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Performance measurement remains a vexing problem for business firms and other kinds of organizations. The balanced scorecard , widely touted as a solution to problems of performance measurement and strategic planning, has no strong basis in theory. Moreover, implementation of the balanced scorecard may create many more problems than it solves. This text returns to the fundamentals by asking what is the performance of the firm, can this performance be measured, and what are reasonable second-best measures if the first-best measures we would like to have are not available.
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