A Survey on the Criteria for Measuring the Profitability of a Construction Organization

A. H. Memon, M. A. Soomro, N. A. Lakho, M. A. Bhutto, A. N. Memon

Abstract


Any organization’s performance depends on profitability which depends on several adopted criteria. The preference and level of adoption of these criteria varies, on different industries. This study focuses on investigating the criteria of profitability in the construction industry. This investigation involves a survey to seek the perception of the contractors involved in handling physical activities of construction works. The survey considered 63 questionnaire forms. Statistical analysis was performed to compute the frequency and the relative importance index. The results indicated that structural capital, lifetime values, capital structure and competitor actions are the top 4 criteria implemented in construction organizations to measure profitability.


Keywords


profitability; criteria of profitability; construction organization

Full Text:

PDF

References


R. Sydler, S. Haefliger, R. Pruska “Measuring intellectual capital with financial figures: Can we predict firm profitability?”, European Management Journal, Vol. 32, pp. 244– 259, 2014

A. W. Mackelprang, M. Habermann, M. Swink, “How firm innovativeness and unexpected product reliability failures affect profitability”, Journal of Operations Management Vo. 38, pp. 71–86, 2015

N. Abu Bakar, H. Yusop, “Intellectual capital efficiency: Study on Malaysian banking sectors”, Proceedings of Asia-Pacific Business Research Conference, Vol. 2, No. 3, pp. 1–9, 2012

D. Andriessen, Making sense of intellectual capital: Designing a method for the valuation of intangibles, Routledge, 2004

M. T. Bataineh, M. Al Zoabi, “The effect of intellectual capital on organizational competitive advantage: Jordanian Commercial Banks (Irbid district) an empirical study”, International Bulletin of Business Administration, Vol. 10, No. 10, pp. 15–24, 2011

M. d. R. Cabrita, N. Bontis, “Intellectual capital and business performance in the Portuguese banking industry”, International Journal of Technology Management, Vol. 43, No. 1–3, pp. 212–237, 2008

Y.-S. Chen, M.-J. Lin, C.-H. Chang, “The influence of intellectual capital on new product development performance – the manufacturing companies of Taiwan as an example”, Total Quality Management & Business Excellence, Vol. 17, No. 10, pp. 1323–1339, 2006

S. Cohen, N. Kaimenakis, “Intellectual capital and corporate performance in knowledge intensive SMEs”, The Learning Organization, Vol. 14, No. 3, pp. 241–262, 2007

B. Marr, G. Schiuma, A. Neely, “The dynamics of value creation: Mapping your intellectual performance drivers”, Journal of Intellectual Capital, Vol. 5, No. 2, pp. 312–325, 2004

O. P. Pfeil, Earnings from intellectual capital as a driver of shareholder value, Haupt, 2004

A. Riahi-Belkaoui, “Intellectual capital and firm performance of US multinational firms: A study of the resource-based and stakeholder views”, Journal of Intellectual Capital, Vol. 4, No. 2, pp. 215–226, 2003

G. Roos, A. Bainbridge, K. Jacobsen, “Intellectual capital analysis as a strategic tool”, Strategy & Leadership, Vol. 29, No. 4, pp. 21–26, 2001

S. Sudarsanam, G. Sorwar, B. Marr, “A finance perspective on intellectual capital. In B. Marr (Ed.), Perspectives on intellectual capital”, Boston, MA: Butterworth-Heinemann, pp. 56–68, 2005

T. Kim, W. G. Kim, S. S. Park, G. Lee, B. Jee, “Intellectual capital and business performance. What structural relationships do they have in upper-upscale hotels?”, International Journal of Tourism Research, Vol. 14, pp. 391–408, 2012

A. C. Brombacher, P. C. Sander, P. J. Sonnemans, J. L. Rouvroye, “Managing product reliability in business processes ‘under pressure’. Reliab”, Reliability Engineering & System Safety Vol. 88, No. 2, pp. 137–146, 2005

