Capital Input and Total Pro

[ 224 ]

Management Decision35/3 [1997] 224–232

© MCB University Press [ISSN 0025-1747]

Capital input and total productivity management

Alan StainerMiddlesex University, London

Provides an overview of totalproductivity, in definition,measurement and manage-ment. Discusses the chal-lenges of evaluating input andoutput factors, highlightingthe basis of capital inputmeasurement and taking intoconsideration the issues ofinflation, operational capacityand technological change.Places productivity in a per-formance-measurementcontext. Explores the affinityof productivity and its variousmeasures to managementaccounting with special focuson price recovery and prof-itability. Devises models forcapital input within totalproductivity, based onreplacement cost. Examinesand analyses surveys relatingto productivity practices andperceptions. Demonstratesthe interrelationship of capi-tal and labour inputs withtotal productivity and itsrelevance to managerialstrategic decision making.

Introduction

In an era that is sensitive to performancemeasurement, there has been an awakeninginterest in productivity. The purpose of thispaper is to demonstrate the relevance andimportance of total productivity measure-ment and management incorporatingreplacement cost capital input to both opera-tions and strategy. At the national level, Ter-leckyj[1] talks of a “window of opportunity”for productivity improvement through invest-ment and training. For the corporation, thisis particularly true in the manufacturingsector where it has been featured heavily inreports by Levy[2] and Andersen Consult-ing[3]. The former shows that despite improv-ing recently at a greater rate than some com-petitors, UK labour productivity still lags 20-25 per cent in absolute terms. The latterreveals that the UK has the lowest labourproductivity of any Western European coun-try and the second worst with regard to quality.

How meaningful are these statements, par-ticularly as they are based on partial mea-sures of labour productivity? By taking thepartial approach, only a fraction of the totalpicture is revealed. This is reflected by thefact that, since the 1980s, cumulative capitalinvestment in UK manufacturing peremployee was only 37 per cent of that of Japanand 70 per cent of that of the USA and Ger-many. A wider strategic view must be takento embrace all resource inputs leading to totalproductivity measurement and hence man-agement. With technological advancement,organizations are becoming more capital- andless labour-oriented. Thus, the effects of capi-tal input must be effectively incorporated fora relevant analysis.

Productivity in context

Productivity is a subject that has been dis-cussed for many years by politicians, econo-mists, management and the media, but withvery little understanding of its meaning ormeasurement. The term “productivity” isoften confused with the term “production”.Although there is often a close relationship,

production is concerned with the activity ofproducing goods or services while productiv-ity relates to the efficient utilization of inputsin producing prescribed outputs of goods orservices. The Dutch economist Verdoorn’sLaw, which states that the greater the produc-tion the greater the productivity, is right asfar as it goes but only focuses on the outputnumerator.

In management discussions, productivity isoften used in a narrow interpretation as syn-onymous with partial measures, that is theratio of total output to one input; the mostcommon is labour productivity, such as out-put per man-year. Some managers have beenso bold as to propound the rate of return oncapital employed as a partial measure, that ofcapital productivity. A fundamental problemin using profitability ratios is that they areoften affected by external conditions whichmay bear no relationship to the efficient useof resources.

A blind alley which has been followed isthat of total factor productivity, known morewidely in Europe as value added. This isbased on net output, where value added isdefined as sales less purchased goods/ser-vices, or viewed from the other direction,labour plus capital and profit. Value added isnot a relevant measure of productivity, espe-cially as it basically relates to sales and oftenbears little or no relationship to the produc-tive process. It also has the disadvantage ofbeing founded on accounting reporting data,embracing historic cost and depreciation.

Total productivity can be described as theoverall measure of economic effectiveness onthe basis of output per unit of all resource(s)utilized. In the last decade, there has been adefinite move towards its utilization, that isthe ratio of total output to the sum of all inputfactors (Figure 1).

