A multiple case study research to determine and respond to management information needs using Total-Factor Productivity Measurement

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Virginia Tech


This study (1) determines the information managers commonly need to make decisions and initiate actions to improve performance, based on selected case studies, (2) investigates and explains the features and issues involved with how the different versions of TFPM address these information needs, and (3) develops a teaching model of TFPM.

Based on the literature review, interviews with experts, and experiences with applications, the features and differences of the available TFPM versions were explained, providing sample applications whenever necessary. Using four selected cases, common user information needs were identified and compared with results of previous surveys. Alternative TFPM applications for each case were developed and evaluated using Archer's (1978) Design Process as implemented with VPC's (1990) PRFORM software. Based on the evaluations of the TFPM applications in each of the case studies, a teaching TFPM model was developed incorporating the features of the available TFPM versions that most appropriately responded to the common information needs. Some other features not portrayed in the available TFPM versions were added to facilitate portrayal, understanding, and acceptance for new users.

There are basically two models of TFPM - the Productivity Indices (PI) Model and the Profitability = Productivity + Price Recovery (PPPR) Model. I proved that as implemented with discrete variables, Gollop's Model is equivalent to the PPPR Model. Various versions of these two models feature differences in deflation, aggregation of Outputs, inputs, and/or organizational units, treatment of capital, computation of dollar effects of changes in performance, and how to use TFPM for planning.

The common information needs identified were (1) measures of a firm's past performance using physical productivity related to profitability; (2) measures of individual organizational units’ productivity aggregated into plant, division, or firm level productivity; (3) partial measures to explain what factors dr.ve the total performance measures; and (4) evaluations of plans/budgets to ensure performance improvement.

Based on the evaluations of possible TFPM versions appropriate for each application, REALST stands out as the most advanced and flexible version. However, it has become too complicated for first-time users. Hence, the teaching TFPM model I have developed is a simplified version of REALST.