Industrial Performance Analysis: A Multi-Criteria Model Method

Performance of manufacturing industries become a major concern of policy makers and industrialists. Attempts to understand industrial performance encompass two principal questions: how performance is measured and what drives a superior performance. Strategic management scholars assess performance of firms mainly from the financial aspect while operations management and performance measurement researchers employ multi-dimensional indicators. The strategic management literature provides two different theories to explain factors driving the performance of firms: the industrial organization and the resource-based view. The former emphasizes effects of industrial competitive environment but the latter focuses on capabilities of particular firms. The operations management literature asserts that excellence manufacturing processes are drivers of competitive performance. Because of these diverse perspectives, there are authors advocate uses of multiple theories to explain performance but limited work have been done on examining relationship between the drivers and the indicators using multiple perspectives. This paper proposes the use of the analytic hierarchy process (AHP) to examine effects of the performance indicators and the drivers on the overall industrial performance. The automotive components industry is adopted for the model's illustration