Sumanth[4], in a simplistic manner, pro-vides the continuous Total Productivity Man-agement Cycle of measurement, evaluation,planning and improvement. Its objective is toincrease total productivity, mirrored in thereduction of the unit costs of goods or ser-vices produced at the highest quality possi-ble. How widely are these measures beingused? In the UK, Stainer and Stainer[5] showthat total productivity measures are utilized

[ 225 ]

Alan StainerCapital input and total productivity management


in 11.9 per cent of manufacturing and 12.5 percent of service organizations compared to 7.5per cent and 10.0 per cent respectively,reported earlier by Stainer[6]. These figuresare still below those for the USA given bySumanth[4] (13.3 per cent and 20.0 per centrespectively), Kraus[7] (15.0 per cent for allorganizations) and Steedle[8] (28.0 per centfor all organizations).

The only practical way that inputs can beaggregated is in money terms. When compar-ison is made over time, the measurementsshould be taken in real terms. This meansthat all economic indicators must be kept atbase-year prices to allow meaningful compar-ison as well as isolate inflation. For this pur-pose, it is important to select, where possible,a relatively stable base-year as this will aidsound analysis.

In most instances, total output is defined inphysical terms. An exception is in organiza-tions where, because the great variety ofoutput precludes physical aggregation, themeasurement can be based on adjusted sales.Examples of measures of output by variousindustries within the UK, in relation to totalproductivity, are shown in Table I.

Quality should not be overlooked and,therefore, the measure of output must beintegrated with the quality level required tosatisfy customer needs. According to Thor[9],

the most profound statement used to connectproductivity to quality is that the former iswhat ultimately makes organizations compet-itive and successful and the latter is the bestway to achieve that productivity.

Basic total productivity relationships canbe shown by interlinking ratios for controlpurposes, such as those focusing on thetotal/labour productivity combination (Figure 2).

It can be seen that the inverse of unit cost,preferably real unit cost, provides the totalproductivity measure. Other relationships,such as capacity or energy utilization, canfollow this pattern and trends can then bedeveloped. The overall model will depend onthe objectives of the organization and itscontrol requirements. In recent years, usingthe above formula, underground coal-miningin the UK, instead of basing decisions almostentirely on partial labour measures such asoutput per man-year, have focused on realunit cost of gigajoules of saleable coal.

Eccles[10] places productivity within thecontext of performance measurement. Hisideas are refined by Fitzgerald et al.[11]andCross and Lynch[12] who focus on the dimen-sions of performance measures for organiza-tions where productivity can be seen as theresource utilization determinant of opera-tional competitive success (Table II).

According to Hörnell and Hjelm[13], serviceindustries have particular problems in pro-ductivity measurement, especially as theoutput is often intangible. Indeed,Drucker[14] believes that great strides havebeen made this century in manufacturingproductivity but the challenge for the futureis the raising of productivity in services.

Although total productivity is recognizedas the ultimate in operations decision makingby Sumanth[4], and later by Thor[9], therehas been considerable reluctance by manage-ment to use this approach because of its per-ceived complexity. Therefore, if it is to gainformal and further recognition, it wouldbenefit to ally itself to forward-thinking man-agement accounting practices.

Productivity and management accounting in context

There have been several exponents of bring-ing productivity into a management account-ing framework. Probably the most relevantand the best documented of such an approachis that of Kaplan and Atkinson[15]. The foun-dation of their thinking relates to Miller[16]who adapted the ideas of van Loggerenbergand Cucchiaro[17]. The basic premiss is that

Figure 1Total productivity

Table IOutput measures in total productivity

Industry Measure of output

Airline Tonnes-kilometresUniversity High-calibre studentsDepartment store Inventory-adjusted salesUndergound coalmine Gigajoules of saleable coalHospital Patients treatedFarming Tonnes of saleable cropCatering Meals servedRefuse collection Tonnes of waste

[ 226 ]



profitability relates to “productivity” and“price recovery”. This is derived as follows:

In essence, profit changes are split into effects caused by changes in productivity, in sales activity (volume and mix) and inprice recovery. This approach leads to the concept of the “nine box” diagram Figure 3).

