The Essence and Measurement of Organizational Efficiency

The construction of an appropriate performance measurement system is an important objective that every company is facing today. Firms using sustained performance measurement systems in management achieve higher efficiency. An identification of solutions in performance measurement applied in Polish enterprises has been made and is based on the analysis of the existing relations between the size of the company, the economic sector, variables describing development strategy and measurements of its implementation, as well as the performance measurement organization. Dependences occurred among the variables: character and the frequency of applied aims measures, possession or not of a development strategy, indicators and economic-financial variables and the way of connecting exploited measures with the motivation system.

The source of the data for the contingency tables was a nationwide survey conducted by the CATI method, which was covered by 300 Polish companies (National Science Centre Project number N N115 436640 “Key indicators of performance management”). Identification was accomplished by the chosen statistical tests and measures.

The aim of the article was the analysis of the relations of the coexistence of the Enterprise Resource Planning (ERP) and selected management methods: Benchmarking, Business Process Management (BPM), Business Process Reengineering (BPR), Balanced Scorecard (BSC), Competency-based Management (CBM), Customer Relationship Management (CRM), Knowledge Management (KM), Lean Management (LM), Outsourcing, Six Sigma, Total Quality Management (TQM). Contemporary organisations invest more and more in enterprise systems, including ERP systems, and high growth of these investments is still predicted. The complexity and dynamics of modern management systems in fact determine the simultaneous and sequential application of many management concepts and methods. In the main, however, the coexistence of implemented solutions should be beneficial for an organisation. The theoretical views on the relations of ERP and selected management methods have thus been empirically verified in the analysis of differences in the assessment of a number of effects of using the selected management methods in pairs with ERP as well as separately (business, efficiency, management, social and environmental effects) were investigated. One-way ANOVA was used for a sample of 167 Polish organizations.

Industry concentration is traditionally used as a measure of the competition in the industry. If the concentration of the industry increases then small number of firms can dominate the industry, which could on the one hand increase the prices for customers. But it is not necessarily a negative situation as with the increase in firm size they may be able to benefit from economies of scale. Therefore, higher concentrated market may cause higher prices as well as higher profits and performance. This is likely to occur in industries with high fixed costs and scope for specialization as life insurance industry. Based on this assumption, we decided to reveal the presence of a link between the changes in the industry concentration and market performance. For the purpose of the analysis, we use life insurance industry data from the Slovak Republic during the period 1993–2012. During analyzed period, this industry has developed from monopolistic market with one dominant insurance company and few very small ones to competitive market with 19 insurance companies offering life insurance products in 2012. Our model proved that decreasing life insurance industry concentration increases profit and performance of the industry.

The objective of this article is to define the relationship between the development level of communication infrastructure and the effectiveness of enterprises in individual voivodeships in Poland. First, we describe communication infrastructure as a subsystem of economic infrastructure, and discuss the impact of communication infrastructure on the functioning of enterprises. Next, we empirically analyse the relationship between the development of communication infrastructure and the effectiveness of enterprises. The problem of the measurement of enterprise effectiveness, although studied in numerous research analyses, has not been comprehensively solved. In this article we attempt to create a synthetic measure of economic effectiveness of enterprises, seizing on an earlier selected set of diagnostic variables. The application of synthetic measures that use one aggregate indicator instead of a series of variables to describe objects, enables us to quantify the multidimensional nature of economic operations and systematize them in a linear way. Our analysis covers all 16 Polish voivodeships. The methodological approach is based on Hellwig’s method, correlation and spatial autocorrelation analysis. The main criterion of variable selection was completeness and availability of data for the period 2003–2011.

The intellectual capital has been stressed to play a crucial role in determining firm performance in current knowledge economies. Theoretical works as well as several empirical studies have declared its importance as a value creation driver. The aim of our study is to challenge these paradigms in the context of SMEs in Slovakia. Therefore, we examine the relationship between intellectual capital (measured using financial data through VAIC^TM) and firm value creation (using the ROCE measure as the most appropriate value creation proxy in this context). Also, we control for the effect of firm size and leverage in this relation. We based our analysis on 2011 financial statements of 3311 Slovak SMEs operating in ten different industrial sections. The data have been obtained from a business information portal (CRIBIS Universal Register). To examine the relation between intellectual capital and value creation while accounting for industry effects we constructed a set of regression models and analysed the explanatory power of intellectual capital performance in firm value creation. Our results suggest, that intellectual capital performance represents a significant value creation driver in each of the examined industries, and its explanatory power exceeds in all cases but one the explanatory power of control variables. Therefore, our results confirm the paradigm of intellectual capital importance for value creation also in the context of small and medium size companies (SMEs) in Slovakia.

