An assessment of the measurement of performance in international business research

Abstract

A sizeable body of international business (IB) research is devoted to building knowledge about the determinants of organizational performance. A key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately. Yet, to date, no systematic investigation has considered how well IB research measures performance. We examine the measurement of performance in 96 articles published in the Academy of Management Journal, Administrative Science Quarterly, Journal of Marketing, Journal of Marketing Research, Journal of International Business Studies, Management Science, Organization Science, and the Strategic Management Journal between 1995 and 2005. The findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct. We describe the implications of these results, and offer suggestions for improving future practice. Journal of International Business Studies (2008) 39, 1064–1080. doi:10.1057/palgrave.jibs.8400398

Cash flow management and manufacturing firm financial performance: A longitudinal perspective

“…Deloof (2003) also posits that a possible explanation of why longer payables are negatively associated with profitability might be that less profitable firms simply need more time to pay their bills. Although true theoretical causality cannot be proven using statistical methods, tests of the relationships between lagged variables within a longitudinal time-series sample, such as the Granger causality test, may lend additional support for causal inferences (Hult et al, 2008) Granger, 1969).…”

International new ventures as “small multinationals”: The importance of marketing capabilities

“…Moreover, most small firms are privately owned and as a rule are very reluctant to disclose sensitive financial information. In situations where firms are hesitant to provide objective performance data collecting subjective data provides researchers with a better ability to understand the values that a manager may place on performance (Hult et al, 2008). Thus, growing numbers of researchers are starting to use subjective measures to assess firms' international performance (Cavusgil & Zou, 1994).…”

“…It may introduce the dilemma of single data source bias and/or lead to inaccurate inferences (Hult et al 2008). Thus, to draw conclusions about performance more effectively, further research should consider using both primary and secondary sources of data.…”

Is profitability a good proxy for efficiency? Evidence from the subsector of tour operators

“…We employ three frequently used indicators of profitability: ROE, ROA and ROS (Hult et al, 2008). Return on equity (ROE) = Earnings after tax (EAT)/Equity; Return on assets (ROA) = Earnings before interest and taxes (EBIT)/Total assets; and Return on sales (ROS) = Earnings before interest and taxes (EBIT)/Sales.…”

“…From both the shareholders' and stakeholders' point of view, profitability indicators are the key measurement of corporate performance. According to Hult et al (2008), return on assets (ROA), return on sales (ROS) and return on equity (ROE) are among the most often applied performance indicators in empirical studies as well. The questions may arise: Do these indicators accurately reflect the economic efficiency of a company?…”