The changes are between time periodsrather than due to external competition. Anorganization may generate a positive changein profits through productivity gains ormerely by increasing output prices to relativeinput costs. It is claimed that, if productivitycan be separated from price recovery, it ispossible to examine trends in labour, capitaland material productivity as well as theirprice recovery. However, the weaknesses ofthe approach are twofold :

1 the productivity measure is over-simpli-fied and partial;

2 capital is invariably based on historic cost.

Belcher[18], Bicheno[19] and Harrison[20]have, in various ways, adapted this methodol-ogy for management control purposes. Work-man-Davies[21] and van Loggerenberg[22]have applied it specifically, and successfully,to the South African gold mining industry.

Capital input

Apart from the complexity of measuring totalproductivity, one major criticism byStainer[23] is the measurement of capitalinput. Traditionally, the input factor has beenhistoric cost depreciation, with all its weak-nesses of reflecting assets bought at varioustimes with money of differing purchasingpower.

A survey was carried out of 480 large orga-nizations, both manufacturing and services,from three European countries, namely theUK, France and Germany, with 223 respon-dents. Part of that survey relates to the totalproductivity approach. The organizationswere asked to select, from given parameters,the most significant advantage and disadvan-tage of using total productivity measures.Table III sets out the results.

The most significant perceived advantagerelates to the total cost approach, while thedifficulty in measuring capital input isselected as the greatest disadvantage. Thus,the Achilles’ heel of total productivityremains as the issues of capital input and itsmeasurement. As Grossman[24] emphasizes,

Figure 2Basic total productivity relationships

Table IIPerformance measures across six dimensions

1 Market competitiveness Result of effectiveness of2 Financial performance chosen strategy

3 Quality/customer satisfaction Operational4 Flexibility Determinants of5 Resource utilization competitive success6 Innovation

}

}

Profitability = Revenue Cost

= Output quantities × Unit pricesInput quantities Unit costs

= Productivity × Price Recovery

[ 227 ]



trying properly to measure capital input isthe most difficult and intractable problem incalculating total productivity.

Capital input must be measured in terms ofservices, which is a flow concept, whereascapital is, by definition, a stock. A workingcapital element should be represented in theequation as it reflects part of the organiza-tion’s ability to produce. Capital input mea-surement presents considerable challenges,so much so that some authorities on produc-tivity, such as Mundel[25], weakly advocatethat it should be ignored. Indeed, Avedillo-Cruz[26], Prokopenko[27] and Heap[28] sug-gest that it should be put to one side and sepa-rately analysed as a ratio of capital to labour.Either way, they are really ducking this majorissue.

In the main, the use of historic cost appears topersist as a basis for valuation of assets inaccounting and productivity management.This is for two reasons: first, it is relativelysimple to record value as a factor based onindependently verifiable transactions and,second, it is enshrined in many aspects ofcompany and tax laws as well as corporatereporting practices. If historic cost is consid-ered inadequate, current value yardsticksmust be focused on. These are:• historic cost adjusted for inflation which

takes into account changes in the generalpurchasing power of money, rather than thespecific rate of price change for the variousassets;

• economic value which is based on forecast,capitalized cash flows from the assetswhich reflect the strengths and weaknessesof discounted cash flow techniques;

• replacement cost which is the cost of replac-ing the service potential of the existingasset in the cheapest possible way;

• net realizable value which is the amountreceived from selling an asset in its existingcondition, less any disposal costs incurred;

• deprival value where, if the organizationwas deprived of an asset, it is the sum ofmoney required to make it whole again,given that it has time to take any necessaryaction to minimize its loss;

• leasing charge which is an opportunity costor tilting annuity relating to the presumedcost of leasing an asset.

