Journal of Science and Technology Policy Management

Strategy map for Chinese science parks with KPIs of BSC

Guixia Wang J inbo Wan Lanxiang Zhao
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Guixia Wang J inbo Wan Lanxiang Zhao , (2014),"Strategy map for Chinese science parks with KPIs of
BSC", J ournal of Science and Technology Policy Management, Vol. 5 Iss 2 pp. 82 - 105
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Strategy map for Chinese
science parks with KPIs of BSC
Guixia Wang, Jinbo Wan and Lanxiang Zhao
Institute of Policy and Management, Chinese Academy of Sciences,
Beijing, Peoples Republic of China
Abstract
Purpose The purpose of this paper is to present a structural evaluation methodology to link key
performance indicators (KPIs) into the strategy map of the balance scorecard (BSC) for Chinese science
parks (CSPs). We establish the visualized strategy map with the logical links to improve the science
parks (SPs) performance.
Design/methodology/approach Corresponding to the four BSC perspectives (fnance, customer,
internal process and employee learning and growth), KPIs for CSPs are synthesized and screened in the
relevant literature. The application for Zhongguancun Science Park (ZSP) is provided as an example.
Findings The research results show that the presented approach is an objective and feasible way to
construct a more justifable strategy map. The proposed framework can be applied to non-proft
organizations, such as SPs.
Originality/value This work provides a systematic method to establish strategy maps for SPs
(non-proft organizations), based on the consideration of the intricate causal relationships among KPIs,
and the analysis of the important strategic improvement paths and proposes the model of assessment of
emphasizing the processes rather than outcomes.
Keywords Strategy map, Balanced scoreboard (BSC), Chinese science park (CSP),
Key performance indicators (KPIs), Strategic performance, Zhongguancun Science Park (ZSP)
Paper type Research paper
1. Introduction
One of the objectives of establishing science parks (SPs) in most countries is to provide
an infrastructure of technical, logistic and administrative support that a young frm
needs in the process of struggling to gain a foothold in a competitive market (Guy, 1996).
It is particularly important to those industrialized and emerging economies because the
expectation is that SPs can act as development catalysts driving new business
start-ups and exploring the path for existing frms to process and product innovations.
An SP is a network organization, which must place more emphasis on improving
internal operational performance to outperform the numerous competitors. SPs must
develop an effective way to align their strategies with organizational goals on the basis
of performance analyses. Thus, the organizations can effciently reach their goals by
prioritizing their actions for the organizational visions and by incorporating effective
performance management. The balance scorecard (BSC) is an adequate evaluation
methodology for achieving these goals (Davis and Albright, 2004). Through the BSC,
managers can not only communicate well with their employees but also control the
progress of strategic development to improve the organizational performance and
increase the competitiveness.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2053-4620.htm
JSTPM
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Received 16 January 2014
Revised 1 April 2014
Accepted 2 April 2014
Journal of Science & Technology
Policy Management
Vol. 5 No. 2, 2014
pp. 82-105
Emerald Group Publishing Limited
2053-4620
DOI 10.1108/JSTPM-01-2014-0003
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In the early stage, the expected output of SPs was the development of new products,
manufacturing processes and engineering techniques. The criteria used to evaluate their
output were well-defned and consolidated, derived from the best practices of private
research evaluation. SPs extended their scopes to the regional territories, becoming an
instrument of innovation policy implementation for the deployment of technology
transfer programs (OECD, 1987, 1997). Mian (1997) proposed an integrated framework
for the university technology business incubator (UTBI) performance assessment.
Previous literature on the performance measurement of SPs tended to emphasize the
assessment of SPs outcomes.
Some common features can be elicited with regard to the literature on SPs, especially
the mission statements, i.e. promoting the interaction between industrial and
academic research structures, promoting the generation of academic spin-offs,
promoting the founding of start-ups, carrying out re-industrialization, technology
transfer and training programs and providing management services. Such a wide range
of mission statements can potentially inspire the strategic behavior of SPs. Therefore,
SPs need to completely reassess their performance measurement to adapt to the
constantly changing needs and requirements of tenant frms. To achieve more effcient
performances, SPs must align their goals with those of their tenant frms services.
However, most of the studies on assessing an SPs performance have focused mainly on
performance measures. Only a few papers have explored the creation of a mechanism
that distinguishes causal relationships among KPIs for the purposes of the strategy
implementation.
The strategy map is the most important procedure in building a BSC systembecause
it can be viewed as the causality of hypothesis among strategic objectives (measured by
KPIs) in the main structure of a BSC system (Kaplan and Norton, 2004a). Therefore,
establishing a strategy map with clear causal/logical links leads to the establishment of
strategic pathways throughout the organization (Evans, 2007). In the related studies,
there is a lack of articulation of the cause-and-effect relationships among KPIs in the
BSC in assessing SPs performances. The main theme of the current study is to propose
a methodology to establish the BSCstrategy map and provide a profound analysis of the
complicated interactive relations among the KPIs.
Chinese science parks (CSPs) are complex network organizations, which are directed
by the Ministry of Science and Technology (MOST), the local governments and the
administrative committees. Therefore, their strategies and missions have complexities.
The key problems are how to effectively monitor and measure their performance and
achieve their goals. There has been a lot of successful experience from business
organizations adopting the BSC. The BSC has been adopted by nearly half of the
Fortune 1000 organizations. As a public sector study funded by the Sloan Foundation
indicated, 70 per cent of the respondents agreed that their governmental entities had
been better off since the implement of performance measures. The City of Charlotte,
North Carolina, has been using the system for several years and accredits it with
focusing employees on the strategy and improving the overall city results. The BSC is a
communication tool and a systemwhich can implement effective performance measures
and evaluate the implementation of strategies. This approach presents a causal model
which can simplify and facilitate the transmission of complex systems and help
decision-makers overcome the cognitive challenges (Vera-Muoz et al., 2007). This tool
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can improve the performance on the decisions which require complex judgments (Lipe
and Salterio, 2002; Dilla and Steingbat, 2005).
