Organizational Financial Performance: Identifying and Testing Multiple Dimensions

This research addresses the measurement of organizational financial performance. Its primary purpose is to provide researchers and managers a better understanding of the implications of selecting the dependent variables that should be used in empirical studies and management practice where organizational financial performance is the criterion of interest. This is the first study that has undertaken to empirically identify both the different distinct dimensions of organizational financial performance and the measures that represent those dimensions. Since no prior research has empirically established the domain of organizational financial performance, this research is by necessity exploratory in nature. A two-part approach was adopted to address this problem. First, a model of overall organizational performance was inferred from empirical data that included the primary constructs of an organization's financial performance and empirical measures of these constructs. Next, the validity and reliability of the constructs and measures were tested. The identification of different dimensions and measures of financial performance for both annual and three-year timeframes are unique contributions of this research.