Figure 3Profitability, productivity and price recovery

Table IIIAdvantages and disadvantages of total produc-tivity measures

Advantages %

Better relationship to total cost 41.3Gives a more accurate real economic picture 28.7Better profit control 18.8Easier sensitivity analysis 11.2

Disadvantages %

Difficulty in measuring capital input 46.2Complexity of data obtained 39.5Does not consider intangible factors 14.3

[ 228 ]



There is no doubt that if total productivity isto be more generally accepted, capital inputmeasures need to be underpinned. The use ofthe accountant’s historic depreciation shouldbe avoided even though it correctly aims toreflect the flow of capital over a period of time.Fisher[29] like Craig and Clark Harris[30]earlier, feels that an element of profit could beincorporated into the capital input, such asthe required pre-tax return on total assets.This could prove a useful approach if theobjective of the productivity measure is, forinstance, a strategic corporate target for anyone period. However, it would add consider-able and unnecessary complications whenusing total productivity measure to analysetrends.

Total productivity measures form a deci-sion-making tool and, therefore, it is impera-tive that the most relevant costs should beutilized. With regard to capital input, a sur-vey by Stainer[23] of UK managers and thesubsequent survey of 223 European organiza-tions were carried out to identify the views ofmanagers who employ the total productivityapproach. They were asked to select the mostappropriate method of evaluating assets fortheir decision needs and the results for bothsurveys are shown in Table IV.

The results are similar, with replacementcost perceived as the most appropriate fordecision making, followed by historic cost.There has been a slight increase in the use ofleasing charge. Therefore, replacement costcapital input has become an approach whichis being utilized in certain industries andorganizations in Europe. It can be based onthe following formula relating to any onepoint in time (Figure 4).

The method would need to be used withconsistency to allow meaningful trend analy-sis, in both capital input and total productiv-ity terms, over a certain time scale. Thisperiod is dependent on the planning horizonof the organization or industry.

The capital to be replaced is all the physicalassets which relate to the decision or problemunder investigation. Groups of assets are

deflated to base-year prices by a wholesaleindex, often founded on equipment priceindices which are constructed by governmentor industry associations. This method ispreferred to using a general retail price indexwhich is based on the general purchasingpower of money. In this way, the ills of infla-tion can be held constant and analysed sepa-rately.

In any discussion relating to current costsin an organization, the question thatinevitably arises is : what is the operatingcapacity to be maintained? In the presentedformula (Figure 4), R is based on the physicalassets, that is fixed assets and inventories, asadvocated by Stainer[23] and Eilon, Gold andSoesan[31]. The latter suggest that an organi-zation determines its capital requirements interms of the nature and volume of its produc-tive/service capacity. This concept is a delib-erate and acknowledged restriction on thedefinition of capital and precludes monetaryassets such as debtors, bank and cash.

Relevant costs associated with capital,denoted as K, such as interest on borrowedfunds as well as leasing charges, should betaken into account but only when relevant.They must also be deflated to a base-year inthe same way as all other costs. Therefore,capital input, at any one point in time, can bederived as shown in Figure 5.

In this way, trends in capital input usage,based on replacement cost in base-yearprices, can be built up and then incorporatedinto the total productivity control. Indeed forinternational comparisons, or where thecorporation is multinational, a furthersophistication can be introduced by taking aconstant base-year exchange rate. In any oneyear, utilizing replacement cost rather thanhistoric cost will generally increase capitalinput and the total productivity measurewould, therefore, be adversely affected. Theparadox is that the total productivity mea-sure itself may have decreased but its mean-ing and relevance considerably enhanced.

The relationship of capital input to total productivity management

There is an expanding number of examples ofdecision making in Europe, based on theconcept of total productivity or its inversereal unit cost, embracing a productivity orperformance cycle from measurement toimprovement. These include gas supply, air-lines, electronics manufacturing, refuse col-lection services and underground coalmines,some of which have incorporated replace-ment cost capital input.

