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The purpose of this paper is to develop a simple microeconomic model of the firm to give theoretical foundations for the balanced scorecard concept (BSC).

The model consists of demand, production, and objective functions integrated into a resource allocation model. Costs, sales volume, and sales revenue grow at constant rates. Strategy is depicted by a weighted objective function of profit and net sales. Output variables are classified according to the four perspectives of BSC.

The effects of the parameters, especially growth and strategy, on the importance of the perspectives and on performance measures, are shown.

Many results are based on assumptions of a constant growth; and of constant demand and production functions. Empirical research is welcome to give evidence on demand and production elasticities, the shifts of strategy, their effects on performance measurement; and tension between profit and revenue maximization.

BSC should be elastic to respond to shifts of strategy towards revenue maximization. When a shift is happened, the focus in BSC should be transferred towards customer relationship management and development and learning; and the time‐series of performance measures should be interpreted cautiously. Even for a constant strategy, the time‐series of non‐financial and financial measures may give a contradicting signal.

This research paper introduces a new growth model of the firm useful in the theoretical analysis of BSC. It can be applied to assess the importance of the four perspectives of BSC, trade‐offs between them, and relationships between non‐financial and financial measures.

The purpose of this paper is to report the outcome of an interdisciplinary discussion on the concepts of profit and profitability and various ways in which we could potentially problematize these concepts. It is our hope that a much greater attention or reconsideration of the problematization of profit and related accounting numbers will be fostered in part by the exchanges we include here.

This paper adopts an interdisciplinary discussion approach and brings into conversation ideas and views of several scholars on problematizing profit and profitability in various contexts and explores potential implications of such problematization.

Profit and profitability measures make invisible the collective endeavour of people who work hard (backstage) to achieve a desired profit level for a division and/or an organization. Profit tends to preclude the social process of debate around contradictions among the ends and means of collective activity. An inherent message that we can discern from our contributors is the typical failure of managers to appreciate the value of critical theory and interpretive research for them. Practitioners and positivist researchers seem to be so influenced by neo-liberal economic ideas that organizations are distrusted and at times reviled in their attachment to profit.

Problematizing opens-up the potential for interesting and significant theoretical insights. A much greater pragmatic and theoretical reconsideration of profit and profitability will be fostered by the exchanges we include here.

In setting out a future research agenda, this paper fosters theoretical and methodological pluralism in the research community focussing on problematizing profit and profitability in various settings. The discussion perspectives offered in this paper provides not only a basis for further research in this critical area of discourse and regulation on the role and status of profit and profitability but also emancipatory potential for practitioners (to be reflective of their practices and their undesired consequences of such practices) whose overarching focus is on these accounting numbers.

The study develops a mathematical model of the firm to derive theoretical foundations for the balanced scorecard concept (BSC). The model is based on several parts which are integrated into a company model. This model includes the demand function, the production function and the objective function of the firm which are depicted by traditional microeconomic concepts. Demand is presented as a function of price and customer relationship management (CRM) costs. Production is assumed to depend on labor, capital, and development and learning (D&L) costs. Simple dynamics is included both in the demand and production function. The strategy of the firm is depicted by the objective function based on profit and net sales. The output variables of the model are classified as the four perspectives of BSC. The effects of the objectives (strategies) on the importance (shadow prices) of the constraints are analysed. It is shown that a change in the objectives may alter the order of their importance. Thus, a change in the strategy should be accompanied with a change in the focus of BSC. Furthermore, non‐financial and financial performance ratios may change in opposite directions, when the strategy is shifted towards revenue maximization. Thus, inconsistencies with the interpretation of cause and effects may emerge, when the strategy is shifted. Numerical examples are presented to demonstrate the results.

The main objective of this paper is to present a holistic approach for measuring overall bank efficiency and its decomposition in intermediation and profitability efficiencies.