The strategic performance measurement methods on SPs previously described
cannot provide a clear prescription as to what the organization should measure to
balance the fnancial perspective. The complexities of CSPs strategies, missions and
contexts inspire the strategic performance evaluation to include heterogeneous
variables (i.e. technological, economic, social and political, innovation, tenant frms and
management organizational structure variables). The strategy map enables an
organization to clarify its vision and strategy. It also enables a supervisor to explore the
causes and effects of the strategy. The BSC provides feedback about both the internal
organization processes and external outcomes to continuously improve the strategic
performance and the results. When fully deployed, the BSC transforms the strategic
planning from an academic exercise into the nerve center of the organization. In
real-world applications, the assessed performance indicators are not strongly related
with the strategy of the organization. Therefore, they cannot provide a proper
orientation for the management about what should be developed for the successful
implementation of business strategy. A well-constructed strategy map can eloquently
describe the strategy of an organization, and a well-constructed BSCcan make the vague
and imprecise world of visions and strategies come alive through clear and objective
performance measures.
The purpose of this research is to organize suitable KPIs for the evaluation of SPs
performances based on the BSC perspectives to explore the complex causal
relationships among KPIs, to identify the critical central indicators of the strategic steps,
to construct the strategy map for the improvement of SPs performances and to provide
suggestions fromthe analytical results and references for the management of associated
organizations as well as for future research.
The remainder of this paper is organized as follows. In Section 2, the literature related
to BSC, strategy map and performance measurement of SPs are reviewed. In Section 3,
the proposed conceptual framework of constructing a strategy map is described. In
Section 4, the research design and research methods were introduced. In Section 5, we
illustrate an empirical example of constructing a strategy map for CSPs, including the
selection of the KPIs of BSC performance measurement, the construction of the strategy
map and the resulting analyses and discussions. Finally, in Section 6, some of the
important managerial implications and suggestions for future research are proposed.
2. Major fndings from literature
2.1 Balance scorecard
The BSC, proposed by Kaplan and Norton (1992), has been widely adopted in the
evaluation of the organizational performance fromfour perspectives: fnance, customer,
internal business process and learning and growth. Its central concept is balance
(Kaplan and Norton, 1996a, 1996b, 1996c; Kaplan, 2012), specifcally those related to
three areas:
(1) Balance between fnancial and non-fnancial indicators of success.
(2) Balance between internal and external constituents of the organization.
(3) Balance between lag and lead indicators of performance.
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The measures selected for the scorecard represent a tool for leaders to communicate with
employees, external stakeholders, the outcomes and performance drivers by which the
organization will achieve its mission and strategic objectives (Kaplan and Norton, 1992).
The BSC can be defned as a management system inspired by the cycle
plan-do-check-act and has generated enormous interest in academic and industrial
communities (Barnabe and Busco, 2012; Kraus and Lind, 2010; Norreklit et al., 2012;
Salterio, 2012). Recent studies have been conducted on BSC application in various felds,
including organizational and IS performance evaluation. Lee et al. (2008) proposed an
approach based on the fuzzy analytic hierarchy process (FAHP) and BSC processes for
evaluating an IT department in the Taiwanese manufacturing industry. Huang (2009)
suggested the use of an analytic hierarchy process (AHP) to prioritize the measures and
strategies of a BSC framework. Wu et al. (2009) suggested a fuzzy multiple criteria
decision-making (FMCDM) approach for banking performance evaluation based on the
four perspectives of BSCs. Asosheh et al. (2010) adopted an integrated use of BSC and
DEA. Velcu (2010) use the BSC approach to analyze business performance.
The BSC has three major advantages, namely, communication and teamwork,
commitment and feedback and learning. It enables a senior manager to clarify the
vision, develop the strategy, setup the teamwork and foster the commitment to a
customer focus across the organizations. It helps employees and stakeholders better
understand how they contribute to the overall achievement of the organization.
Therefore, it is crucial to demonstrate the links between the measures by displaying how
the performance indicators in one area affect those in another.
The BSCadded non-fnancial strategic performance measures to traditional fnancial
metrics and gave managers and executives a more balanced viewof the organizational
performance (Kaplan and Norton, 1992, 1993). The BSC has evolved from a tool of
performance measurement (Kaplan and Norton, 1992) to one for implementing
strategies (Kaplan and Norton, 1996), and to a framework for building the alignment of
human, information and organization capitals with the strategies (Kaplan and Norton,
2004a). Strategy maps are the causal maps that depict the relations between BSC
performance measures and overriding strategic objectives. They help managers
understand the relative importance of the measures for the accomplishment of strategic
goals (i.e. linking to strategy), and thus they provide clues to weight and aggregate BSC
measures when formulating the overall decisions. Kaplan and Norton (2000a, 2004a,
2006a, 2006b) instructed managers to communicate with strategy maps and BSCs and
several companies tried this new methodology (Mair, 2002; Kaplan and Norton, 2004a,
2006a; Urrutia and Eriksen, 2005). With the popularization of strategy maps with BSCs
in the business world, commercial scorecard applications have been developed, such as
Oracle Hyperion Performance Scorecard, which can even produce strategy maps for
users[1]. Research on information systems and management has long recognized the
value of causal maps for complex problems (Axelrod, 1976; Eden et al., 1992; Fiol and
Huff, 1992). Causal maps can help individuals construct more accurate mental models of
complex systems. Experimental research implies that decision-makers perform better
when their mental models are similar to the external systems they represent (Wyman
and Randel, 1998; Davis and Yi, 2004; Capelo and Dias, 2009).
