Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
권호 표지
DOI QR코드

DOI QR Code

Design and Application of Two-Stage Performance Measurement System Considering Dynamic Capabilities

동태적 역량을 고려한 2단계 성과측정시스템 설계 및 적용

  • Kwon, Sun-Man (School of Management Consulting, Hanyang University) ;
  • Han, Chang Hee (School of Business Administration, Hanyang University)
  • 권순만 (한양대학교 일반대학원 경영컨설팅학과) ;
  • 한창희 (한양대학교 경상대학 경영학부)
  • Received : 2018.03.12
  • Accepted : 2018.06.07
  • Published : 2018.06.30
Download PDF
⟨ Previous Next ⟩

Abstract

The dynamic capabilities of sensing market signals, creating new opportunities and reconfiguring resources and capabilities to new opportunities in a rapidly changing economic environment determines the competitiveness of the enterprise to create added value and survival. This study conceptualized a two-stage performance measurement framework based on the casual model of resource (input)-process-performance (output). We have developed a 'Process capability index' that reflect the dynamic capabilities factors as a key intermediary product linking resource inputs and performance outputs in enterprise performance measurement. The process capability index consists of four elements : manpower (level of human resource), operation productivity, structure and risk management. The DEA (Data Envelopment Analysis) model was applied to the developed performance indicators to analyze the branch office performance of a telecom company. Process capability efficiency (stage 1) uses resource inputs to reach a certain level of process capabilities. In performance result efficiency (stage 2), the process capabilities are used to generate sales revenues and subscribers. The two-stage DEA model derives intermediate output values that optimize the individual stages simultaneously. Some branch offices in the telecom company have focused on process capability efficiency or some other branch offices focused on performance result efficiency. Positioning map using two-stage efficiency decomposition and benchmarking can help identify the sources of inefficiencies and visualize strategic directions for performance optimization. Applications of two-stage DEA in conjunction with the case study that are meaningfully used in performance measurement areas have been scarce. In particular, this paper has the contribution to present a new performance measurement model considering the organization theory, the dynamic capabilities.

