In their recent monthly report SIEMS studies High Performance Firms in China and Russia. In the paper you will find the methofology of the survey, the final top list of high performance firms and the analysis of their success drivers. Here is the short overview of the report:
"All Roads Lead to Rome: High Performance Firms in China and Russia"
One of the primary goals of managers is to achieve and maintain high performance. The popularity of best-sellers such as “Built to Last” and “Good to Great” demonstrates the current enthusiasm for high performance firms. After decades of research, what do we know about high performance firms? What measures should we adopt to evaluate firm performance, especially in emerging markets? And finally, which are the high performance firms in emerging markets, such as China and Russia, and what can we learn from their success stories? The objective of this report is to provide managers with guidance to evaluate firm performance in emerging markets and suggestions on how to achieve and maintain high performance.
Chapters I and II of the report are devoted to selecting the comparison measures for evaluating and ranking the companies’ results. The authors carefully consider the factors that are usually applied for similar research and outline several of them being of the highest importance for evaluating the operations efficiency of the companies working on emerging markets. The authors conclude that there are three factors crucial for such alalysis: Sales growth, Market share and Profitability.
The next question is how we compare firm performance using these measures. We need a method that can compare multiple measures of different scales simultaneously. Frontier analysis was chosen to be applied for the survey. Frontier analysis is a way to understand the efficiency of decision-making units (DMUs) with specific inputs and outputs. A DMU could be any unit with inputs and outputs, such as a production line or a firm. Data envelopment analysis (DEA) is one simple form of frontier analysis. You can find the detailed description of the method in Chapter III of the report.
In suggesting DEA as the method for evaluating firm performance, the authors assume that efficiency is a firm’s primary goal. This may not always be true because certain firms, such as State-owned enterprises (SOE), may pursue other goals like administrative tasks. Therefore, the report only focuses on private manufacturing firms that are efficiency driven and grow and prosper in emerging markets indigenously. Appendix 1 summarizes how private Chinese and Russian firms are selected.
Frontier analysis was applied to the top 500 Chinese and Russian firms in each year. The table below reports year, the number of observations (less than 500 due to missing values), mean, and standard deviation of efficiency scores.