Measuring strategic performance

This paper demonstrates the inadequacy of traditional measures, that are based on a firm's profitability, for evaluating its strategic performance. Two other measures, one that attempts to assess the quality of a firm's transformations (and not merely its outcomes) and the other that attem...

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Bibliographic Details
Published in:Strategic management journal 1986-09, Vol.7 (5), p.437-458
Main Author: Chakravarthy, Balaji S.
Format: Article
Language:English
Subjects:
Bankruptcy
Business structures
Computer industry
Control data
Corporate strategies
Dividends
Manycompanies
Measurement
Measures
Organizational effectiveness
Profitable firms
Ratings & rankings
Return on investment
Returns
Sales
Shareholders
Statistical data
Strategic planning
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Summary:This paper demonstrates the inadequacy of traditional measures, that are based on a firm's profitability, for evaluating its strategic performance. Two other measures, one that attempts to assess the quality of a firm's transformations (and not merely its outcomes) and the other that attempts to measure the satisfaction of all of the firm's stakeholders (and not merely its stockholders), are shown here to be important discriminators of strategic performance. The performances of seven `excellent' firms from the computer industry, featured in the recent book by Peters and Waterman, are contrasted with that of seven 'non-excellent' firms from the same industry, to develop a framework for measuring strategic performance.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.4250070505