How to measure organizational performance in search for factors of competitiveness

Abstract

The aim of this paper is to find an appropriate method of expressing a company’s performance in order to offer it to researchers for the purpose of subsequent searches for factors affecting corporate competitiveness.Of the possible approaches to performance measuring, and after considering their advantages and limitations, we have chosen long-term financial indicators, Assets Growth and Return on Assets, because each of these indicators represents one of two possible strategies to improve financial performance.This article thus presents the alternatives that are offered for that purpose as well as several means of using selected indicators (cluster analysis, etc.). While verifying the suitability of the various means, we assumed that the better the financial performance is expressed, the higher the accuracy of methods seeking competitiveness factors will be under otherwise similar conditions.We have employed the Sequential Floating Forward Selection (SFFS) as the appropriate factors seeking method, which has already been used for similar types of tasks in other fields. The best results of expressing a company’s performance were achieved using the method of adding the standardized values of both indicators.

Keywords

• competitiveness
• financial performance
• Sequential Floating Forward Selection
• <i>k</i>-Nearest Neighbours