The purpose of this article is to define the factors of the entrepreneurial environment which could drive productive entrepreneurial activity from the macro-economic perspective. The main research question therefore is to identify, what are the main environmental drivers of productive entrepreneurial activity and what is its effective sectorial structure. Our analysis is based on 2013 Global Entrepreneurship Monitor (GEM) data obtained through an adult population survey and national expert survey. In our investigation we employ PATH-analysis, SEM model and multiple regression analysis to empirically define the effective structure of entrepreneurial activity for the performance of an economy and the environmental factors that impact it. This approach empirically examines the directions of influence in the above mentioned relationships. In addition, the robustness of our findings was checked by repeating our analysis on a different sample (2010 GEM data on 59 economies) and by multiplying regression analysis for separate variables of entrepreneurial activity effectiveness, and our results were confirmed. Our findings suggest that of all the different environmental enablers, access to infrastructure (both physical and commercial) is the most influential attribute of entrepreneurial environment affecting economic performance at a macro level and the effective sectorial structure of business activities. Overall, the main drivers of the productiveness of entrepreneurship are: access to infrastructure, rule of law, effective government programs and market openness and dynamics.

Since dozens of years multi-business companies have constituted the dominant form of business organization. Years of research on their management led to the creation of Corporate Portfolio Management (CPM) concept, in which science have taken and lost interest alternately. Regardless of emerging and overturned concepts, contemporary research studies confirm that 2/3 of companies regularly use CPM tools and perceive CPM as the best way to build value. Unfortunately, despite years of scientific attention, recent studies also indicate that the CPM application is hampered by the lack of appropriate metrics and instruments. Managers express their dissatisfaction with the results they obtain using CPM in comparison to the effort they make.

The aim of the article is to propose a model supporting strategy formulation for strategic business units. The basis of the algorithm is a developed Rappaport’s model of threshold margin. This article presents an application based on the mathematical model, previously developed by authors. The authors describe, step by step, quantitative measurement tools, on the basis of which development strategies for business units focused on maximizing enterprise value may be formulated. The proposed tools indicate, in which situations is it possible to maximize value through development, sale or divestment of strategic business units. The application includes financial constraints limiting the ability to increase enterprise value. The article presents the results of simulation for exemplary strategic business units.

The aim of this article is to examine whether the efficiency of generation of added value from intangible resources in agricultural enterprises is related to their financial performance.

According to conventional wisdom, the economic efficiency of agricultural enterprises is a function of the use of owned balance sheet and non-balance sheet resources, which are referred to as intellectual capital. One of the measures describing the effects of the use of these resources is the Value-Added Intellectual Coefficient (VAIC™) developed by Pulić. Similarly to profitability indicators used in financial analysis, it is based on companies’ source data (balance sheet and income statement). This enables the study of the relationship between VAIC and its derivatives and corporate profitability measured with the indicators of the Return On Assets (ROA) and Return On Equity (ROE). The paper makes reference to a wide range of publications on the efficiency of use of intellectual capital and its impact on the financial results in non-agricultural sectors and it presents the results of a study on a group of Polish agricultural enterprises.

The results confirmed a correlation between the VAIC™ and profitability indicators, pointing to the growing importance of intellectual capital in agricultural enterprises, which justifies further research.

The research shows that intellectual capital is important to generate value added and results in enterprises. So far researchers of the agricultural sector have been disregarding this issue. The study proves the thesis that financial results are strongly related to the efficient use of non-balance sheet resources of intellectual capital.

This chapter details a study of the current state of the development of cross-sector collaboration among social enterprises, nongovernmental organizations (NGOs) and the corporate sector. It establishes a conceptual framework of a Tripartite Collaborative Model (TCM) with Social Exchange Theory, Inter-organizational Collaboration Theories and Stakeholder Theory with Value Creation to depict the logic of cross-sector collaboration among the predefined partners, namely, a work integration social enterprise (WISE), a created shared value (CSV) enterprise, and a sustainable NGO for value creation.

Under the framework of the TCM, iEnterprise, a privately owned WISE, established a call center in Hong Kong to create employment opportunities for people with disabilities and those from underprivileged communities while maintaining financial sustainability. The tripartite partnership of iEnterprise was developed with a “value added” outsourcing contract from a CSV corporate and a “win-win” servicing agreement with a sustainable NGO.

The successful value-creation experience of iEnterprise was analyzed and evaluated as a case study for the TCM. The set of performance indicators of iEnterprise was compared with other examples of WISEs from the government subsidy model and the cross-border franchising model in order to contrast the advantages and disadvantages of a TCM.

