Measuring Organizational Performance: Towards Methodological Best Practice

Journal of Management, Vol. 35, No. 3, pp. 718-804, June 2009

Posted: 18 Jun 2009

See all articles by Pierre J. Richard

Pierre J. Richard

University of New South Wales (UNSW) - Management; UNSW Australia Business School, School of Economics

Timothy M. Devinney

University of Manchester - Alliance Manchester Business School

George S. Yip

Imperial College London

Gerry Johnson

Lancaster University - Lancaster University Management School

Date Written: June 1, 2009

Abstract

Organizational performance is one of the most important constructs in management research. Reviewing past studies reveals a multidimensional conceptualization of organizational performance related predominately to stakeholders, heterogeneous product market circumstances, and time. A review of the operationalization of performance highlights the limited effectiveness of commonly accepted measurement practices in tapping this multidimensionality. Addressing these findings requires researchers to (a) possess a strong theoretical rationale on the nature of performance (i.e., theory establishing which measures are appropriate to the research context) and (b) rely on strong theory as to the nature of measures (i.e., theory establishing which measures should be combined and the method for doing so). All management research on performance should explicitly address these two requirements. The authors conclude with a call for research that examines triangulation using multiple measures, longitudinal data and alternative methodological formulations as methods of appropriately aligning research contexts with the measurement of organizational performance.

Keywords: performance, profitability, empirical measurement, construct validity, organizational effectiveness

JEL Classification: M1, M2, M4

Suggested Citation

Richard, Pierre J. and Devinney, Timothy M. and Yip, George S. and Johnson, Gerry, Measuring Organizational Performance: Towards Methodological Best Practice (June 1, 2009). Journal of Management, Vol. 35, No. 3, pp. 718-804, June 2009 , Available at SSRN: https://ssrn.com/abstract=1421199

Pierre J. Richard

University of New South Wales (UNSW) - Management ( email )

Sydney, NSW 2052
Australia

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Timothy M. Devinney (Contact Author)

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

George S. Yip

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Gerry Johnson

Lancaster University - Lancaster University Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

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