Measuring Performance

Performance measurement is difficult! Generations of empirical researchers have presented measures of organizational performance. In their article Measuring Organizational Performance: Towards Methodological Best Practice, Richard et al. (2009) have reviewed past studies. They reveal the multidimensional nature of this important construct. According to the authors, organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.); (b) product market performance (sales, market share, etc.); and (c) shareholder return (total shareholder return, economic value added, etc.). Limited effectiveness of commonly accepted measures in tapping this multidimensionality is highlighted. The appendix of the article, which is published in the Journal of Management, includes many examples of research that includes organizational performance as a dependent, independent, or control variable. To my knowledge, no comparable review is available for supply chain performance. It would be interesting to know, how this construct can be measured properly.