Table IVMethods of valuing assets for total productivity

Survey by EuropeanStainer[23] Survey

% %

Replacement cost 67 52Historic cost 22 28Leasing charge 1 8Value in use 5 4Net realizable value 3 4Value to the owner 2 4

[ 229 ]



An area that must be considered in totalproductivity is that of capital input related totechnological change, as technology can beseen as part of the process that converts inputresources into outputs of goods and services.Edosomwan[32] believes that total productiv-ity measures could be a justifiable techniquefor investment appraisal when implementingnew technology. Therefore, any analysisshould incorporate technological enhance-ment/improvement as well as take intoaccount adjustment for inflation. Forinstance, in the British coal-mining industry,a technological enhancement annual rate of6.2 per cent compound was utilized in theperiod 1960-80 in investment appraisal andtotal productivity calculations. This wasbased on welfare, such as increased safety orincreased production, or both.

Not only is there the need to utilize totalproductivity measures based on replacementcost capital input, there is also the need tocombine this with new approaches to totalproductivity management. In the vital area ofcompetitive advantage, total productivitymust be balanced with perceived value. Pro-ductivity is the concern of the organizationand is the quotient of volume and real unitcosts whilst value is the concern of the cus-

tomer and is a quotient of quality and price,determining how many units are sold in amarket economy. Customer-perceived valuealters from low, when related to price, to high,when related to both price and quality (Fig-ure 6).

Thus, in the competitive arena, organiza-tions should be focusing on the dual objec-tives of high customer-perceived value andhigh total productivity.

Within the total productivity managementframework, organizations should be able toidentify the impact of the various resourceinputs to output. There is an effect of thecombination of labour and capital productiv-ity on total productivity, hence allowing man-agement to adopt the strategic productivitydirection to match the organizational objec-tives (Figure 7).

In a competitive strategic environment, it isthe harnessing of total productivity that dri-ves down real unit costs. Simultaneously, theorganization should target the perceivedcustomer value through quality and price.

So what is the way forward? There are sev-eral implications for both the managementpractitioners and academic researchers whowish to adopt, investigate or implement thetotal productivity management approach,and focus on the capital input factor. For theoperations manager and strategist, there arefour particular issues:1 commit the organization to continual total

productivity improvement, ensuring thatthis is communicated throughout the orga-nization;

2 appreciate that Total Productivity Man-agement is based on a continuous cycle ofmeasurement, evaluation, planning andimprovement, the overall effectiveness ofwhich depends on the combination of allthe components’ individual effectiveness;

3 understand that total productivity mea-sures may seem complex but they canoften be made more understandable andrelevant in setting goals when using theinverse, real unit cost;

4 ensure that there is a monitoring andreviewing system in place to facilitateeffective feedback.

For the academic researcher in this field, thegreatest and most interesting challengesrelate to four distinct areas:1 the development of capital input, both in

definition and measurement, including therelevance of required pre-tax profits andmonetary assets, such debtors, bank andcash;

2 the measurement of both intangible inputsand outputs, where the analysis would

Figure 4Replacement cost capital input of physical assets

Figure 5Capital input based on replacement cost

[ 230 ]



involve the utilization of indirect surro-gate measures;

3 both internal and external benchmarkingof total productivity and its related inputsand outputs, to improve performance;

4 investigation into the applicability of thetotal productivity model, its process and

its implementation, to specific industries,especially public services.

Thus, the learning curve should continue andboth these potential sets of efforts by practi-tioners and researchers will greatly aid man-agement in understanding what needs to be measured to improve organizational

Figure 6Total productivity and value matrix

Figure 7The total productivity axis

[ 231 ]



productivity and quality performance. Totalproductivity management should, therefore,be seen as an ally of change, with capitalinput measurement continuing to remain arewarding challenge in the domain. AsThor[9] suggests, “what you measure is whatyou get” to create a high-performing business.