The social orientation of these organizations is the essential difference between
government, non-proft and business organizations. Public and non-proft organizations
play the important roles as service providers. The government and non-proft
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organizations have no proft motives, thus there is not a single indicator of performance
that is comparable with business enterprises in the bottom line. Yeung and Connell
(2006) took into account the non-proft organizations distinguished characteristics in
Hong Kong using the Nivens BSC model. Kaplan (2001d) argued that, though the
fnancial perspective provided a clear long-run objective in the private sector, it should
be considered as a constraint rather than an objective for non-proft organizations.
According to the characteristics of government and non-proft organizations, Niven
(2003) redesigned the original BSC model, giving more emphasis to the organizations
mission. He developed the modifed BSC approach for public and non-proft
organizations considering the following aspects presented in Figure 1:
the organizations mission perspective is moved to the top, whereas strategy stays
at the core of the scorecard system;
the customer perspective is elevated and is given emphasis on who are defned as
customers and how the organization may create value for them;
the fnancial perspective is moved to a minor position, and the question attached
becomes: how do we add value for customers while controlling costs? Financial
measures in the public and non-proft sector scorecard model can best be seen as
either enablers of customers success or constraints within which the group must
operate; and
the internal business perspective is focused on business process excellence to
satisfy customers while meeting budgetary constraints. The processes chosen to
focus on will normally fow directly from the objectives and measures chosen in
the customer perspective.
Customer
Whom do we define as our
customer? How do we create
value for our customer?
Mission
Financial
How do we add value for
custom rs while controlling
costs?
Internal Processes
To satisfy customers while meeting
budgetary constraints, in which
business processes must we excel?
Strategy
Employee Learning and Growth
How do we enable ourselves to
grow and change, meeting
ongoing demand?
Source: Niven (2003, p. 32)
Figure 1.
BSC framework for the
public and non-profts
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Using the BSC for CSPs, it can provide a framework to assess and develop a strategy. It
develops strategic objectives and performance measures to translate the strategy into
actions. It provides a way to measure and monitor the performance of key performance
drivers that can lead to the successful execution of the strategy. It is an effective tool to
ensure continuous improvement for the systems and processes of CSPs. However, the
studies on how to analyze the causal relationships among evaluation criteria,
distinguish infuential factors and create an effective mechanism for the strategic
implementation of the evaluation criteria are still scarce (Malina et al., 2007).
Consequently, managers of CSPs are challenged by the delineation of the strategies that
can both analytically and organizationally link together the performance indicators that
contain outcome measures and the performance drivers while allowing for the
implementation of the BSC process.
2.2 Strategy map
Astrategy map expresses the causal relationships between BSC performance measures
and overriding strategic objectives (Kaplan and Norton, 2000b, 2001a, 2001b, 2001c,
2004, 2008a, 2008b; Kaplan, 2009; Kaplan and Wisner, 2009). Kaplan and Norton (2004a,
2004b, 2004c) proposed that BSCs refect dynamically the change of strategies and
indicate how organizations create their value, and the chains of cause-and-effect in
strategy maps connect all the factors (i.e. performance indicators) through the four
perspectives of BSCs. A strategy map is an illustration of the organizations strategy.
Derived from the vision and strategy of the organization, it provides a visualization
frame for an organizations strategic causal relationships. Its main purposes are to
facilitate the translation of the strategy into operational terms and to communicate with
employees how their jobs relate to the organizations overall objectives. Strategy maps
are intended to help organizations focus on their strategies in a comprehensive yet
concise and systematic way.
Strategy maps provide a way that it is possible to visualize how different parts of
the organization contribute (directly or indirectly) to the organizations overall
performance. They connect organizational assets to internal business processes,
which in turn enable the organization to succeed from both customers and
shareholders points of view. Each theme in a strategy map consists of a vertical
chain of cause-and-effect relations linking objectives, measures and initiatives that
span the four BSC perspectives. The aggregation of strategic themes articulates how
business and support units can work together to create the synergies necessary to
realize the organizations mission.
Strategy maps can help managers identify KPIs associated with the objectives,
distinguish the performance indicators whether they ft in a cause-and-effect
relationship and may be important to an organizations strategy, and facilitate the
selection of KPIs.
There have been published case studies refecting the strategy map in the private
sector (Wu, 2012), but few have been identifed which consider the use of this technique
in the public sector. In the public sector, the clarity of a fnancial bottom line does not
exist, but it is equally essential that everyone in the organization has a clear
understanding of the strategy and their roles to achieve it.
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2.3 Knowledge management
Alavi and Leidner (2001) consider knowledge management systems supporting the
creation, transfer and application of knowledge in organizations, collect these abilities
and the know-how sustaining the foundations of distinctive activities. Therefore,
Knowledge Management Practices (KMP) are considered organizational routines
(Nelson and Winter, 1982) oriented toward its exploitation. Alegre et al. (2011) consider
two main KMP: knowledge dissemination and storage practices. The former deals with
the applications, whereas the latter entails the systems to retrieve relevant knowledge in
the organization. Firms use routines to gather, process and interpret export market
information, and they distribute relevant information to export decision-makers
(Morgan et al., 2012).
Knowledge management facilitates effective information exchange and cost benefts.
It is one of the main forms of lowering uncertainties when reforming technical systems
(Carrillo and Gaimon, 2004; Nonaka and Takeuchi, 1995). The enhancement of
knowledge management yields improvements in innovation performance (Arikan, 2009;
Belso-Martinez et al., 2011; Casanueva et al., 2013; Koskinen et al., 2003; Nonaka and
Takeuchi, 1995). Therefore, knowledge management and innovation activities share a
relationship.
Industrial clusters enhance the depth and breadth of cooperation and competition,
and bring together various industries to form cluster relationship networks (Kotler,
2000; Olson, 1998; Porter, 1990). Positive interaction is a key factor for frms to maintain
their competitive advantage (Bell et al., 2009). Industry clusters can strengthen frms
innovation performance (Gnyawali and Srivastava, 2013; Phelps, 2010; Zhang and Li,
2010). KMP reinforces cluster relationship effects, which, in turn, affect the corporate
innovation performance.
