Measurement of Business Performance in Strategy Research: A Comparison of Approaches

Venkatraman, N.; Ramanujam, Vasudevan

doi:10.5465/amr.1986.4283976

Cited by 2,193 publications

(1,591 citation statements)

References 31 publications

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“…This scale was supported by other researchers Venkatraman & Ramanujam, 1986, 1987. Therefore, a 5-point Likert-type scale was used (1 means far below average and 5 means far above average).…”

Section: Instrumentsmentioning

confidence: 88%

Organizational Capabilities and Profitability

López‐Cabarcos

Göttling-Oliveira-Monteiro

Vázquez-Rodríguez

2015

Sage Open

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The resource-based view (RBV) posits that the sustainability of a firm's success depends upon the creation, development, and implementation of a given organization's unique resources and capabilities. Based on this theoretical framework, this article analyzes the relationship between organizational capabilities, business strategy, and profitability in the Portuguese textile industry. The strong relationship between these variables suggests that the organizational capabilities and the choice of business strategy may be the key to increase the profitability in this study context. So, the ability of the Portuguese textile organizations to change their business strategy based on their organizational capabilities affects profitability in a number of ways. Concretely, the results of this study highlight the importance of the choice of the business strategy as a partial mediator between the organizational capabilities and the profitability, a point that is crucial to understanding the success of a given organization and how resources and capabilities contribute to the process. The article concludes with a number of managerial implications and directions for future research.

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Section: Instrumentsmentioning

confidence: 88%

Organizational Capabilities and Profitability

López‐Cabarcos

Göttling-Oliveira-Monteiro

Vázquez-Rodríguez

2015

Sage Open

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“…The first limitation, which is evident in a study such as this, concerns the use of a secondary database created for a purpose other than that of the research at hand. Venkatraman and Ramanujam (1986) also suggest using a primary data source to validate the information.…”

Section: Conclusion and Limitationsmentioning

confidence: 99%

Operational practices and financial performance: an empirical analysis of Brazilian manufacturing companies

Castro

Duarte

Artur

et al. 2011

BAR, Braz. Adm. Rev.

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In the operations management field, operational practices like total quality management or just in time have been seen as a way to improve operational performance and ultimately financial performance. Empirical support for this effect of operational practices in financial performance has been, however, limited due to research design and the inherent difficulties of using performance as a dependent variable. In this paper, we tested the relationship between selected operational practices (quality management, just in time, ISO certification and services outsourcing) in financial performance outcomes of profitability and growth. A sample of 1200 firms, operating in São Paulo, Brazil, was used. Analysis using multiple regression explored the direct effect of practices and their interaction with industry dummies. Results did not support the existence of a positive relationship with financial performance. A negative relationship of outsourcing with both profitability and growth was found, supporting some critical views of the outsourcing practice. A weaker negative relationship between ISO certification and growth was also found. Some interactions between practices and industries were also significant, with mixed results, indicating that the effect of practices on performance might be context dependent.

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“…Firm performance is a complex, multidimensional construct which is inherently difficult to operationalize (Dess & Robinson Jr, 1984;Venkatraman & Ramanujam, 1986;Richard, Devinney, Yip& Johnson, 2009;Carton & Hofer, 2010). Dess & Robinson Jr(1984) suggested that firm performance researchers must address two basic issues: (1) selection of a conceptual framework from which to define firm performance and (2) identification of accurate, available measures that operationalize firm performance.…”

Section: Measurement Of Firm Performancementioning

confidence: 99%

“…While firm performance is a multi-dimensional construct (Venkatraman & Ramanujam, 1986;Richard, et al, 2009), firm financial performanceis also a multidimensional construct (Chakravarthy, 1986;Carton & Hofer, 2010). Venkatraman & Ramanujam(1987) has shown that sales growth, profit growth and profitability measure different dimensions of firm financial performance and no one of these measures fully captures firm financial performance.…”

Section: Measurement Offirm Financial Performancementioning

confidence: 99%

“…Finance scholars have mainly used an event study methodology, Accounting scholars used financial reporting methodology, and Management researchers predominantly used case study and survey based methodologies. Indeed, different disciplines should have different definitions and measures of post-merger performance because they deal with different research questions (Venkatraman & Ramanujam, 1986). All these methodologies are discussed in the following sections.…”

Section: Measurement Of Post-merger Firm Financial Performancementioning

confidence: 99%

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Creating or destroying value through mergers and acquisitions: A marketing perspective

Rahman

2015

Industrial Marketing Management

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The world has witnessed a major wave of mergers and acquisitions (M&A) through the 1990s and up to 2007.A majority of these M&A deals are horizontal, involving the purchase of another company in the same industry. Such acquisitions imply a motivation to increase revenues by expanding market scope and/or market share, and/or by adding new products to the portfolio. They also suggest a pursuit of cost efficiencies in various aspects of operations. Whether these benefits are actually realised is an empirical question that has attractedresearch in several disciplines, including economics, finance and accounting. By now, there is a large body of research evidence to indicate that M&As have a poor record of success, with the main beneficiaries being the sellers who reap a one-off gain from the premium paid to acquire their firm.The objective of this dissertation was to examine post-merger performance from a marketing perspective, a topic that has not been explored thus far. This study followed a multi-stage approach; in the first stage an exploratory case study was conducted to identify the parameters of the research problem and to develop a set of hypotheses. Following this, a quantitative study of a sample of M&A transactions was carried out to test these hypotheses.The exploratory case study was based on Tata Motors, an Indian company which acquired Jaguar and Land Rover from Ford Motors. This case investigation based on both primary data collected through in-depth interview and a wide spectrum of secondary sources, showed that the acquisition had a significantly positive impact on Tata Motors' marketing performance, with sales volume and revenue growing significantly in the post-acquisition years. However, these sales increases came at a high cost; the company invested a huge amount in new product development and marketing communications, with the result that profit performance was negatively affected in the three years post-merger. Profit margins increased, however, in the seventh year 2014, suggesting that the reduction post-merger may have been a temporary effect.The quantitative study was based on a sample of forty-five M&A deals involving ninety US companies.This longitudinal study examined performance over six years, three before the merger, and three yearsafter the merger. Four analytical toolswere used:a paired sample t-test, an analysis of effect size, an analysis of covariance (ANCOVA), and regression analysis, to examine post-merger performance. The results of both raw data and log-transformeddata analyses showed that sales revenue increased significantlyin the post-merger years compared to the pre-merger years. Moreover, the combined companies reduced their marketing and selling costs in proportion to sales revenue. However, there was asignificant reduction in profit as measured by return on sales (ROS).Combining the findings from both the qualitative and quantitative studies, we concluded that post-merger marketing performance improved, i.e. sales revenue and cost of marketing and selling, but...

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Measurement of Business Performance in Strategy Research: A Comparison of Approaches

Cited by 2,193 publications

References 31 publications

Organizational Capabilities and Profitability

Organizational Capabilities and Profitability

Operational practices and financial performance: an empirical analysis of Brazilian manufacturing companies

Creating or destroying value through mergers and acquisitions: A marketing perspective

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