Conclusion

Through a systematic and consistent method-ology of capital input measurement, mean-ingful yardsticks for improvement can bedeveloped. In recent years, one of the mostrecommended prescriptions for businesscompetitiveness is for government policy toencourage new capital investment, which isconsidered essential for productivityimprovement. However, this notion can beoverrated. For example, both in the USA andthe UK, as shown by Grayson and O’Dell[33],total productivity has often declined at thesame time as capital investment hasincreased. Their research also indicates that,even where there has been improvement inproductivity, capital investment contributedonly about 10 per cent to that improvement.Thus, a balanced approach in measurementand management must be consciously under-taken in the capital input/total productivityscenario.

In an era of rapid technological change andinflationary conditions, traditional capitalinput could only be assumed constant forsome short-term operational decisions. Management must choose the productivitymeasure which would produce the most relevant information for their strategic decision making. No measure is perfect but,in most cases, using total productivity incor-porating replacement cost capital input ismore meaningful than any traditionalmethod and must remain the logical pathway.

In the introduction to his book Hutton[34]propounds that “productivity is a word moremisunderstood, more abused, more misap-plied than any other except capital and sex”.Thus, when relating capital input to totalproductivity management models, it is impor-tant to appreciate the limitations, pitfalls andpotential of measurement and, hence,improvement. It is essential to understandthat total productivity is only one strand ofeffective operations strategy and manage-ment. It must be both relevant and allied tocustomer-perceived value.

References1 Terleckyj, N.E., “Productivity improvement:

the closing window of opportunity”, inChristopher, W.F. and Thor, C.G. (Eds), Hand-book for Productivity Measurement andImprovement, Productivity Press, Cambridge,1993, pp. 1-4.7.

2 Levy, J.C., UK Manufacturing – Facing Interna-tional Change, the Institution of ElectricalEngineers, London, 1994, pp. 34-37.

3 Andersen Consulting, “Worldwide manufac-turing competitiveness study – the second leanenterprise report”, Andersen Consulting,London, 1994, pp. 34-7.

4 Sumanth, D.J., Productivity and EngineeringManagement, McGraw-Hill, New York, NY,1984, pp. 122-46.

5 Stainer, A. and Stainer, L., “Productivity, qual-ity and ethics – a European viewpoint”, Euro-pean Business Review, Vol. 95 No. 6, pp. 3-11.

6 Stainer, A.I., “Productivity practices in theUnited Kingdom”, in Pridham, M. andO’Brien, C. (Eds), Production Research, Taylor& Francis, London, 1991, pp. 327-30.

7 Kraus, J., How US Firms Measure Productivity,National Association of Accountants, NewYork, NY, 1984, pp. 53-55.

8 Steedle, L.F., “Has productivity measurementoutgrown infancy?”, Management AccountingUSA, August 1988, p. 15.

9 Thor, C.G., Measures of Success – Creating aHigh Performing Organization, Oliver WightPublications, Essex Junction, 1994, pp. 95-6.

10 Eccles, R.G., “The performance measurementmanifesto”, Harvard Business Review, Janu-ary/February 1991, pp. 131-8.

11 Fitzgerald, L., Johnston, R., Brignall, S., Silve-stro, R. and Voss, C., Performance Measurementin Services Businesses, CIMA, London, 1991, pp. 7-9.

12 Cross, K.F. and Lynch, R.L., “For good mea-sure”, CMA Magazine, April 1992, pp. 20-23.

13 Hörnell, E. and Hjelm, P. (Eds), AchievingService Productivity – for Competitive Advan-tage – Lessons from the Best in the World,Financial Times/Pitman Publishing, London,1994, pp. 1-3.

