INNOVATIVE APPROACHES AND THEIR APPLICATION IN MEASURING BUSINESS PERFORMANCE

Abstract

In the area of business performance evaluation, we should pay attention to innovative approaches to performance measurement. They include the application of a matrix model. This concept was initially used for addressing the efficiency of input and output transformations. However, the terms ‘efficiency’ and ‘performance’ are closely linked. Some authors even assign them the same meaning. Based on the above-mentioned, a linear programming model for addressing the problems of input and output transformations can also be applied for business performance measurement. The benefit of this paper is the measurement of business performance applying a matrix model. One of the significant outcomes of such matrix model is the formation of new indicators, which can be beneficial in business performance measurement. Another positive aspect of this approach is the creation of a network of indicators assessing business efficiency, effectiveness and performance. There are strong links between indicators in a network, which can be mathematically described. Based on the knowledge, the management of a business can focus on those functional areas, which are preconditioned for business performance and efficiency improvement.