Through the formation of clusters, frms can lower their investment costs, access
common suppliers, cultivate a professional work force and develop a spillover effect for
techniques and knowledge (Tallman et al., 2004). The structure of an organizations
alliance network can be strengthened through sharing the knowledge (Lissoni, 2001). In
highly competitive industry clusters, some important skills in business management, or
techniques to do with knowledge, are necessary for the industry cluster to support the
activities of the industry (Leonard and Swap, 2000). Networks provide critical access to
information, and knowledge acquisition shares a positive correlation with knowledge
exploitation in innovation performance (Yli-Renko et al., 2001)
2.4 Organizational learning
At the most fundamental level, organizational learning is the development of new
knowledge or insights that have the potential to infuence behavior (Slater and Narver,
1995). Organizational learning consists of a series of sub-processes, such as knowledge
acquisition, knowledge sharing and knowledge utilization (Nevis et al., 1995). Networks
gather the information and knowledge of different node frms to ensure that the frms
meet their diverse information and knowledge needs (Uzzi, 1997); networks lead to
information fow and knowledge transfer (Dyer and Singh, 1998). Organizations
learning through interaction with other organizations in networks can improve their
structures, processes, strategies and performance (Knight, 2002). It focuses on acquiring
and using knowledge from networks (Knight, 2002; Schildt et al., 2012).
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Organizational learning is a process by which the organization enhances its capacity
to act (Huber, 1991). It is also a dynamic process creating knowledge and transferring it
where it is needed and used (Kane and Alavi, 2007). Organizational knowledge creation
entails making knowledge created by available individuals, amplifying it in social
contexts and selectively connecting it to existing knowledge in the organization
(Nonaka and von Krogh, 2009). It has long grappled with the analysis of individual and
organizational knowledge creation and the relationship between them (Minbaeva et al.,
2012; Nonaka and Konno, 1998).
The 4I model of Crossan et al. (1999) identifes four processes of learning: intuiting,
interpreting, integrating and institutionalizing. Knowledge institutionalization
contributes in building competitive advantage by converting learning into practice
(Flores et al., 2012). Zietsma et al. (2002) presented an improvement proposal of the 4I
model by adding two processes: attending and experimenting. Castaeda and
Fernndez (2007) added to the group level of the 4I model of Crossan et al. the concepts
of conversation and social modeling. Merad et al. (2014) propose a characterization of the
four stages, including punctual learning, constrained learning, comparative learning
and deep learning.
2.5 Performance measurement of SPs
The development of SPs in many countries clearly received its early impetus from the
successful experience of the Silicon Valley in the USA (Storey and Tether, 1998).
Mainland China is not an exception. Chinese Government has engaged in the
establishment of SPs as a critical policy for developing high-tech industries. The initial
objective is to reduce its dependence on high-tech product imports and build its domestic
innovation capacity. Through years of investment and effort, China has 90 SPs. Some
have already been qualifed to carry on the strategic adjustment and promotion.
Meanwhile, the government has also begun to focus on evaluation of the SPs. Therefore,
there are many papers about the performance evaluation of SPs. In practice, the torch
center of the MOST is carrying out this task.
The literature does not offer complete and suffciently tested methodological
approaches on evaluating the performance of SPs. Nonetheless, it is possible to
extract information that can help develop an effective way to appraise the
performance of SPs. Hodgson (1996) pointed out the causes for complexity of the
evaluation problem. The births of SPs are by now usually favored by local
governments, universities, professional associations, companies, banks, etc. For
example, CSPs are managed by the MOST, local governments and administrative
committees. The goal of the MOST is to improve the capability of independent
innovation; the goal of the local government is to speed up the regional economy
development and increase employment and fnancial revenue; the goal of the
administrative committee of an SP is to maximize its own operation management
beneft, while meeting national and local objectives. These three goals intertwine
with mutual infuences. The main action bodies of CSPs are local birth and
reproduction of private technological enterprises, branches of multinational
corporations (R&D institutions or branch factories), enterprises launched by the
overseas returnees, R&D institutes of universities, research institutions, banks,
venture capital companies and other intermediaries, etc. Therefore, their demands
are widely divergent and complex.
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The current literature on the appraisal of SPs can be sorted into three classes.
(1) The institutional perspective focuses on whether the SPs confer competitive
advantages to the tenant frms and positive spillover effects to the frms located
in its vicinity and the regional economy. For example, Mian (1996) assessed the
value-added contributions of UTBIs to the new technology-based tenant frms.
Bergek and Norrman (2008) developed a framework serving for identifying the
best practices of incubator models.
(2) The economic geography perspective considers the relationship between SPs
and regional economy and inter-frm linkages and agglomerative effects. Some
empirical studies provided evidences for their driving forces for the growth of
industrial cluster and the research on cluster policies (Sun et al., 2009).
(3) The performance assessment perspective proposes an integrated appraisal
framework. Mian (1997) proposed an integrated framework for the UTBI
performance assessment. In this model, three sets of variables are identifed:
performance outcomes, management policies and their effectiveness and
services andtheir addedvalue. This approachis usedto analyze the comparative
characteristics of different UTBI programs.
Lindelf and Lfsten (2003) assessed the performance of new technology-based frms
(NTBFs) located in and off the SPs in nine Swedish SP organizations between 1994 and
1996. Another empirical study is to compare the R&D productivity of NTBFs located
inside and outside SPs (Yang et al., 2009). However, the method does not specify the
consequent possible mission areas (Chen and Ouyang, 1996; Zhang et al., 1997),
performance indicators for each factor or focus on monitoring the business process of
SPs.
