Corporate Performance Measurement: An Integrated Approach

The online retail market has achieved dynamic growth in recent years, making up 4% of the total retail sales. Not only the net sales in e-commerce have grown, but also its share of the whole trade has increased gradually. The number of enterprises engaged in electronic trading in Hungary is roughly 5,000-6,000, which is continuously increasing. Today, the possibilities provided by the Internet play an increasing role in every segment of the economy. In an increasing market competition it is no longer sufficient to provide services to the local population. The driving force behind online trading is market activity, and thus it is crucially important to measure their performance. Over the past year e-commerce has expanded three times faster than the whole Hungarian retail trade, but the borders and limits of this growth are already visible; therefore, this sector faces greater challenges and changes than ever before. It is increasingly important to measure performance accurately, and to support managerial decisions based on performance measurement. Excellent results and success basically and primarily depend on performances, in addition to luck. Performance is construed as measurable results or, in a broader sense, successful efforts made to achieve corporate goals. Performance measurement is the process of measuring the effectiveness and economic efficiency of an activity. It is aimed at supporting decisions and actions relating to the operation of the company. Performance measurement is not only a decision-support tool but also an influential element at all levels of the decision-making system, which has an impact on the actions taken by the persons concerned. Both its danger and importance is that its inappropriate functioning (using an inappropriate standard) may result in an operation which conflicts with corporate objectives. The growing interest in business performance measurement can be explained by the information demand from corporate decision-makers. Companies’ approach to and toolkit of performance measurement have undergone radical change over the last 15-20 years. The international and Hungarian literature usually refer to performance evaluation, thereby also making it clear that quantitative features that can be measured directly and qualitative features that cannot be measured directly alike are crucial factors in performances. The performance indicators used can in fact play their role if they form a uniform system, which takes into account interactions whilst also being sensitive to the actual needs of the company. I intend to assess corporate performance measurement practices, and evaluate the relationship between financial and operational performances. In addition, I will give a theoretical overview of integrated performance measurement systems.