Keywords

References

  1. Banker, R.D., Charnes, A., and Cooper, W.W., Some models for estimating technical and scale inefficiencies in data envelopment analysis, Management Science, 1984, Vol. 30, No. 9, pp. 1078-1092. https://doi.org/10.1287/mnsc.30.9.1078
  2. Barreto, I., Dynamic capabilities : A review of past research and an agenda for the future, Journal of Management, 2010, Vol. 36, No. 1, pp. 256-280. https://doi.org/10.1177/0149206309350776
  3. Brown, M.G., Keeping Score : Using the Right Metrics to Drive World-Class Performance, New York : Quality Resources, 1996.
  4. Charnes, A., Cooper, W.W., and Rhodes, E., Measuring the efficiency of decision making units, European Journal of Operational Research, 1978, Vol. 2, No. 6, pp. 429-444. https://doi.org/10.1016/0377-2217(78)90138-8
  5. Chen, Y. and Zhu, J., Measuring information technology's indirect impact on firm performance, Information Technology and Management, 2004, Vol. 5, No. 1, pp. 9-22. https://doi.org/10.1023/B:ITEM.0000008075.43543.97
  6. Eisenhardt, K.M. and Martin, J.A., Dynamic capabilities : what are they?, Strategic Management Journal, 2000, Vol. 21, No. 10/11, pp. 1105-1121. https://doi.org/10.1002/1097-0266(200010/11)21:10/11<1105::AID-SMJ133>3.0.CO;2-E
  7. Fitzgerald, L., Johnston, R., Brignall, T.J., Silvestro, R., and Voss, C., Performance Measurement in Service Businesses, London : Chartered Institute of Management Accountants, 1991.
  8. Hudson, M., Lean, J., and Smart, P.A., Improving control through effective performance measurement in SMEs, Production Planning & Control, 2001, Vol. 12, No. 8, pp. 804-813. https://doi.org/10.1080/09537280110061557
  9. Kao, C. and Hwang, S.-N., Efficiency measurement for network systems : IT impact on firm performance, Decision Support Systems, 2010, Vol. 48, No. 3, pp. 437-446. https://doi.org/10.1016/j.dss.2009.06.002
  10. Kaplan, R.S. and Norton, D.P., The balanced scorecard : measures that drive performance, Harvard Business Review, 1992, Vol. 70, No. 1, pp. 71-79.
  11. Khan, Z. and Lew, Y.K., Post-entry survival of developing economy international new ventures : A dynamic capability perspective, International Business Review, 2018, Vol. 27, No. 1, pp. 149-160. https://doi.org/10.1016/j.ibusrev.2017.06.001
  12. Kurtzman, J. and Urresta, L., Is your company off course? Now you can find out why, Fortune, 1997, Vol. 135, No. 3, pp. 128-130.
  13. Kwon, S.M. and Han, C.H., Empirical Investigation on Information Breach Effect on the Market Value of the Firm : Focused on Source and Long Term Performance, The Journal of Society for e-Business Studies, 2016, Vol. 21, No. 2, pp. 81-96. https://doi.org/10.7838/JSEBS.2016.21.2.081
  14. Kwon, S.M. and Han, C.H., Evaluating Performance of Telecommunication Branch : Application of DEA with Non-Discretionary Factor, Journal of Society of Korea Industrial and Systems Engineering , 2017, Vol. 40, No. 4, pp. 21-28. https://doi.org/10.11627/jkise.2017.40.4.021
  15. Lohman, C., Fortuin, L., and Wouters, M., Designing a performance measurement system : A case study, European Journal of Operational Research, 2004, Vol. 156, No. 2, pp. 267-286. https://doi.org/10.1016/S0377-2217(02)00918-9
  16. Lynch, R.L. and Cross, K.F., Measure up! : Yardsticks for continuous improvement, Blackwell (USA), 1991.
  17. Meyer, M.W., Finding performance : The new discipline in management, Business performance measurement : Theory and practice, 2002, pp. 51-64.
  18. Neely, A. (Ed.), Business performance measurement : Unifying theory and integrating practice, Cambridge University Press, 2007.
  19. Neely, A., Adams, C., and Crowe, P., The performance prism in practice, Measuring Business Excellence, 2001, Vol. 5, No. 2, pp. 6-13. https://doi.org/10.1108/13683040110385142
  20. Neely, A., Richards, H., Mills, J., Platts, K., and Bourne, M., Designing performance measures : a structured approach, International Journal of Operations & Production Management, 1997, Vol. 17, No. 11, pp. 1131-1152. https://doi.org/10.1108/01443579710177888
  21. Neely, A.D., Adams, C., and Kennerley, M., The performance prism : The scorecard for measuring and managing business success, London : Financial Times/Prentice Hall, 2002.
  22. Paek, B.J. and Lee, H.S., Exploratory research on the dynamic capabilities of leading firms : Research framework building, Journal of the Korea Academia-Industrial Cooperation Society, 2015, Vol. 16, No. 12, pp. 8262-8273. https://doi.org/10.5762/KAIS.2015.16.12.8262
  23. Parmenter, D., Key performance indicators : developing, implementing, and using winning KPIs, John Wiley & Sons, 2015.
  24. Protogerou, A., Caloghirou, Y., and Lioukas, S., Dynamic capabilities and their indirect impact on firm performance, Industrial and Corporate Change, 2012, Vol. 21, No. 3, pp. 615-647. https://doi.org/10.1093/icc/dtr049
  25. Quinton, S., Canhoto, A., Molinillo, S., Pera, R., and Budhathoki, T., Conceptualising a digital orientation : antecedents of supporting SME performance in the digital economy, Journal of Strategic Marketing, 2017, pp. 1-13.
  26. Ratnatunga, J., Gray, N., and Balachandran, K.R., $CE-VITA^{TM}$ : the valuation and reporting of strategic capabilities, Management Accounting Research, 2004, Vol. 15, No. 1, pp. 77-105. https://doi.org/10.1016/j.mar.2003.12.005
  27. Schwab, K., The fourth industrial revolution : what it means, how to respond, In World Economic Forum, 2016.
  28. Taticchi, P., Tonelli, F., and Cagnazzo, L., Performance measurement and management : a literature review and a research agenda, Measuring Business Excellence, Vol. 14, No. 1, 2010, pp. 4-18. https://doi.org/10.1108/13683041011027418
  29. Teece, D.J., Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance, Strategic Management Journal, 2007, Vol. 28, No. 13, pp. 1319-1350. https://doi.org/10.1002/smj.640
  30. Teece, D.J., Pisano, G., and Shuen, A., Dynamic capabilities and strategic management, Strategic Management Journal, 1997, Vol. 18, No. 7, pp. 509-533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
  31. Wongrassamee, S. Simmons, J.E., and Gardiner, P.D., Performance measurement tools : the Balanced Scorecard and the EFQM Excellence Model, Measuring business excellence, 2003, Vol. 7, No. 1, pp. 14-29. https://doi.org/10.1108/13683040310466690
  32. Yin, R.K., Case study research : design and methods, Thousand Oaks, CA : Sage Publications, Inc, 2013.
  33. Zahra, S.A., Sapienza, H.J., and Davidsson, P., Entrepreneurship and dynamic capabilities : A review, model and research agenda, Journal of Management Studies, 2006, Vol. 43, No. 4, pp. 917-955. https://doi.org/10.1111/j.1467-6486.2006.00616.x
  34. Zhu, J., Quantitative models for performance evaluation and benchmarking : data envelopment analysis with spreadsheets (Vol. 213), Springer, 2014.
  35. Zollo, M. and Winter, S.G., Deliberate learning and the evolution of dynamic capabilities, Organization Science, 2002, Vol. 13, No. 3, pp. 339-351. https://doi.org/10.1287/orsc.13.3.339.2780

Cited by

  1. 균형성과표(BSC)를 활용한 탄약 비군사화 시설의 핵심성과지표 개발 vol.44, pp.1, 2018, https://doi.org/10.11627/jkise.2021.44.1.017