Overcoming Obstacles to Balanced Scorecard Implementation in Islamic Banks: a Cross-Cultural Perspective

EasyChair Preprint 14763

Abstract

The implementation of the Balanced Scorecard (BSC) in Islamic banks presents unique challenges, given the cultural, ethical, and operational frameworks that guide Islamic financial institutions. Unlike conventional banks, Islamic banks operate under Shariah law, which emphasizes social justice, fairness, and the prohibition of interest-based transactions (riba). These principles necessitate a performance measurement system that not only evaluates financial outcomes but also assesses ethical, social, and environmental impacts. This abstract explores the obstacles Islamic banks face in adopting the BSC, particularly from a cross-cultural perspective.

While the BSC is globally recognized as a strategic performance management tool, its traditional form focuses on four perspectives: financial, customer, internal processes, and learning and growth. However, Islamic banks require a customized approach that incorporates Shariah-compliant financial performance metrics and evaluates social responsibility initiatives. This research identifies key obstacles to implementing the BSC in Islamic banks, including cultural differences, varying interpretations of Shariah law across regions, and the need for specialized key performance indicators (KPIs) that align with Islamic values.

Through a comparative case study analysis of Islamic banks in different cultural contexts, this study examines how local cultural norms, regulatory environments, and customer expectations influence BSC adoption. Key challenges include the lack of standardized social and environmental KPIs for Islamic finance, difficulties in aligning Shariah compliance with business growth strategies, and resistance from stakeholders unfamiliar with the BSC's framework.

Keyphrases: Balanced Scorecard, Financial Inclusion, Islamic banks, KPI adaptation, Shariah Compliance, cross-cultural perspective, cultural differences, ethical banking, performance measurement, social responsibility

@booklet{EasyChair:14763,
  author    = {Oluwaseyi Oladele},
  title     = {Overcoming Obstacles to Balanced Scorecard Implementation in Islamic Banks: a Cross-Cultural Perspective},
  howpublished = {EasyChair Preprint 14763},
  year      = {EasyChair, 2024}}