Publications

October 2011 (Revised October 2012)
Background Note

On the Use of Capital Efficiency Metrics

By: Willy Shih and Margaret Pierson

This note describes capital efficiency metrics including RONA, ROIC, and EVA. This note is intended to be used with the case "Boeing 737 Industrial Footprint: The Wichita Decision," HBS No. 612-036. View Details

Keywords: Capital; Performance Efficiency

2022
Working Paper

Measuring the Tolerance of the State: Theory and Application to Protest

By: Veli Andirin, Yusuf Neggers, Mehdi Shadmehr and Jesse M. Shapiro

We develop a measure of a regime's tolerance for an action by its citizens. We ground our measure in an economic model and apply it to the setting of political protest. In the model, a regime anticipating a protest can take a costly action to repress it. We define the... View Details

Keywords: Political Protests; Modeling And Analysis; Government and Politics; Conflict and Resolution

May 1998 (Revised February 2007)
Background Note

Measuring Mutual Fund Performance

By: Andre F. Perold and Markus Mullarkey

Examines various approaches to measuring mutual fund performance. The approaches include the use of risk exposure and the Sharpe Ratio, as well as the Morningstar star system for rating mutual funds. Applies the approaches to a variety of mutual funds to demonstrate... View Details

Keywords: Investment Funds; Performance

September 7, 2020
Article

Where ESG Ratings Fail: The Case for New Metrics

By: Mark R. Kramer, Nina Jais, Erin E. Sullivan, Carina Wendell, Kerry Rodriguez, Carlo Papa, Carlo Napoli and Filippo Forti

One agency’s A+ is another’s “laggard” — and neither links to financial performance. Hybrid metrics will change everything, argue Harvard Business School’s Mark Kramer and leaders in the shared-value movement. View Details

Keywords: ESG Ratings; Shared Value; Integrated Corporate Reporting; Performance; Measurement and Metrics

March 2012 (Revised December 2014)
Case

Schön Klinik: Measuring Cost and Value

By: Robert S. Kaplan, Mary L. Witkowski and Jessica A. Hohman

The case illustrates how a leading German hospital group has invested deeply in the measurement of patient-level outcomes and costs, the foundations of a health care value framework. The company launches a pilot project to use time-driven activity-based costing (TDABC)... View Details

Keywords: Health Care; Costing; Activity-Based Costing; Hospitals; Activity Based Costing and Management; Value; Health Care and Treatment; Outcome or Result; Health Industry; Germany

Research Summary

Choice, Rationality and Welfare Measurement

By: Jerry R. Green

For the past century, economists have used the hypothesis that individual choice is based on rationality in their calculations of individual and collective welfare. The central ideas are that actual market choice reveal underlying preferences, and with a good set of... View Details

June 2015
Teaching Note

Schӧn Klinik: Measuring Cost and Value

By: Robert S. Kaplan

Teaching Note for Schon Klinik: Measuring Cost and Value. View Details

Keywords: Health Care and Treatment; Cost Management; Projects; Health Industry; Germany

21 May 2019
Working Paper Summaries

rTSR: When Do Relative Performance Metrics Capture Relative Performance?

Keywords: by Paul Ma, Jee-Eun Shin, and Charles C. Y. Wang; Financial Services

Research Summary

Risk Measurement

By: David E. Bell

David E. Bell has completed research on the measurement of financial risk. The concepts of risk and return are widely used, at least informally, in the appraisal of financial opportunities. Return is typically measured by the expected value of a project, risk by the... View Details

October 2011
Case

Raleigh & Rosse: Measures to Motivate Exceptional Service

By: Robert Simons and Michael Mahoney

In January 2010, U.S. luxury goods retailer Raleigh & Rosse is being sued by its employees for encouraging "off the clock" hours. At the center of the class action lawsuit is the famous Raleigh & Rosse performance measurement system previously thought to be the core of... View Details

Keywords: Control Systems; Performance Measurement; Goal Setting; Compensation; Incentives; Motivation; Sales Compensation; Motivation and Incentives; Goals and Objectives; Growth Management; Lawsuits and Litigation; Organizational Culture; Management Systems; Customer Focus and Relationships; Employees; Performance Evaluation; Compensation and Benefits; Retail Industry; United States

Research Summary

Performance Measurement and Incentive Alignment

Professor Kulp is interested in how organizations use information to enhance firm performance. The manner in which an organization gathers, analyzes, and uses performance information as part of its internal governance system affects organizational success. Professor... View Details

Article

Measuring and Managing Customer Profitability

By: Robert S. Kaplan and V.G. Narayanan

Keywords: Measurement and Metrics; Management; Customers; Profit

Find at Harvard

07 Oct 2009
Working Paper Summaries

Specific Knowledge and Divisional Performance Measurement

Keywords: by Michael C. Jensen & William H. Meckling

Article

A Critical Examination of Corporate Environmental and Social Impact Measurement and Valuation

By: Judith Stroehle, Ali Aslan Gümüşay, Laura Marie Edinger-Schons, Amyn Vogel, Alnoor Ebrahim, Andreas Rasche, Andrew King, Ken Pucker, Richard Barker, Juliane Reinecke, Giovanna Michelon, Stuart Cooper, Dror Etzion, Karim Harji, Marya Besharov, Colin Mayer, Nien-hê Hsieh and Emma van den Terrell

The assignment of monetary values to a company's impact on society and the natural environment promises much. At the same time, this endeavor would benefit from addressing three prior ethical considerations: 1) determining responsibility to clarify attribution of... View Details

Keywords: ESG; Social Impact; Impact Accounting; Corporate Responsibility; Impact Measurement; Corporate Social Responsibility and Impact; Ethics; Valuation; Corporate Accountability

July – August 2006
Article

A New Measure for Measuring

By: Andrew Ang, Matthew Rhodes-Kropf and Rui Zhao

Keywords: Measurement and Metrics

Find at Harvard

06 Dec 2021
Research & Ideas

The Popular Stock Metric That Can Lead Investors Astray

from 75 percent to 45 percent. The metric is no longer accurately predicting future returns and growth while the other valuation metrics continue to do so. "Institutional... View Details

Keywords: by Rachel Layne

Article

Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?

By: Robert Gibbons and Robert S. Kaplan

Agency theorists, historically, have analyzed what kinds of performance measures should be used in formal incentive contracts. For example, after Kaplan-Norton proposed a balanced scorecard of both financial and non-financial measures, some envisioned its role only in... View Details

Keywords: Relational Contracts; Performance Measurement; Informal Management; Balanced Scorecard; Economics; Mathematical Methods

Find at Harvard

2009
Working Paper

Specific Knowledge and Divisional Performance Measurement

By: Michael C. Jensen and William H. Meckling

This paper discusses five common divisional performance measurement methods—cost centers, revenue centers, profit centers, investment centers, and expense centers—providing a theory that explains when each of these methods is likely to be the most efficient. The... View Details

Keywords: Business Units; Business Headquarters; Decisions; Cost; Investment; Investment Return; Profit; Revenue; Knowledge Use and Leverage; Managerial Roles; Performance Efficiency; Strategy