ABSTRACT

This chapter mainly concerns performance measurement at the level of the individual firm and industry, but the contentious qualities of performance indicators can be equally well illustrated at the macroeconomic level. It examines the main types of performance measure that are currently in use, indicating their respective uses and limitations. These are: profit measures; productivity measures; indirect measures relating to market structure and pricing and investment rules; and measures of productive and 'X-efficiency'. The chapter concerns the productivity measurement from the public policy standpoint, at the levels of the industrial sector and individual firm. It discusses the conceptual and practical difficulties in calculating the above ratios are evident from the earlier review of productivity measurement. The chapter concludes with a brief review of the methods used to compare productivity changes in British and West German manufacturing industries over the period 1954–72.