3. Conceptual framework
Corresponding to the four BSC perspectives, the information and indications that
emerge from the literature made it possible to design a performance evaluation system
for CSPs based on the following elements:
It seems to be essential to identify the real mission and strategy of CSPs. These
elements are often hidden by the formal documents of the organization and can
thus be identifed solely by considering actual behaviors (e.g. the organizations
decisions and actions). For example, an innovation network of technological
entrepreneurship frms is loose in its initial stage (i.e. isolated island phenomenon),
thus the knowledge and technology spillovers are scarce; the synergy of
innovative networks is relatively low at the early stage; and the innovation
performance of tenant frms in SPs are relatively poor. This indicates the real
mission and strategy vary widely in different stages.
The decisions and actions of SPs must be explained and justifed by the
concurrence of the stakeholders interests. What is often is that CSPs institutional
efforts come from the primary stakeholder. In China, the stakeholders of a CSP
mainly include the MOST, the local government and the administrative
committee. A CSP must achieve the MOSTs goal which is to improve the
capability of independent innovation, realize the local governments goal which is
to speed up the regional economy development and increase employment and the
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fnancial revenue and, simultaneously, achieve the administrative committees
objective which is to maximize its own operation management beneft while
meeting national and local objectives.
Contextual conditions, legal structure, existing technical and profession cultures
provide a distinguishable infuence factor to identify the real objectives of CSPs; it
is important to consider the contextual conditions in which CSPs operate. These
conditions often represent the needs for the economic development in the
specifc territories where they belong. The regional economic development is
unbalanced, which will result in the differences among the special objectives of
different SPs. Moreover, the majority of universities and institutes which have
high levels of technical competence gather in Beijing, Shanghai and Xian, the
differences in technical ability accumulation, innovation performance and
technology spillover effects are enormous, thus the real missions and
strategies cannot be identical.
Tenant satisfaction must be considered to identify the real objectives. Tenant
frms satisfaction is also an important infuencing factor. It was pointed out
that the interactions among incubator companies (i.e. technology frms), the
local universities and other companies in SPs were rather limited (Bakourors
et al., 2002). They were usually restricted in commercial transactions and
social interactions. In the course of trade and investment promotion of each
administrative committee, it is emphasized that the analysis of the investors
from other regions is very necessary. In light of local industry characteristic
and local economic development stage, the administrative committee
determines if it will attract the investors for the achievement of the real
mission and strategy of an SP.
To sum up, as can be seen in Figure 2, the performance evaluation system is directly
infuenced by the real mission and strategy of CSPs which are determined by the
contextual conditions, life cycle, legal structure, tenant satisfaction and the commitment
of its stakeholders. According to the four perspectives of the BSC, the appropriate
information and indication of the strategic performance measurement are synthesized
and screened from the relevant literature. Then, consider the synthesized generic
evaluation indicators of SPs strategic performance and target a case SP, our study
conducts a causal relationship analysis on KPIs. Finally, a strategy map of the BSC is
developed based on the qualitative analysis.
- Contextual conditions
- Life cycle
- Stakeholders commitment
- Legal structure
- Tenant satisfaction
Real mission and strategy
SPs performance
Causal relationships
analysis of key
performance indicators
Establishing strategy map
of the BSC
Figure 2.
Proposed framework of
constructing a strategy
map of the BSC
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4. Research design and the method used
This paper presents a structural evaluation methodology to link KPIs into the strategy
map of the BSCfor CSPs. We establish the visualized strategy map with the logical links
to improve the SPs performance.
The following research questions were used:
Is it true that the determinants of a performance evaluation system for SPs
basically draw from a parks real mission and resulting real mission?
Is it true that the aforementioned real mission and strategy derive from an SPs
development cycle, legal structure, tenant satisfaction, stakeholders commitment
and the conditions of the context the park is a part of?
Is it true that the determinants are based on the four BSC perspectives?
The research was carried out using a case study methodology. We establish the
visualized strategy map with the logical links to improve the SPs performance.
Zhongguancun Science Park (ZSP) is used as the illustrative example. Referring to
the proposed strategy map, construction framework depicted in Figure 2, the four
perspectives of the BSC are used to establish the KPIs skeleton. According to the BSC
structure, we address an exploratory research to analyze the cause-and-effect
relationships among the theoretical indications and other emerged factors and construct
the strategy map and the strategic evaluation index system of ZSP.
5. An empirical example of constructing a strategy map for CSPs
A brief history of CSPs in Mainland China, an analysis of the real mission and strategy,
the KPIs selection of the BSC performance measurement, the construction of the
strategy map and the analysis and discussion of ZSP with proft agencies were
described in the section.
5.1 A brief history of CSPs in Mainland China
Although neither Silicon Valley nor Route 128 came into existence by a blueprint,
countries around the world, developed or developing, have tried to emulate their success
by offering policy incentives to encourage high-tech frm formation in the designated
locations (Hu, 2007). Not only affected by the international infuence but also lit up by
Chen Chunxians entrepreneurial venture in 1980 and the founding of Lenovo in 1984,
China launched the National Torch Programwhich was carried out by the State Science
and Technology Commission in 1988. Its purpose was to construct science and
technology industry parks and incubate new start-ups for China. Since then, Chinese
Government has established science and technology industry parks in 56 metropolises.
The state hopes that the R&D institutes, universities and start-ups could closely
cooperate to promote the technology transfer and diffusion.
CSPs offer various policy incentives to encourage investment and formation of new
frms. For example, new frms are exempted from corporate income tax for two years.
The inspection of licenses for import can be waived as long as the imported materials or
parts will be used in export production. Their revenues from technology transfers are
tax-free for the frst 300,000. Intangible assets such as intellectual properties can be
factored into their registered capital. To gain entries to the parks and be qualifed for
these policy incentives, frms are required to have the high-tech and new-tech nature for
their technologies and products, which will be certifed by government agencies (MOST,
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2001). Another criterion is that frms have to spend at least 3 per cent of their sales on
research and development. This high-tech status test is to be repeated every year, in
which the failed ones will be disqualifed for enjoying the policy incentives provided by
the government. Some of these technology-oriented ventures, such as the Founder
Group of Peking University, Ziguang Group and Tongfang Group of Tsinghua
University and the Legend Group (or Lenovo Group, as it is later renamed) of the
Institute of Computer Technology of CAS, Huawei Tech. Co. Ltd. and ZTE Corporation,
have grown into the leading industrial organizations in China. Preferential government
policies lead to the rapid growths of the CSPs.
