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Analysis of Profit-Linked Total-Factor Productivity Measurement Models at the Firm Level

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  • David M. Miller

    (College of Commerce & Business Administration, University of Alabama, Tuscaloosa, Alabama 35487-9725)

  • P. Mohan Rao

    (College of Commerce & Business Administration, University of Alabama, Tuscaloosa, Alabama 35487-9725)

Abstract

The purpose of the paper is to present the results of a comparative analysis of two main-line productivity measurement procedures: the American Productivity Center's total factor model, and the Ethyl Corporation's "Profitability = Productivity + Price Recovery" model. Several fundamental differences between the two approaches are identified and analyzed. As demonstrated in the paper, differences such as the method of deflation can substantially affect the proper choice of the more appropriate procedure to use in a given corporate setting.

Suggested Citation

  • David M. Miller & P. Mohan Rao, 1989. "Analysis of Profit-Linked Total-Factor Productivity Measurement Models at the Firm Level," Management Science, INFORMS, vol. 35(6), pages 757-767, June.
    • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:6:p:757-767
    DOI: 10.1287/mnsc.35.6.757
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    Citations

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    Cited by:

    1. E. Grifell-Tatjé & C. A. K. Lovell, 1999. "Profits and Productivity," Management Science, INFORMS, vol. 45(9), pages 1177-1193, September.
    2. Sahoo, Biresh K. & Tone, Kaoru, 2009. "Radial and non-radial decompositions of profit change: With an application to Indian banking," European Journal of Operational Research, Elsevier, vol. 196(3), pages 1130-1146, August.
    3. Robert Chambers, 2008. "Stochastic productivity measurement," Journal of Productivity Analysis, Springer, vol. 30(2), pages 107-120, October.
    4. Suho Bae, 2009. "The responses of manufacturing businesses to geographical differences in electricity prices," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(2), pages 453-472, June.
    5. Parkan, Celik, 2007. "Verifying OCRA's economic sense: Response to Agrell and West (2001)," International Journal of Production Economics, Elsevier, vol. 107(1), pages 274-278, May.
    6. Oral, Muhittin & Cinar, Unver & Chabchoub, Habib, 1999. "Linking industrial competitiveness and productivity at the firm level," European Journal of Operational Research, Elsevier, vol. 118(2), pages 271-277, October.
    7. Frederic Ang & Pieter Jan Kerstens, 2023. "Robust nonparametric analysis of dynamic profits, prices and productivity: An application to French meat-processing firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 771-809.
    8. Avninder Gill, 2011. "Measurement and Comparison of Productivity Performance Under Fuzzy Imprecise Data," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 2(1), pages 19-32, April.
    9. Parkan, Celik, 1996. "Measuring the performance of hotel operations," Socio-Economic Planning Sciences, Elsevier, vol. 30(4), pages 257-292, December.
    10. Marte Bjørnsen & Gudbrand Lien & Timo Sipiläinen, 2011. "The productivity performance of Finnish and Norwegian dairy farms: the effect of joining/not joining the EU," ERSA conference papers ersa11p793, European Regional Science Association.
    11. Agrell, Per J. & Martin West, B., 2001. "A caveat on the measurement of productive efficiency," International Journal of Production Economics, Elsevier, vol. 69(1), pages 1-14, January.
    12. Subal Kumbhakar & Frank Asche & Ragnar Tveteras, 2013. "Estimation and decomposition of inefficiency when producers maximize return to the outlay: an application to Norwegian fishing trawlers," Journal of Productivity Analysis, Springer, vol. 40(3), pages 307-321, December.

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    Keywords

    productivity; analysis; model;
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