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The use of quantitative and qualitative criteria in the measurement of performance in small firms

The use of quantitative and qualitative criteria in the measurement of performance in small firms Concern has been expressed, over the years, about the financial management strategies adopted by small firms, but very little is known about these practices. Business performance measures are an important element of these financial management strategies. The paper discusses the findings from research carried out in the UK examining the quantitative and qualitative criteria in the measurement of performance in small firms. Semi‐structured interviews were carried out with 20 owner‐managers from both manufacturing and service sectors. Orthodox theory assumes that the objective of the firm is to maximise profits, and it follows that the performance measures advocated are largely based upon this theory. However, research has shown that small firms pursue a range of goals. It was, therefore, not surprising to find that owner‐managers of small firms used a variety of measures and indicators to assess business performance. Profit measures were found to be less important than conventional views suggest. In particular, cash flow indicators were considered to be critical. Other performance measures adopted by owner‐managers include the quality of inputs and outputs and intangible indicators. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Small Business and Enterprise Development Emerald Publishing

The use of quantitative and qualitative criteria in the measurement of performance in small firms

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References (20)

Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
1462-6004
DOI
10.1108/EUM0000000006834
Publisher site
See Article on Publisher Site

Abstract

Concern has been expressed, over the years, about the financial management strategies adopted by small firms, but very little is known about these practices. Business performance measures are an important element of these financial management strategies. The paper discusses the findings from research carried out in the UK examining the quantitative and qualitative criteria in the measurement of performance in small firms. Semi‐structured interviews were carried out with 20 owner‐managers from both manufacturing and service sectors. Orthodox theory assumes that the objective of the firm is to maximise profits, and it follows that the performance measures advocated are largely based upon this theory. However, research has shown that small firms pursue a range of goals. It was, therefore, not surprising to find that owner‐managers of small firms used a variety of measures and indicators to assess business performance. Profit measures were found to be less important than conventional views suggest. In particular, cash flow indicators were considered to be critical. Other performance measures adopted by owner‐managers include the quality of inputs and outputs and intangible indicators.

Journal

Journal of Small Business and Enterprise DevelopmentEmerald Publishing

Published: Jun 1, 2000

Keywords: Performance measurement; Objectives; Cash management; Small firms; Financial management

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