14 Drucker, P.F., “The new productivity chal-lenge”, Harvard Business Review,November/December 1991, pp. 69-79.

15 Kaplan, R.S. and Atkinson, A.A., AdvancedManagement Accounting, Prentice-Hall, Englewood Cliffs, NJ, 1989, pp. 321-71.

16 Miller, D.M., “Profitability = productivity +price recovery”, Harvard Business Review,May-June 1984, pp. 145-53.

17 van Loggerenberg, B. and Cucchiaro, S., “Pro-ductivity measurement and the bottom line”,National Productivity Review, Vol. 1 No. 1,Winter 1981-82, pp. 87-99.

18 Belcher, J.G. Jr, Productivity PLUS +, GulfPublishing Company, Houston, TX, 1988, pp. 216-27.

19 Bicheno, J., “Exploring productivity accounting for management and strategy in

[ 232 ]



manufacturing and services”, InternationalJournal of Operations & Production Manage-ment, Vol. 9 No. 5, 1989, pp. 56-68.

20 Harrison, M., Operations Management Strat-egy, Pitman Publishing, London, 1993, pp. 28-38.

21 Workman-Davies, C.L., “The link betweenproductivity and profit”, Colloquium – Produc-tivity for Present Profitability and Posterity’sProsperity, for the South African Institute ofMining & Metallurgy, Johannesburg, 29 March1994.

22 van Loggerenberg, B., “Productivity monitor-ing in gold mining”, Colloquium – Productivityfor Present Profitability and Posterity’s Prosper-ity, for the South African Institute of Mining &Metallurgy, Johannesburg, 29 March 1994.

23 Stainer, A.I., “Capital input – the Achilles’ heelof productivity measurement” in Sumanth,D.J., Edosomwan, J.A., Scott Sink, D. andWerther, W.B. Jr (Eds), Productivity and Qual-ity Management Frontiers – III, IndustrialEngineering and Management Press, Nor-cross, 1991, pp. 139-44.

24 Grossman, E.S., “How to measure companyproductivity”, in Christopher, W.F. and Thor,C.G. (Eds), Handbook for Productivity Measure-ment and Improvement, Productivity Press,Cambridge, 1993, pp. 6-115.

25 Mundel, M.E., Improving Productivity andEffectiveness, Prentice-Hall, Englewood Cliffs,NJ, 1983, p. 83.

26 Avedillo-Cruz, E., A Manual on Quick Produc-tivity Appraisal (QPA), Development Academyof the Philippines, Manila, 1984.

27 Prokopenko, J., Productivity Management –Practical Handbook, International LabourOffice, Geneva, 1987, pp. 23-59.

28 Heap, J., Productivity Management : A FreshApproach, Cassell, London, 1992, pp. 59-66.

29 Fisher, T.J., “Business productivity measure-ment using standard cost accounting informa-tion”, International Journal of Operations &Production Management, Vol. 10 No. 8, 1990, pp. 60-9.

30 Craig, C.E. and Clark Harris, R., “Total produc-tivity measurement at the firm level”, SloanManagement Review, Spring 1973, pp. 13-29.

31 Eilon, S., Gold, B. and Soesan, J., Applied Pro-ductivity Analysis for Industry, PergamonPress, Oxford, 1976, pp. 47-50.

32 Edosomwan, J.A., Integrating Innovation andTechnology Management, John Wiley, NewYork, NY, 1989, pp. 67-71.

33 Grayson C.J. Jr and O’Dell, C., American Busi-ness – A Two-Minute Warning, Free Press, NewYork, NY, 1988, pp. 128-30, 254-56.

34 Hutton, D.G., We Too Can Prosper: The Promiseof Productivity, George Allen & Unwin, London, 1953.

Application questions1 How do you measure productivity in your

organization? How is productivity man-aged and controlled?

2 Are the formulae presented by the authorfor productivity measurement useful? Citesome advantages and drawbacks of usingthis kind of measurement-based approach.

Capital Input and Total Pro

Documents

Transcript of Capital Input and Total Pro