Now, CSPs have entered the second venture stage, facing new missions and
urgently requiring strategic adjustments and innovations to improve their strategic
executive forces. The ideal destiny of CSPs is to become an innovation cluster (Wang
et al., 2010). The potential importance of CSPs as a mechanism for generating
technological spillover is well-recognized, but there are important issues, like how to
improve the environment of CSPs so that the frms located inside really enjoy higher
innovative productivity than observationally equivalent off-park frms, how to change
CSPs to innovation clusters and how to make strategic adjustment to pave the way for
the tenants innovation and development when facing enormous changes, such as
environment protection, increasing land and labor costs and the latter-fnancial crisis
times.
Adapting to constantly changing needs and requirements of their tenants in the new
stage, CSPs need to completely reassess their performance measurement. To achieve
more effective performance, CSPs must align their goals with those of their tenants and
stakeholders. Through the BSC, managers can not only communicate well with their
tenants, stakeholders and employees but also control the progress of strategic
development to improve organizational performance and enhance the organizational
execution.
The common objective of CSPs is to build concentrations of high-technology
companies through policy incentives, such as tax holidays, expedite technology
adoption and diffusion, and create synergies among the academic and fnancial
institutions and corporations within or near the parks. They have been growing at
astonishing paces. From 2000 to 2007, the share of CSPs industrial added value in that
of the whole nation had increased from 7.79 to 9.15 per cent[2]. The number of frms in
CSPs in 2010 was 2.5 times that in 2000; the number of jobholders at the end of 2010
reached 8.59 million, which was 3.4 times that for 2000; and export earnings at the end
of 2010 achieved $24,7630 million, which was 13.3 times that for 2000[3].
CSPs have been widely recognized for their importance for the development of
high-tech industries and regional economic growths. Therefore, the model of CSPs has
been closely watched and emulated by other transitional economies. For their
signifcance in economy, there have been many articles on the evaluation of CSPs in
Mainland China. But most of them have ignored the strategic performance measures.
Nowadays, after 20 years development, CSPs have entered the second venture
stage. To improve their strategy executive forces, they are facing new missions and
urgently requiring strategy adjustment and innovation. The Mission statements on
CSPs in the second venture stage emphasize more in the following aspects: promoting
the generation of academic spin-offs, carrying out technology transfer programs to
strengthen tenant frms and carrying out training programs aimed at developing and
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managing new technologies. Strategy maps and BSC evaluates the alignment of goals,
objectives and strategies with structures, resources and activities and the
communication of the network organization. Therefore, they are suitable in applying to
assess the network organization of CSPs.
5.2 An analysis of the real mission and strategy
ZSPs mission is rather manifold. It is developed in three different directions, i.e. the
international path, the national path and the local path. About 200 branches and R&D
centers of the worlds top 500 companies have set their offces in ZSP. As a national
public body, as many as 32 highest educational institutions are located near the park,
including Peking University and Tsinghua University, so do 200 national (municipal)
scientifc institutions such as the Chinese Academy of Social Sciences and the Chinese
Academy of Engineering, 67 state-level laboratories, 27 national engineering research
centers, 28 national engineering and technological research centers. ZSP has played
such an important role in the local economic development that its economic growth
contribution rate to Beijings economic growth achieves 24 per cent. ZSP is the home of
a wide range of competences, among which the most signifcant areas are aerospace,
equipment, new material, new energy, emerging cultural and creative and new energy,
energy conservation and environmental protection, electronic information, new energy
vehicle and biology.
Although ZSP is growing into an innovation cluster, rich human resources have
played a very important role. ZSP is one of the regions with the most intensive talents
and educational resources in China[4]. By August 2011, among the 418 talented working
staff members in Beijing who were enrolled by the nations One Thousand Talents
Program, 80 per cent are fromZhongguancun, where ZSP belongs. There are 15,000
overseas returnees, who have established more than 6,000 enterprises in ZSP, which has
become a region with the most enterprises founded by overseas returnees in China.
ZSPs venture capital is relatively rich. The amount of investment per year is about
one-third of the national total, which has laid a solid economic basis for achieving the
goal of the innovation cluster. Today, the number of listed companies in the zone adds
up to 189, including 113 domestic and 76 overseas companies[5]. As many as 38
enterprises have been listed on the Chinese Growth Enterprise Market. It has been
planned to establish a national S&T fnancial innovation center in ZSP that involves
government and social funds, industrial and fnancial capitals and direct and indirect
fnances.
ZSP is in its second venture stage and requires strategic adjustment. In 2011, its
enterprise gross income grew 23.2 per cent and reached 1.96 trillion, approximately
one-seventh of the national total for all high and newzones[6]. The number of companies
in the park listed on NASDAQaccounts for one-third of that for the nation. The number
listed on NewYork Stock Exchange accounts for one fourth of that for the nation[7]. On
March 13, 2009, the State Council announced the construction of the Zhongguancun
independent innovation model district, which refects the goal to build an innovation
cluster with a global infuence. Therefore, the vision statement of ZSPinvolves the goals
of growing into an innovation cluster with a global infuence and improving the bottom
line performance, rather than improving shareholders value, which is the goal for
proft-seeking enterprises, but not for a public or non-proft organization (including
CSPs).
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5.3 KPIs selection of BSC performance measurement
Based on this mission and strategy statement, the indications found in the literature and
from the specifc characters of ZSP are solicited and synthesized for determining the
KPIs. We have seen that the vision statement of ZSP involves the goal of being an
innovation cluster with a global infuence and improving bottom line performance.
For example, from the Customer perspective of the BSC, to achieve ZSPs mission,
the SP institutions must make the most of their intrinsic advantages and resources to
incite the innovativeness of the cluster and generate an infuence in a global scale.
