Different Nature of Non‐Financial Performances and Their Measurement Practices in Financial Services Industry

Abstract

Much has been written about the need and importance of Non‐financial Performance/s (NFP) measures in modern technologically advanced competitive business organizations. But there is not an acceptable definition available on NFP, though recent corporate accounting scandals have been created greater need of ethical, moral viz a viz NFP measurement. However, all non‐monetary qualitative pieces of information are not same in considering an organization's strategy, objective, and even for the differences of organizational characteristics/particularities. Thus, this study attempts to identify the nature of NFP with references to financial institutions in Finland and Japan. According to the empirical evidence, this study classifies three different natures of NFP. The first type of NFP is the profit driven one, and the second one is for long‐term competitive advantage of business. The third type of NFP is independent in nature, i.e. they are not linked with the profitability of organization. This study also demonstrates the relative link of NFP with financial performances, and the weight and importance that management is giving to improve and measure NFP in the studied organizations. At the end some directions for further research are given in light of the recent corporate accounting scandals in the USA.

Citation

Hussain, M. and Islam, M.M. (2003), "Different Nature of Non‐Financial Performances and Their Measurement Practices in Financial Services Industry", Humanomics, Vol. 19 No. 3, pp. 18-35. https://doi.org/10.1108/eb018886