Search results

1 – 2 of 2
Per page
102050
Citations:
Loading...
Access Restricted. View access options
Article
Publication date: 7 April 2015

Domenico Laise, Laura Marraro and Gianpaolo Iazzolino

In a previous paper the authors emphasized the advantages of multicriteria methodologies to evaluate business performance. The purpose of this paper is to highlight the metachoice…

444

Abstract

Purpose

In a previous paper the authors emphasized the advantages of multicriteria methodologies to evaluate business performance. The purpose of this paper is to highlight the metachoice problem that always arises in a benchmark multicriteria analysis that can be synthesized as follows: “how to choose an algorithm to choose?”

Design/methodology/approach

In order to perform a benchmark analysis, a set of criteria must be chosen. In the Balanced Scorecard approach, for example, key performance indicators (KPIs) are grouped in four different perspectives: financial, customer, internal processes and learning and growth. In this paper, the authors focus on multicriteria benchmark analysis applied to KPIs of the financial perspective. The paper considers a set of criteria used in financial statement analysis based on balance sheet, income statement and cash flow statement. A case study is described.

Findings

The main findings of the paper are when the evaluation of a firm is based on different genuine criteria, a metachoice problem arises: multicriteria ranking algorithms cannot be selected using a multicriteria algorithm; the choice of an algorithm ultimately depends on the subjective preference of the policy maker; and the authors metachoice solution to the benchmarking problem is in accordance with Simon’s satisfacing solution, describing a non-maximizing performance measurement methodology.

Practical implications

The paper provides several practical implications in all cases in which a ranking has to be assigned to a group of firms based on financial performances. More in general the problem is very relevant when a ranking has to be carried out with respect to a set of projects, a set of strategies, a set of organizational units, etc.

Originality/value

The adoption of a set of criteria is certainly an advantage to avoid uni-criterial myopic evaluation. However, this also creates some methodological problems. The paper demonstrates the “relativity” (subjectivity) of results of the evaluation process when there are many evaluation criteria, as in a benchmark context. This is a metachoice problem that cannot be solved by using another multicriteria algorithm.

Details

Benchmarking: An International Journal, vol. 22 no. 3
Type: Research Article
ISSN: 1463-5771

Keywords

Access Restricted. View access options
Article
Publication date: 25 May 2012

Gianpaolo Iazzolino, Domenico Laise and Laura Marraro

The business performances of firms are measured on a set of indicators (Financial Ratio Analysis Indicators or Balanced Scorecard Key Performance Indicators). Traditional…

11784

Abstract

Purpose

The business performances of firms are measured on a set of indicators (Financial Ratio Analysis Indicators or Balanced Scorecard Key Performance Indicators). Traditional benchmark analysis considers a set of criteria, though it generally synthesizes all the results, taking into consideration only an aggregate performance criterion (reductio ad unum approach). This methodology has many disadvantages, both theoretical and empirical. The purpose of this paper is to illustrate the advantages, in terms of greater flexibility and realism, related to the application of a multicriteria methodology.

Design/methodology/approach

The paper uses a tutorial approach. An exemplification of an outranking multicriteria methodology (ELECTRE type) is described.

Findings

The main findings of the paper can be summarized as: first, the evaluation of a business performance cannot generally be conducted by means of a unique criterion as in the traditional monocriterion benchmark analysis; second, when the evaluation of a firm is based on different genuine criteria, the performance has to be “satisfacing” and not maximizing; and third, the outranking methods are able to provide logically rigorous solutions to the genuine multicriteria benchmarking evaluation problems.

Practical implications

The paper provides practical implications useful for evaluating firm performances in many cases, also when each stakeholder (managers, shareholders, banks, etc.) assigns different “weights” to the decision criteria.

Originality/value

As a multicriteria evaluation is generally incompatible with a profit maximizing approach, the paper proposes a multicriteria performance measure approach that offers Simon's satisfacing solutions. The paper shows that satisfacing solutions to a multicriteria evaluation problem may be rigorously obtained through an outranking methodology (already introduced by other scholars).

Details

Benchmarking: An International Journal, vol. 19 no. 3
Type: Research Article
ISSN: 1463-5771

Keywords

1 – 2 of 2
Per page
102050