Consequently, Tenant retention rate, Tenant increasing rate, Number of new
start-ups, New venture mortality and Number of multinational enterprises
cultivated are set as the strategic objectives to attract more technology-based frms to
ZSP. Correspondingly, fromthe other three BSCperspectives, the remaining KPIs can be
derived by the same way. For further commentary on the detailed procedure generating
KPIs associated with BSC perspectives for the strategic objectives derived from the
vision and mission of the organization, see Quezada et al. (2009) (Table I).
5.4 Construction of the strategy map for ZSP
The priorities of the strategy mappings can help managers concentrate on the most
important areas, and setup the plans more effectively and effciently. The strategy map
for ZSPis constructed, as shown in Figure 3, and the strategy corresponds to the logical
links (causal relations) among KPIs.
The strategic improvement paths are the strategic steps which link KPIs. The
study reveals that the Customer perspective plays the central role as the main
effect-factor and cause-factor among the four BSC perspectives. In addition, the two
most important KPIs of the C: Customer perspective, C1 and C5 are the most
critical lagging indicators used to measure ZSPs performance at the same time. C1 can
be determined by many other indicators, i.e. C2, C3, C4 and C5. The effects of
F3 on C2, C3, C4 and C5 is strong.
In the internal process perspective, P1 and P6 are found to be the most crucial
indicators, with strong infuences on C1, C2 and C5. They have moderate
infuences on C3 and C4. In addition, P5 has weak infuences on C1 and C3,
and it has a strong infuence on C5. Its infuences on C2 and C4 may be negligible.
In the Learning and growth perspective, L2 is found to be the most crucial
indicator, with strong infuence on C1 and C2 and moderate infuences on C3,
C4 and C5. L1 has positive effects on C3 and C5. In other words, R&Dspillover
is advantageous to the generation of new enterprises and the promotion of the
competitiveness of multinational enterprises cultivated in the SP.
5.5 Discussions and comparisons with proft agencies
This research constructs a strategy map of ZSPs performance by extensively
synthesizing the relevant literature and by objectively analyzing of ZSPs characters
and strategy in the second venture stage. It is favorable for the managers of ZSP to
understand the cause-effect relations among the strategic objectives (or performance
indicators) by building strategy maps from the four BSC perspectives.
ZSP is a public and non-proft organization, which has a large number of internal and
external stakeholder relationships. Simultaneously, ZSP is also a technical innovation
network organization, and the nodes of this organization are very complicated,
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Table I.
Description of the KPIs
selected for ZSP
Number KPI Description
C: customer
C1 Tenant retention rate Capability of keeping existing tenants
C2 Tenant increasing rate Growth rate of new tenants
C3 Number of new start-ups Active degree of innovation and
entrepreneurship
C4 New venture mortality Degree of support the small- and medium-sized
enterprise (SME) development
C5 Number of multinational enterprises
cultivated in SP
Capability of global resource leveraging
F: fnance
F1 Growth rate of turnover Growth of turnover for services/royalties
F2 Growth rate of funding Access to venture capital funding, banking
facilities, other funding sources
F3 Revenue per unit of land area Capability of the economic development of
cluster enterprise in SP
P: internal process
P1 Level of pooling resources Organizing staff training and development
activities, marketing events, exhibitions, press
conference
P2 Cost of consulting services Provision of legal, accounting, business and
technical advices at low cost (or free-of-charge)
P3 Management performance Simplifcation of moving into SP
P4 Maturity of talent agency Number and type of talent agency above-scale
P5 Number of scientifc publications Number of scientifc publications of the period
with the relative impact factor
P6 Performance of knowledge
innovation and diffusion
Number and type of new product prototypes
launched by frms and established labs in SP
P7 Convenience of sharing resources Sharing laboratory facilities, offce equipment,
testing equipment and administrative support
(e.g. meeting room, library and reception area)
P8 Aggregation of industry New products and/or processes adopted by
local frms and developed by the collaboration
with the SP
L: learning and growth
L1 Number and type of new R&D labs
hosted
Important point of promoting innovation
network development and innovation
performance
L2 Responses of tenant service Number of suggestions provided by tenant
frms about the synergy of innovation network
L3 Tenant satisfaction Tenant satisfaction about both hardware and
software provided by SP
L4 Organization competence Policies to attract talent, management capacity
of venture capital by SP and improvement of
strategic project management
L5 Professional training Number of professional certifcations or
training programs per employee in SP
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including tenant frms, the MOST, Beijing Government, Administrative Committee of
ZSP, banking institutions, venture capital companies, human resources companies and
other intermediaries. The three management departments for ZSP have very different
objectives, so their interests are intriguing. Therefore, to achieve the goal of building an
innovation cluster with a global infuence, tenant frms represent the core of this
network organization. In the strategy map for ZSP, the customer perspective is elevated,
and tenant frms turn into the real customers. To accomplish the mission,
Administrative Committee of ZSP focuses on the tenant frms, investigates and grasps
their demand attentively and serves them fast. It plays more the role of a service
provider rather than a manager to pave the way for sharing resources, public image,
networking, funding, venture capital, talent accumulation and industrial
agglomeration.
Strategy remains at the core of the strategy map for ZSP. The vision statement of ZSP
is solicited and synthesized for determining the KPIs (i.e. the performance indicators of
the most relevant and important attributes with respect to strategic objectives of each
BSC perspective).
Following the mission is the customer perspective (tenant frms), not fnancial
stakeholders. To achieve its mission, fscal responsibility and stewardship are not
Customer
Perspective
Mission & Strategy
Growth into an innovation cluster with a global
influence, and improving the bottom-line performance
Learning &
Growth
Perspective
Internal
Process
Perspective
Finance
Perspective
Customer value proposition
Tenant
Enterprises
C1 C2
Start-ups Multination
Enterprises
C3 C4
C5
Turnover
Growth
Founding
Growth
Land
Returns
F1 F2 F3
Financial
Operations
Management
process
P2 P3 P8
Innovation
Process
P5 P6
Tenant
management &
Social Process
P1 P4 P7
Intangible Assets
Information &
Service Capital
L1 L2 L5
Organizational
Capital
L3 L4
Internal Processes
Figure 3.