The findings confirmed the possibility of building a form of tripartite social enterprise under the collaborative framework of a TCM characterized by a low capital requirement and resulting in mission fulfillment together with financial sustainability, strategic operational efficiency and effective workfare creation on capital employed.

Market anomalies have absorbed many academics and investors. Uncovering puzzling results is still an attractive research task. Anomalies are perceived as empirical findings inconsistent with accepted asset pricing models. Many of them were found illusory, and appeared to be not robust to the methodology, sample or period choice. Some anomalies weakened substantially, reversed themselves, disappeared or even reappeared after some time. There have been anomalies that have fascinated economists from all over the world. One of these was the short-term underpricing and long-term underperformance phenomenon observed after initial public offerings (IPOs). Are IPOs really offering investors an unfailing opportunity to earn money at the moment of going public, resulting in a huge amount of money being left on the table by the issuing firms? Is investing in IPO firms in the long run an easy way to lose money? Are the short- and long-term abnormal returns robust enough to become recognised as statistically and economically significant? The research aimed to answer the questions using a broad set of benchmarks and empirical approaches. The study comprised of all of the non-financial firms that made their initial public offering on the Warsaw Stock Exchange between 1995 and 2013.

Goodwill provides the proverbial canary in the coal mine for financial reporting since any hint of impairment allows financial users to determine conditions of worsening economic conditions, thus enabling a company to thrive within its stakeholder environment. Goodwill impairment decisions require benchmarks, assumptions about growth rates and other subjective elements left to the management’s discretion. All these variables are intertwined with the companies’ cultural framework. This paper tries to investigate the determinants and quality of goodwill impairment decisions within two separate accounting cultures under Hall’s classification of low-context/high-context considering high-context emerging European markets such as Poland and Romania as well as low-context emerging African markets such as South Africa and Zimbabwe in two models, one investigating goodwill impairment decisions with the other focusing on the relevance of goodwill numbers. The findings suggest that cultural context is connected through various proxy variables to goodwill impairment decisions, thus shedding light on a set of novel variables for consideration.

Tour guide profession is connected with fulfilling various social roles and hence it demands having developed communication competences. This paper situates communication activities of tour guide in praxeological-systemic model of presentation and takes up concepts of effectiveness of those activities.

Next to the substantive contents of excursions, a selection of appropriate means of communication determines the success of excursions conducted by a given tour guide. Authors suggest usage (by tour guides) persuasive communication which allows to accomplish established results of communication activities to greater extent. Simultaneously authors attempt to create efficiency evaluation criteria of tour guide communication with a tour group.

As a result of studies, based on the observation of feedback given by tour groups, basic effective evaluation criteria of tour guides’ communication activities were distinguished. They were divided into: proxemic behavior, verbal interactions, visual behavior, unequivocally positive assessments and unequivocally negative assessments. Each criteria were further analyzed in this paper.

According to the authors prevalence of awareness and understanding of specified feedback can improve the quality of guiding services.

Most companies are interested in increasing their efficiency. Controlling offers those some of the instruments needed for this purpose. A particular industry where controlling is vital is the banking industry. The paper’s objective is to investigate controlling in the banking industry of Romania. More specifically, the author intended to analyze how controlling in banks has evolved in Romania over the past few years. The research design is empirical in nature. As proxy for the evolution of controlling in banks, the researcher uses the development of job announcements for the position of controller in the Romanian banking industry. The announcements are classified according to: language of the job announcement; geographical area of the employer; the controller’s tasks; the controller’s professional requirements; education and qualification; practical experience; personal attributes; age; salary etc. The results of the research consist in the current profile of a controller in a Romanian bank and in an overview of its evolution over time. The research fills in an important gap in the Romanian academic literature, which lacks studies on the topic of controlling, on one hand, and on the banking industry, on the other hand.

The article presents a model proposal for enterprises business efficiency assessment based on fuzzy logic. The main concept of proposed solution is based on one of so called the model system of inequalities variants, embracing changes in the scope of total assets and basic results categories of income statement. The main reason for developing this model was to fulfil the gap in the scope of synthetic measure of enterprises business efficiency, taking into account variety of sources shaping the final net result.

