The purpose of this study was to determine the relationship between institutional rationale in balanced scorecard adoption and the performance of state corporations of Kenya. The research design employed in this study was an explanatory cross-sectional survey design. The research population consisted of 96 managers of state corporations in Kenya. Structured questionnaires containing closed-ended questions were administered using the drop and pick method. A total of 92 questionnaires were returned representing a response rate of 96%. Statistically, this was large enough to render the results permissible and acceptable as a representation of the entire population. The results indicated that institutional rationale in balanced scorecard adoption is a good predictor of organizational performance of state corporations of Kenya supported by (F= 8.824, p< 0.001). Further, institutional rationale and organizational performance had a positive and significant relationship (B= 0.517, p< 0.001.