Page 71 - CITN 2017 Journal
P. 71

2.     LITERATURE REVIEW

         Corporate Effectiveness and Efficiency
         An organization has finite resources and must decide on how best to use them to develop
         strengths  when  pursuing  opportunity  worldwide. A  key  assumption  is  that  effective
         resource management can deliver competitive advantage; organizations must manage
         people, information, knowledge and technology resources along with tangible goods and
         materials if they are to be responsive, innovative, effective and efficient. While managers
         are striving for better performance results, scientists are reaching for best ways to evaluate
         the organization. One of the most common ways to assess the performance of a firm is to
         measure the effectiveness or the efficiency of the organization.
         Effectiveness and efficiency are exclusive performance measures, which firms can use to
         assess their performance. Efficiency is oriented towards successful input transformation
         into outputs, where effectiveness measures how outputs interact with the economic and
         social environment. Bounds, Dobbins, and Fowler (2005); Robbins, (2000) in their various
         studies opined that common measures of the organizational performance are effectiveness
         and efficiency. Therefore corporate drivers, suppliers and investors these two terms might
         look synonymous, yet, according to Mouzas (2006), each of these terms have their own
         distinct meaning. Most organizations assess their performance in terms of effectiveness.
         Their main focus is to achieve their mission, goals and vision. At the same time, there is
         plethora of organizations, which value their performance in terms of their efficiency,
         which relates to the optimal use of resources to achieve the desired output (Chavan, 2009).
         Cameron  (1986)  and  Hitt  (1988)  have  suggested  that  studies  of  organizational
         performance  should  include  multiple  criteria.  According  to  Pennings  and  Goodman
         (1977),  efficiency  and  effectiveness  are  performance  domains  that  have  been  clearly
         distinguished.  Efficiency  refers  to  an  input-output  ratio  or  comparison,  whereas
         effectiveness refers to an absolute level of either input acquisition or outcome attainment.
         Although the best-performing organizations are both effective and efficient (Katz & Kahn,
         1978), however, according to Mahoney (1988), there may be trade-offs between the two.
         While Kopelman, Brief & Guzzo (1990) assert that progression along one performance
         dimension could entail regression along another. Thus, an organization can be effective,
         efficient, both, or neither.

         Corporate Effectiveness and Asset measurement
         Conceptual Framework does not articulate a comprehensive set of criteria for determining
         the appropriate measurement bases for assets and liabilities. However, it is the ability of
         management to put machinery in place towards achieving the organization's set goal.


         According to The American Public Works Association Asset Management Task Force
         (2002), asset management is a methodology needed by those who are responsible for
         efficiently allocating generally insufficient funds amongst valid and competing needs.
         Asset management systems are goal-driven and, like the traditional planning process,
         include components for data collection, strategy evaluation, program development, and
         feedback.  Also,  according  to  Organization  for  European  Cooperation  and
         Development(1999), proper asset management, can improve organization's project and
         infrastructure quality, increase information accessibility and use, enhance and sharpen
         decision-making, make more effective investments and decrease overall costs, including
         the social and economic impacts of the economy.

         Asset  management  is  a  systematic  process  of  maintaining,  upgrading,  and  operating
         physical assets cost-effectively. It combines engineering principles with sound business

                                               64
   66   67   68   69   70   71   72   73   74   75   76