Strategic performance management in municipality through dynamic balanced scorecard and game theory

BACKGROUND AND OBJECTIVES:Aligning short and long-term goals, operational plans, and vision, the interests of the organization's internal and external stakeholders, and investing in intangible and late-returning assets are the characteristics of a strategic performance management system. The importance of strategic performance management for public organizations such as municipalities increases due to its direct impact on the quality of life of the urban community. The balanced scorecard is one of the most used tools in this field, which, along with its operational advantages, also has important weaknesses. This study aims to explore the application of a dynamic balanced scorecard framework integrated with game theory to enhance strategic performance management in the municipality.METHODS: In this paper, the system dynamics is used to design the dynamic strategy map of the Tehran Region 4 municipality with a case study approach. After designing performance improvement strategies, the strategies are simulated, and the best combination of strategies is selected with a cooperative game theory approach.Findings: The results revealed that the customer's perspective and the learning and growth perspective have the highest Shapley values ​​of 5.38 and 4.64, respectively. Therefore, in choosing the best strategies for the municipality, attention should be paid to the strategies that improve these two perspectives. Based on this, the combination of strategies C1L1I1F1, C2L2I3F3, and C3L3I2F2 is selected.CONCLUSION: Simulating KPIs and examining scenarios lead to a better understanding of the factors influencing the organization's success and prevent bias in strategic decisions. Also, a suitable mechanism for strategy selection creates a better agreement between managers for sympathetic implementation. This paper presented a framework for strategic performance management by combining dynamic BSC and game theory, and the effectiveness of the framework is investigated by conducting a case study in the municipality.