How to Measure Company Productivity using Value-added: A Focus on Pohang Steel (POSCO) Marvin B. Lieberman UCLA Anderson School of Management Los Angeles, CA 90095-1481 USA Email: [email protected]Jina Kang Technology Management Economics and Policy Program (TEMEP) Seoul National University Seoul 151-742, South Korea Email: [email protected]Acknowledgement We thank Mike Peng and an anonymous referee for helpful suggestions and comments. This study received support from the UCLA Center for International Business Education and Research, and from the steel project, “Competitiveness in the Global Steel Industry,” funded by the Alfred P. Sloan Foundation and the American Iron and Steel Institute.
Marvin Lieberman(PhD, Harvard University) is Professor in the Policy Area at the UCLA Anderson School of Management. His research interests are in the fields of competitive strategy, industrial economics, and operations management. He has published articles on topics relating to industrial productivity, learning-by-doing, market entry and exit, first-mover advantages, vertical integration and imitative behavior. In recent studies he compares the performance of U.S. and Asian manufacturing firms in the automotive and steel industries. Jina Kang(PhD, UCLA) is Assistant Professor at Seoul National University. Her current research focuses on business strategy, knowledge spillover, creative industries, and technology management. She has written articles on knowledge characteristics and social networks, firm performance during privatization phases, and productivity measures. 2
How to Measure Company Productivity using Value-added: A Focus on Pohang Steel (POSCO) ABSTRACT How should the performance of a manufacturing company be assessed, relative to firms making similar products, at home and abroad? This paper shows how company-level productivity measures can be developed from public financial data to provide a more comprehensive gauge of firm performance than profit rates alone. As a specific example, we focus on the Korean steelmaker, POSCO. Founded four decades ago, POSCO is commonly regarded as the world’s most efficient and profitable integrated steel producer, and our analysis documents POSCO’s superior record of profitability and labor productivity. We find, however, that a broader assessment of POSCO’s performance is tempered by the firm’s high capital intensity relative to producers in Japan and the United States. Keywords: productivity, performance assessment, steel industry, POSCO, value-added 3
As producers in emerging economies strive to catch up to established rivals abroad, much attention has been paid to determinants of their success (Mathews, 2006; Tybout, 2000). How should the performance of these companies be compared and assessed? What metrics should be used to track the progress of a manufacturing firm and its performance on the world stage? Conventional comparisons of business performance are based on measures of accounting profits, or if companies are publicly-traded, stock prices.
You've reached the end of your free preview.
Want to read all 30 pages?
- Summer '19
- Economics, Capital accumulation, U.S. Steel, Posco