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PERFORMANCE IMPROVEMENT QUARTERLY
© 2020 International Society for Performance Improvement
Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/piq.21328
Composite Indicators of
Company Performance:
A Literature Survey
Qinqin Zeng | Wouter W.A. Beelaerts van Blokland | Sicco C. Santema |
Gabriël Lodewijks
C
ompany performance can be defned as the
efciency and efectiveness of actions (Neely,
Gregory, and Platts, 1995) for decision mak-
ers to monitor performance. Traditionally, fnancial
performance is regarded as company performance,
and fnancial analysis systems, such as DuPont’s, are
sufcient to measure this performance. However, it is
acknowledged that fnancial performance is just one
aspect of company performance. Due to the complex
global business environment, company performance
has evolved into an integration of both fnancial and
non-fnancial indicators. Since the late 1980s, several classically integrated
company performance frameworks have been developed. For example,
the concept of the third generation of performance measurement system
was proposed with emphasis on the adoption of non-fnancial indicator
and intangible indicators (Neely, Marr, Roos, Pike, & Gupta, 2003). How-
ever, the integrated frameworks of company performance are multidi-
mensional, which makes it difcult to quantify them directly.
According to the Glossary of Statistical Terms, a CI “is formed when
individual indicators are compiled into a single index, on the basis of an
underlying model of the multidimensional concept that is being mea-
sured” (Organization for Economic Cooperation and Development, 2007,
p. 125). Composite indicators (CIs) have increasingly been accepted as a
useful tool for benchmarking, performance comparisons, policy analysis,
and public communication in many felds (Zhou, Ang, & Zhou, 2010).
Company performance is a multi-dimensional concept. A way of measur-
ing the multidimensional performance is to adopt or construct CIs that
convey relevant information into a single fgure.
Various techniques for constructing CIs have been elaborated in pub-
lications such as the well-known tool book, Handbook on Construct-
ing Composite Indicators (Organisation for Economic Cooperation and
Composite indicators (CIs) are needed
for decision makers to efectively bench-
mark holistic company performance.
Composite indicators at macro levels are
inappropriate to be implemented at the
company level. By a literature survey, this
article identifed 29 individual methods for
constructing CIs, 17 specifc business sec-
tors where CIs have been utilized in prac-
tice, and the motor vehicle manufacturing
sector as the most studied sector. This arti-
cle identifed nine problems and provided
four recommendations for future research.