The health care system in Poland requires thorough institutional changes. Problems occurring therein cannot be tracked down merely to a lack of funds. Institutional analysis based on the achievements in various fields can reveal a number of reasons for inefficiency of the system by referring to transaction costs, agency costs and costs associated with the transfer of property rights. This applies not only to relationships and contracts between the patient and the doctor, but also between all the actors involved in the process of redistribution and service. System optimization and reducing inefficiencies should be applied to contract analysis and is based on the comparative approach to indicate the best possible solution in terms of efficiency. It is important to adopt a holistic approach, draw on the achievements of different scientific disciplines, and expand the economic analysis of qualitative factors that relate to the sociological phenomena of human behavior and psychology. The identified institutional shortcomings of the current health care system cannot be remedied without applying complementary solutions that shall reduce the formation of the so-called externalities. Today, it is difficult to talk about the health services market, since many of these services are contracted without taking into account the criterion of quality and the results achieved. The existing health care system’s asymmetry of information reveals a number of opportunistic behaviors and phenomena characteristic of the agency problem. An attempt to identify and assess the magnitude of transaction costs and agency costs seems to be a challenge. However, it seems to be, in addition to the governance structure and managerial competencies, the main source of inefficiency in health care in Poland.

The paper reviews selected approaches and methods for assessing R&D projects useful for effective innovation management. It presents a method of simplified assessment based on the concept of the threshold (minimum) value of economic effects, i.e. the value covering capitalised project expenditures constituting the basis for estimating the rate of economic efficiency for variants of the implementation of R&D projects. The lower the rate of economic effects based on their threshold value, the more efficient the R&D project is. The usefulness of the proposed method is assessed based on the example of a research unit conducting activities in the area of advanced research and development of technical solutions and their deployment in the field of electro-technical equipment and systems. The presented method of evaluation of R&D projects can be used in the initial assessment of the project, at the phase of preparation of the project concept when the research unit seeks to choose variants of implementation, as well as at various stages of project implementation (at R&D project checkpoints) when the research unit seeks to effectively manage the research process, deciding whether to continue or curtail research activities.

This paper discusses the accumulation of FCF for companies operating under different industry specific conditions resulting in a positive or negative difference between the length of the operating cycle and payables deferral period. On the basis of simulations on an easy spreadsheet financial model of company operations, it proves that: (1) in the case of a growing company operating under conditions of negative cash conversion cycle the FCF are systematically overestimated by a permanent increase in surplus cash generating from credit delivered by suppliers and employees and as such do not satisfy the definition of FCF, (2) indicates that FCF from operations suffer from timing and matching problems because they count accounting periods instead of operating cycles and therefore valuations based on such FCF are systematically overestimated every time the cash inflows from operating cycle occur earlier to the corresponding cash outflows and, reversely, are systematically underestimated every time the cash inflows from operating cycle occur later to the corresponding cash outflows. To overcome these problems, the on-going approach to free cash flows analysis that matches outflows and corresponding inflows is suggested. The application of a simple NPV to evaluate cash investments in the operating cycle (i.e. cash investments in operating working capital) based on net cash flows generated by operating cycle counts adequately for the industry specific differences in timing of operating cash flows and removes the relevant bias in FCF.

The paper presents results of author’s own research on business valuation. The research was conducted among experts in business valuation. A total of 182 experts was surveyed. The article attempts to answer the following questions: whether and to what extent are business valuation standards (BVS) conducive to improving the quality of valuations? Do the experts find business valuation standards necessary? Are there differences in the perception of the phenomena connected with valuation between experts working on the U.S. market, where BVS are well-established, and experts from other countries such as Poland and Romania where these standards have a shorter history?

This article has the character of a review to better understand the form of hybrid organisations in the context of their effectiveness. The paper explores how hybrid organisations are defined in many countries, as well as present case studies and the wide range of mixed forms of delivery services. The author suggests that Polish municipal companies could be classified as one of the existing forms of a hybrid organisation. The study is based on foreign and national literatures. In this article, one of the approaches presented is the contemporary interpretation of effectiveness.

Innovation-related intangibles allow a firm to create and commercialize new knowledge. Intangible assets necessary for innovation are key drivers of a firm’s performance and growth in knowledge intensive industries such as biotechnology which is under high pressure to produce new commercial products and processes. Nevertheless, numerous biotechnology firms fail in their attempts to bring on innovations, since the research and development activities are considered to be high-risky in this sector. The aim of this paper is to conduct an analysis of the relationship between investments in innovation-related intangibles, i.e. R&D and patents, and a biotechnology firm’s market value. A sample consists of ten biotech firms listed on the New Connect market. This study utilizes the panel dataset over a 3-year period to run empirical analyses using a fixed effects model. The main findings of the research reveal that there is a non-linear effect of patents on the market value in the sample firms. Surprisingly, R&D expenditures appear to have an insignificant impact on the market value.