Abstract Conventional accounting techniques that treat the organizational world as static and unidimensional may be inadequate in evaluating performance in the modern complex organization. Past studies have focused on the problems with return on investment and residual income and have advocated various forms of multiple non-accounting measures without offering a means of reconciling these disparate evaluative yardsticks into a single performance measure. This paper first reviews the need for multiple performance criteria to measure longs run profitability and then provides a model (the Analytic Hierarchy Process) for developing an overall effectiveness measure in a multiple measure environment which is applied to a detailed hypothetical example. The analytic hierarchy process offers a systematic means to weight multiple measures, using a participative process that can enhance Internalization of organizational goats. The analytic hierarchy process thus gives management accountants a means for reducing the subjectivity of current weighting schemes and improving performance evaluation of both organizational segments and their managers.
Yee-Ching et al. (Sun,) studied this question.