A strategy map of the
four BSC perspectives for
ZSP
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enough. ZSPmust determine whomit aims to serve and howtheir requirements can best
be met. All the activities regarding fnancials, revenues, funding and others are to
support the tenant frms.
Under a deep understanding the activities and needs of tenant frms, based on
knowledge and sharing information, we propose the strategy map and KPI for ZSP. If
we get this right, the outcome will be not only effective processes but also a clear
understanding of what need to be provided to fulfll tenant frms needs effectively.
Seeing the relation between fnancial measures and quality service delivery or
mission accomplishment needs deeper considerations. If services are performed with
less cost or more effciency, more attention and more investments can be attracted from
funders. Therefore, successful operation of ZSP will attract more venture capitalists and
create a capital environment of higher quality for tenant frms.
Internal processes can produce value for tenant frms. The processes we choose to
focus on will normally fow directly from the objectives and measures chosen to the
tenant frms perspective. It is not hard to see the importance of the internal processes
perspective from the eight KPIs of BSC for it.
Employees learning and growth perspective provides the foundation for ZSPs BSC.
ZSP is a mission-based organization, which is a non-proft, public-sector and
networking agency, and relies heavily on the skills, dedication and alignment of their
staff to achieve their socially important goal, i.e. becoming an innovation cluster with a
global infuence. Success in driving process improvements, operating in a fscally
responsible way and meeting the needs of all tenant frms depends to a great extent on
the ability of employees, the policy and other tools to support ZSPs mission. The
employees needs to be motivated and have the right mix of skills and tools. The
organizational climate needs to be designed for sustaining improvements.
We promote that not only administers but also tenant frms, particularly others in the
network organization, as well as the business support network understand our strategy
very clearly. The detailed strategy map is exceptionally helpful in explaining our
strategy, particularly when we were able to showhowthe building blocks fell into place.
The strategy map helps overcome the internal divisions. It demonstrates that all
members in network organization are working to a common agreed objective. It allows
us to take decisions on the allocation of resources which staff can see as a response to a
logical process of assessing tenant frms needs rather than because we value one
activity more than another. And it provides a common language by which we can
explain our strategy to external stakeholders. It will seem that this approach has been
effective in ensuring that everyone understands where we are going and what we are
trying to do.
6. Conclusions
This work provides a systematic method to establish strategy maps, based on the
consideration of the intricate causal relationships among KPIs, and the analysis of the
important strategic improvement paths. The BSC with four perspectives is used in
the strategy map construction framework. It should be pointed out that though the
generic theory works for any organization, each manager still needs to identify the
specifcs of the BSC and choose the suitable performance indicators for his own
organization. The empirical analysis takes ZSP as the example to more thoroughly
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address the issue of performance evaluation of SPs and get a better insight for
approaching this problem.
In our study, it is empirically verifed that some factors are determinant in the
strategic performance measurement system. They are identifed as the conditions of
context, i.e. where the SP is located and operated, the real stakeholders interests and the
life cycle. They determine the real mission and the consequent strategy for the SP.
Beside these determinant factors, two other important factors need to be highlighted
from the judgment and statement of the real mission. They are identifed as the legal
form of the SP and the availability of the technicalscientifc knowledge from the
cooperation with universities, research centers or other professional institutions.
Notes
1. www.oracle.com/appserver/business-intelligence/hyperion-fnancial-performance-
management/hyperion-performance-scorecard.html
2. Source: authors own calculation on China Statistical Yearbook 2008 and Chinese torch
statistics yearbook 2010.
3. Source: authors own calculation on Chinese torch statistics yearbook 2010.
4. Source: http://en.zgc.gov.cn/2011-12/16/content_14089530.htm
5. Source: http://en.zgc.gov.cn/2011-11/14/content_14025989.htm
6. Source: www.zgc.gov.cn/sfqgk/56261.htm
7. Source: http://en.zgc.gov.cn/2011-12/16/content_14089530.htm
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American Association of State Highway and Transportation Offcials (2003), Strategic
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municipal governments in the USA and Canada, International Journal of Public Sector
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Chan, Y.C.L. (2009), Howstrategy map works for Ontarios health system, International Journal
of Public Sector Management, Vol. 22 No. 4, pp. 349-363.
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pp. 261-265.
Niven, P.R. (2002), Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining
Results, Jon Wiley and Sons, New York, NY.
Schalock, R.L. and Bonham, G.S. (2003), Measuring outcomes and managing for results,
Evaluation and Program Planning, Vol. 26 No. 3, pp. 229-235.
Singh, J.C.A. and Mirchandani, P. (2006), Performance measurements for not-for-proft
organizations, The Chartered Accountant, June, pp. 1754-1758.
About the authors
Guixia Wang is a PhD candidate at the Institute of Policy and Management, and University of
Chinese Academy of Sciences, Chinese Academy of Sciences, China. She has worked for several
years in a management advisory corporation, focusing primarily on ZSPs strategy,
organizational innovation and industry research. Her research interests include public support to
early-stage ventures, strategy management, organizational innovation and innovation policy.
Jinbo Wan is an Associate Professor at the Institute of Policy and Management, Chinese
Academy of Sciences. His research interests are in the areas of technology strategy and planning,
green innovation and sustainable development.
Lanxiang Zhao is a Professor at the Institute of Policy and Management, Chinese Academy of
Sciences. Her research interests are in the areas of innovation strategy and planning. She is the
Executive Director of the Strategic Research Center of CAS. Lanxiang Zhao is the corresponding
author and can be contacted at: ipm@vip.163.com
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints
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