The measurement of performance can be termed as the cornerstone of the business practice on the premise that it assists the managers to determine the achievement of fundamental goals. In other words, it sets the scope and direction of improvement actions. Performance represents the outcome of the implementation of any task and if the outcome of the said task was successful. The measurement of performance over time together with the assessment of the factors influencing it, which include internal or external environmental types, will provide the necessary evidence of sustainability of strategies adopted by management.
The goals of any business enterprise are not only to achieve the set goals, but also to achieve them in such a way that the strategy will allow repetition, thus, the method should be sustainable. In comparison with other sectors, transportation has received relatively little attention concerning performance assessment, least of all the shipping industry. The performance of the maritime industry, first, has not been subjected to the systematic examination that other sectors have experienced. The existing studies on the shipping industry may be divided into three categories. The first branch focuses on the financial operation and performance of firms. This relates to their financial effectiveness and ability to churn profits.
The second studies are based on the stock market of the listed firms in this category and the third is on other aspects of performance, for example, third party-rated performance or self-evaluation of performance (Panayides, 2011). It is evident that studies have approached the measurement of performance from different perspectives and most studies seek to analyze different determinants or forecasters of high performance rather than develop a systematic approach to the evaluation of performance. For example, a study on shipping was conducted by Cullinane and Lam. The aim was an investigation of conduct and structure as well as results for the influential shipping corporations between 1998 and 2002.
The procedure measured performance using financial performance indicators such as turnover and operating profit, as well as, net profit. The results showed different companies’ experienced different degrees of success or failure in financial performance during that period. However, there is no exclusive evidence of a relationship based on correlation coefficients between the structure, and the conduct with the performance. The investigation noted that though the structure of the industry and the shipping line conduct can affect the performance, the direction of the source of the trend is reversible.
A similar study was done Panayides on the relationship between competitive strategy and performance in the context of management of shipping companies. According to Panayides (2011), performance is a multidimensional construct and, thus, measured using seven items of self-report constructed from the use of survey methods like questionnaires. The strongest influences on performance seem to lie in controlling the economies of scale. It also depends on differentiation of goods and services to provide a wider range of products.
Market and competitor analysis is also important in this scheme. Some suggest that the highest performers in the shipping industry are more likely to look for a combination of mundane issues as compared to using only one static strategy on its own to determine a solo effect. Another study on the contribution of innovation to Norwegian shipping, which is a major regional Rohden competitor, revealed interesting results. The hypothesis suggested that organizational and inter-organizational variables influence innovation, which in turn influences performance in the shipping firms.