The Application of Model of Input and Output Transformations in Measuring Business Performance

Abstract

Performance is a term which we use in everyday life. One of the areas of its application is business performance, which is the subject of our research. Business performance depends on a number of factors. There are also several methods in theory how to measure business performance. The aim of this paper was to point out the possibility of the application of matrix model as one of the modern methods of performance measurement. This method provides opportunities for various calculations and economic analysis. In this paper we applied one of them – the model of input and output transformations applying simplex method of linear programming. We used the model of input and output transformations for the calculation of business efficiency. Our goal was to use this model for the calculation of business performance and to highlight the fact that efficiency and performance are related, or even they have the same meaning. We applied Spearman`s rank correlation coefficient to confirm the match of rankings of business performance and efficiency. We found out that there is relationship between performance and efficiency. With the use of mentioned approach we can calculate performance of individual businesses or industry and we can also formulate solutions for performance enhancement.