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Rao, Dr. K. Rama Mohana; Tesfahunegn, Simon Zekarias (2015)
Publisher: Journal Of Business Management & Social Sciences Research
Journal: Journal Of Business Management & Social Sciences Research
Languages: English
Types: Article
Subjects: Applied Sciences; Department of Horticulture, performance, measurement, financial measures, non financial measures, garment
Products of garment industry are one of the basic needs of mankind. Garment industry is making significant contribution to many national economies especially in the developing world. Many countries are exploiting this industry for reasons of economic growth. The high amount of labor involved in textile productions has caused textile and garment industries to seek locations with lower wage employees for reduced production costs. Thus, days are gone when garment industry was concentrated in the consumption hubs of US, EU and other developed countries of the world as the industry in developing countries have low labor cost competitive advantage than same industries in developed countries. Ethiopia, as a developing country with large population size, also has competitive advantage in this industry. The aim of this study is therefore, to investigate the performance of the industry from financial and non-financial perspectives/dimensions and also to show the relationship between the business performance and their performance measurement practices. To analyze the financial performance, six years consecutive panel data were collected from 19 garment enterprises that have employed 100 employees and above. The primary data on the utilization of different performance measurement dimensions were collected by distributing 247 questionnaires to managers or professional employees. The financial data and response rates on the non-financial dimensions are analyzed descriptively. The utilization of different performance measures is analyzed using cluster analysis. The relationship between the financial performance and utilization of the different performance measures is analyzed using OLS. The result of our analysis indicated that during the study period, the financial and non financial performance of the sampled garment enterprises are disappointing compared with the industry averages and with its own previous performance. Firms predominantly use financial measures to evaluate performance. There is an inverse relationship between business performance and use of financial measures in PM. Firms that use balanced PMS have relatively better financial performance. MCUMU, MPPOI, MHRU, MFU are found as significant common determinants of financial performance indicators ratios of ROA, ROE and sales growth
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