Two-stage network data envelopment analysis (NDEA) model has been used for obtaining intermediation and profitability efficiencies along with overall bank efficiency. Additionally, bootstrap truncated regression has also been adopted to explore the influential predictors of two stages.

A comparative analysis between Indian private-sector and public-sector banks showed that the former is efficient than the latter in profitability efficiency stage. Another interesting finding is that none of the banks is efficient in overall study tenure. Finally, outcomes of bootstrap truncated regression show that differences in intermediation efficiency are explained by firm size, return on asset, market share and ownership while profitability stage is determined by diverse, gross domestic product and ownership.

This study will guide the Indian banking sector to act on which they are lagging, for the betterment of their overall performances. Finally, parameters like loan waives and disposal income of non-performing assets (NPAs) are not considered because of the unavailability of information in the output measures of NDEA model.

This paper not only provides a detailed performance assessment of Indian banks but also examines banks’ internal efficiency by deposits as an intermediary measure.

Since the Second World War the Transnational Corporations (TNCs) have emerged as powerful engines of growth and development in the world economy. Much controversy surrounds the issues of TNCs' benign and malign effects on the development aspirations of host developing countries (HDCs). The TNCs exert immense economic power over HDCs by virtue of their proprietary control over a package of ingredients much sought after by HDCs. This TNC package comprises capital, technology, managerial talent, marketing networks, information and know‐how. The TNCs carefully safeguard their ownership of this package by patents, licences, trade‐marks and a variety of other legal devices. The ownership of the package enables TNCs to extract monopoly rents from HDCs.

The purpose of this study is to propose a comprehensive strategic model to manage profitability. Strategic management accounting concepts and tools are adopted to explore and manage the main profitability drivers (cost, assets, and revenue).

A deductive approach is used to identify the variables of the profitability model. Phase one of this study rely on reviewing prior literature in the field in order to identify the key profitability drivers that uses in managing profitability (costs, assets and revenue).Phase two of the research focuses on testing the perceptions of the managers of Egyptian “Information and communications technology” sector, the relative merits of such a model.

The most important finding in the current study, which has not been investigated in previous studies, is that the proposed comprehensive profitability model which contains cost, the assets and revenue techniques was a better predictor of profitability than the alternative models, which contain a combination of two variables.

As the first study of its kind, this model contributes to the theoretical literature in the field. It is also a practical contribution in managing profitability of the Egyptian “Information and communications technology” sector.

We investigate the relative roles of key components of earnings change in explaining the value relevance of earnings across different life‐cycle stages of the firm. We hypothesize that firms in different life‐cycle stages take different strategic actions: change in sales is emphasized in the growth and mature stages, while in later stages, profitability is emphasized. Because payoffs to such strategies vary across the life‐cycle, the stock market reaction to the success firms have in employing these strategic actions is likely to vary across the life‐cycle. To test our hypotheses, we disaggregate changes in earnings into three key components: earnings change from change in sales, earnings change from change in profitability, and an interaction term comprising both sales change and profitability change. Our findings are consistent with our hypotheses: when firms are in the growth stage, the value‐relevance of change in sales is relatively greater than that of change in profitability. In the mature stage, the value relevance of change in profitability increases, relative to that of change in sales. When firms are in stagnant stage, the value‐relevance of changes in profitability are relatively greater than that of change in sales. Collectively, the results demonstrate a shift in the value relevance of earnings components from a growth emphasis early in the life‐cycle to a profitability emphasis later in the life‐cycle.

This study Investigates Shareholders' value adjustment in response to financial institutions (FIs) merger announcements in the immediate event window and in the extended event window. This study also investigates accounting measures performance, comparison of post-merger to pre-merger, including several cash flow measures and not just profitability measures, as the empirical literature review suggests. Finally, the authors examine FIs mergers orientations of diversification and focus create more value for shareholders (in the immediate announcement window and several months afterward) and/or generates better cash flows, profitability and less credit risk.

