30]. Implementing a BSC

is simpler and more fruitful for large companies

than it is for SMEs, [74]. Organizational learning,

financial perspective, customer focus, and internal

business processes affect the competitiveness of

microfinance institutions in Kenya, [75]. Finally, the

BSC reduces the cost and lowers turnover, [31].

This article demonstrated how utilizing a BSC is

becoming more and more important because it aids

businesses in reflecting their strategic plans and

achieving a competitive strategy. Furthermore, it

shows which perspective managers should take into

account when developing their competitive strategy.

Additionally, it serves to highlight the perspective

that managers should prioritize in light of their

competitive strategy. However, it appeared that the

innovation perspective is the least unimportant for

the businesses in Jordan. Particularly when

compared to China's industrial sectors, innovation is

the key to success in the market, [83]. Therefore,

businesses should concentrate on enhancing their

innovation outlook to compete with Chinese

products.

5 Conclusions

The competition between the Jordanian SMMEs

manufacturing industry and the imported products

from foreign countries especially from China is

increasing. The import from China is increasing,

which negatively affects local manufacturing

companies, the Chinese products are at lower prices

with the same quality compared with locally

manufactured products. Therefore, this research

aims to investigate how local manufacturing

companies can compete with imported products. To

gain a competitive edge, local manufacturers must

assess and improve their operations. The

effectiveness of SMMEs can be evaluated and

compared using the BSC method. Thus, the purpose

of this study is to investigate how different BSC

viewpoints affect the strategies employed by small

and medium-sized enterprises (SMEs) in the

marketplace. The questionnaire used in the study

takes a quantitative descriptive and causal approach.

A total of 120 participants, representing 100

different businesses, provided the data. Data

analysis and hypothesis testing were performed

using SPSS.

The results reveal that SMEs in Jordan's

manufacturing sector changed their competitive

strategies because of implementing the BSC, with

the greatest effect seen on SMEs' focus strategies,

followed by their cost leadership strategies, and

finally their differentiation strategies. Furthermore,

the results demonstrate that the competitive

strategies of Jordanian small and medium

manufacturing enterprises are affected by the

implementation of the BSC perspectives (financial,

customer, internal business processes, and learning

and growth), with the customer perspective having

the greatest impact on competitive strategies,

followed by the financial perspective, the learning

and growth perspective, and the internal processes

perspective.

Limitations/Recommendations: The small and

medium-sized enterprises (SMEs) of Jordan's Sahab

Industrial Area were the focus of this research. This

could prevent the extrapolation of findings to other

fields or even different nations. As a result, this

study suggests future research be conducted on

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2024.21.8

Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

related topics in other sectors, additional nations,

and further into the future.

Practical Implications: This article illustrated

how using a BSC is essential to measure and

manage organizational performance via analyzing

weaknesses and strengths, which helps to achieve

competitive strategies. Therefore, owners and

managers should use BSC as a tool before setting

strategic goals and objectives to achieve a

competitive strategy. The industry should provide

training for all managers and owners on how to use

BSC in daily practices to be able to compete with

Chinese products, organizations should focus on

improving their innovation outlook. Training should

be related to BSC components including how to

improve the relationship with customers, internal

processes, and learning and growth to enhance

competitive advantage and strategy. Training should

be provided to all owners and managers in SMMEs

at different levels and have to be provided by

experts such as the Balanced Scorecards Institute or

any certified body.

Social Implications: Managers and owners

should consider corporate social responsibility

dimensions (social, economic, and environmental

responsibilities) when they use BSC for better

contribution to the community and economy, and

preserve the environment through using eco-friendly

material.

Originality/Value: It is probable that, to date,

this is one of the only studies in Jordan to examine

the issue of how using a BSC can affect a company's

ability to stay competitive.

Acknowledgement:

The authors would like to thanks the Middle East

University.

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Abdel-Aziz Ahmad Sharabati,

Assad Adnan Ghaith, Amer Morshed,

Hesham Abusaimeh, Shafig Al-Haddad

E-ISSN: 2224-2899

Volume 21, 2024

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