Reconciling diverse measures of performance

A measurement model for assessing the validity and reliability of performance measures is developed and Data Envelopment Analysis based on the performance measures allows the creation of a performance frontier which inherently recognizes the tradeoffs.

Abstract

This paper examines the multidimensional aspects of performance measures specifically studying variables related to "marketing effectiveness." A measurement model for assessing the validity and reliability of performance measures is developed. The framework provides a conceptual platform from which further empirical and theoretical development may proceed. This is illustrated through an empirical analysis which addresses the issues associated with resolving conflicts among performance measures. The empirical results show the importance of carefully assessing the performance measures chosen. The results confirm earlier findings that the dimensions of performance can be mutually exclusive, leading to confusion as to the appropriate means of resolving tradeoffs. Data Envelopment Analysis based on the performance measures allows the creation of a performance frontier which inherently recognizes the tradeoffs. This method is used to further validate the characteristics of the performance measures chosen. The model incorporating profitability, market growth and adaptability was the most consistent in both predictive and concurrent validity checks.