This study examines FIs merger effect on bidders’ shareholder’s value and on their observed performance. This examination deploys three techniques simultaneously: a) an event study analysis, to estimate and calculate abnormal returns (ARs) and cumulative abnormal returns (CARs) in the narrow windows of the merger announcement, b) buy and hold event study analysis, to estimate ARs in the wider window of the event, +50 to +230 days after the merger announcement and c) an observed performance analysis, of financial and capital efficiency measures before and after the merger announcement; return on equity, liquidity, cost to income ratio, capital to total assets ratio, net loans to total loans, credit risk, loans to deposits ratio, other expenses and total assets, economic value addition, weighted average cost of capital and return on invested capital. Deal criteria of value, mega-deals, strategic orientation (as in Ansoff (1980) growth strategies), acquiring bank size and payment method are set as individually as control variables.

Results show that FIs mergers destroy share value for the bidding firms pursuing a market penetration strategy. Market development and product development strategies enable shareholders’ value creation in short and long horizons. Diversification strategies do not influence bidding shareholders’ value. Local bank to bank mergers create shareholders’ value and enhance liquidity and economic value in the short run. Bank to bank cross border mergers create value for bidders’ in the long term but are associated with high costs and higher risks.

A significant advancement over the current literature is in assessing mergers, not only for bank bidders but also for the three pillars FIs of the financial sector; banks, real-estate companies and investment companies mergers. It is an improvement over current finance literature because it deploys two different strategies in the analysis. At a univariate level, shareholder value creation and market reaction to merger announcements are examined over short (−5 or +5 days) and long (+230 days) windows of the event. Followed by regressing, the resultant CARs and BHARs over financial performance variables at the multivariate level.

The purpose of this paper is to develop a workforce optimisation model that maximises the profitability of a knowledge-based service organisation in the quaternary sector.

An optimisation model that allocates resources from different skillsets and seniority to projects that are delivered from several geographies has been developed in this paper. With the objective of maximising the profitability of a pipeline of projects, the model selects which projects to accept and which not to and indicates how many resources to hire for (or layoff from) each skillset-seniority-geography combination.

The paper discusses the model and its scalable nature. Through hypothetical scenarios, it is shown that the model, using a simple non-linear algorithm, converges to optimal solutions.

The model depends on inputs that are exogenously supplied by the organisation. The applicability of the outcome is dependent on them. However, on the other hand, it allows for the alignment of the outcomes with the strategic objective of the organisation.

The paper discusses the multi-dimensional nature of effective human resource allocation problem. It not only maximises profitability but also allows organisations to strategically screen projects. With proper calibration and minor modifications, the model may be used to allocate resources across the knowledge-based industry.

The paper integrates the demand and supply-side problems of workforce allocation to projects in a novel way to form a tractable model that is pragmatic and applicable.

This study aims to present an extended service-profit chain (SPC) framework for assessing service performance. This framework is then used to investigate non-linear and asymmetric links between service delivery investments and customer satisfaction, as well as time lags in organisational performance outcomes.

The study draws on panel data with repeated measures from a sample of automotive after sales service departments. Data collected comprises both objective and survey-based data, including operational inputs, productivity, service quality, service experience, behavioural intentions, customer retention and organisational performance.

Non-linear and asymmetric effects are identified, suggesting that customers’ evaluations of service performance are more sensitive to negative performance (dissatisfaction) than positive performance (satisfaction). Accordingly, focusing on attributes for which customers are experiencing negative performance first, and then allocating resources to attributes for which customers are experiencing positive performance, can be far more consequential for improving customer satisfaction.

From a practical perspective, the findings deepen current understanding of the relationships between service performance metrics. They also provide guidance for managers seeking to better deploy service resources to enhance service quality, customer satisfaction and customer retention to improve profitability over time.

Drawing on a unique and rich data set, this study provides a significant improvement on previous SPC frameworks by adding new dimensions identified in recent meta-analyses and addresses calls for more research into non-linear, asymmetric and longitudinal effects within the SPC.