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Measuring Sustainability of Strategic Performance

Опубликовано на портале: 25-12-2002
This paper proposes the assessment of sustained superior performance by means of two measures called Static Performance and Dynamic Performance. The first evaluates the attained superior performance, and the second gauges its sustainability over time. This proposal builds primarily on the fact that, under the strategic management perspective, a firm's prevalent objective is the pursuit of sustained superior performance. Three basic conceptual dimensions stem from this objective: relativity, sign dependence, and dynamism. They serve as the foundation to the two performance measures presented. In contrast to the measures and methods in extant literature, our proposal provides: (i) a dynamic approach by considering the progress or regress in performance over time; and (ii) a cardinal measurement of performance differences and its changes over time. The paper also develops an axiomatic framework that any measure of strategic performance should comply to be theoretically and managerially sound. Finally, an empirical application to the Spanish banking sector during 1987-1999 is used to illustrate the measures.

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