Measuring Organizational Effectiveness: An Industrial Study on Indonesia’s Listed Manufacturing Firms

Abstract

The turbulent business environments, coupled with the unstable world economy following the global financial crises, have certainly put pressures on firm’s survivability. The financial conditions of firms may have been the closest approximation to learn the influential effect of the economy. The firm’s ability to meet its operational obligations may portray as the key for survivability. The period of uncertainties, coupled with high fluctuations, had certainly pushed firms to monitor their on-going effectiveness. In order to evaluate the organizational effectiveness of the Indonesian firms, this paper follows the concepts on various ratio analyses in attempting to measure the firm’s performance over a period of 2005-2010. In particular, this paper only focuses on the publicly listed firms at the Bursa Efek Indonesia ('BEI') to note the level of performance of the Indonesian firms, particularly the level of effectiveness. This study covers an extensive research on manufacturing firms, which are comprised of automotive, textile, agriculture, mining, pharmaceutical, ceramics, aluminum, cigarettes, cement, cable, basic industry, chemicals, household products, food and beverages, metal, logging, glass manufacturing, animal feed, pulp and paper, including plastic and packaging.

Previous studies have been undertaken to cover the qualitative and quantitative studies from view notable perspectives. This paper is solely dependent on secondary data concerning the financial statements of various Indonesia’s publicly listed manufacturing firms. Other variables are obtained from the general economic condition of the country to note the likelihood of impact toward organizational performance. From approximately 600 data, during a span of 6 years, it is expected that this paper is able to provide the organizational effectiveness, which may provide probable signal for the firm’s level of viability into years to come. Statistical analyses are also performed to observe the general practicality of the data.

Keywords: organizational effectiveness, manufacturing firms, publicly listed, Indonesia

JEL Classification: M10, L10, O10