J. A. Guajardo, M. A. Cohen, S.-H. Kim, S. Netessine, “Impact of performance-based contracting on product reliability: an empirical analysis”, Management Science, Vol. 58, No. 5, pp. 961–979, 2012

H.-Z. Huang, Z.-J. Liu, D. N. P. Murthy, “Optimal reliability, warranty and price for new products”, IIE Transactions, Vol. 39, No. 8, pp. 819–827, 2007

R. Adner, D. Levinthal, “Demand heterogeneity and technology evolution: implications for product and process innovation”, Management Science, Vol. 47, No. 5, pp. 611–628, 2001

G. Ahuja, C. Lampert, “Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions”, Strategic Management Journal, Vol. 22, No. 6–7, pp. 521–543, 2001

S. Ahire, P. Dreyfus, “The impact of design management and process management on quality: an empirical investigation”, Journal of Operations Management, Vol. 18, No. 5, pp. 549–575, 2000

D. Cohen, M. N. Darrough, R. Huang, T. Zach, “Warranty reserve: contingent liability, information signal, or earnings management tool”, Accounting Review, Vol. 86, No. 2, pp. 569–604, 2011

J. Chu, P. K. Chintagunta, “An empirical test of warranty theories in the U.S. computer server and automobile markets”, Journal of Marketing, Vol. 75, No. 2, pp. 75–92, 2011

R. Karim, K. Suzuki, “Analysis of warranty claim data: a literature review”, Int. J. Qual. Reliab. Manage. Vol. 22, No. 7, pp. 667–686, 2005

M. Hora, H. Bapuji, A. V. Roth, “Safety hazard and time to recall: the role of recall strategy, product defect type, and supply chain player in the US toy industry”, Journal of Operations Management, Vol. 29, No. 7-8, pp. 766–777, 2011

K. B. Hendricks, V. R. Singhal, “The effect of supply chain glitches on shareholder wealth”, Journal of Operations Management, Vol. 21, No. 5, pp. 501–522, 2003

M. A. Hamid, A. Abdullah, N. A. Kamaruzzaman, “Capital Structure and Profitability in Family and Non-Family Firms: Malaysian evidence”, Procedia Economics and Finance, Vol. 31, pp. 44–55, 2015

J. Abor, “The effect of capital structure on profitability: empirical analysis of listed firms in Ghana”, Journal of Risk Finance. Vol. 6, No. 5, pp. 438-45, 2005

N. Ahmad, F. Abdul-Rahim, “Theoretical investigation on determinants of government-linked companies capital structure”, Journal of Accounting, Finance and Economics, Vol. 3, No. 2, pp. 72-85, 2013

N. Biger, N. V. Nguyen, Q. X. Hoang, “The determinants of capital structure: evidence from Vietnam”, International Finance Review, Vol. 8, pp. 307-326, 2007

A. Gill, N. Biger, C. Pai, S. Bhutani, “The determinants of capital structure in the service industry: evidence from United States”, The Open Business Journal, Vol. 2, No. 1, pp. 48–53, 2009

P. Nadaraja, A. H. Zulkafli, T. A. Masron, “Family ownership, firm’s financial characteristics and capital structure: evidence from public listed companies in Malaysia”, Economia Seria Management, Vol. 14, No. 1, pp. 141–155, 2011

W. Reinhartz, S. J. Thomas, V. Kumar, “Balancing Acquisition and Retention Resources to Maximize Customer Profitability”, Journal of Marketing, Vol. 69, No. 1, pp. 63–79, 2005

P. D. Berger, R. N. Bolton, D. Bowman, E. Briggs, V. Kumar, A. Parasuraman, C. Terry, “Marketing Actions and the Value of Customer Assets”, Journal of Service Research, Vol. 5, pp. 39–54, 2002

R. Venkatesan, V. Kumar, “A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy”, Journal of Marketing, Vol. 68, pp. 106–125, 2004

R. T. Rust, K. T. Lemon, V. A. Zeithaml, “Return on Marketing: Using Customer Equity to Focus Marketing Strategy”, Journal of Marketing, Vol. 68, pp. 109–127, 2004




eISSN: 1792-8036     pISSN: 2241-4487