Performance Measurement, Difficulties in Measuring Small Business Performance
business performance in general as well as the small business performance.
Accounting measures consider as objective and more accurate then nonobjective measures, but even if such objective measures can be obtain it is very hard to interpret them in small businesses (Covin and Slevin, 1989, 1990). This statement reinforced by Rappaport (1981) and Stewart (1991) findings of weak correlation between accounting measures related to small business performance and the small business value. Dess and Robinson (1984) argue that the reason for the difficulty in interpreting objective data such as accounting measures may be due to different accounting rules for different types of corporation like proprietary limited company and partnership. Covin and Slevin (1990) relate to the small business owners’ salaries as another potential cause for problem, which is unique for small businesses. In many of the small businesses the owner salaries takes substantial share of the business profitability.
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