Measuring Productivity of Private Companies on the Iran Stock Exchange

Abstract

Through the calculation and analysis of the productivity indices of the total production elements, it is possible to determine the performance of the private industrial sectors in terms of the optimized application of the production resources. Therefore, these days, productivity is considered necessary for the economic growth and improvement of lifestyle and welfare of a country. Our country’s success depends on technical know-how, creativity of the employees, applying new scientific methods for management and innovation, all of which will be manifested in form of an increased productivity.

We can determine the performance of private sectors for optimising production resources through analysis and calculation of index factor from factor productivity.

The purpose of this study is to measure the productivity of companies and selected industries on the Tehran Stock Exchange. This research measures total, average and final productivity of various industrial activities over the period 2001–2009. To study and evaluate total productivity of the industries, a Cobb–Douglas production function is used. The results indicate that the overall productivity is 2.12. In fact, the per unit cost to income ratio of the private firms increases, productivity increases 2.12 units; final productivity of capital, labour force and intermediate goods are 0.60, 4.94 and 0.51, respectively.

Key words:  performance measurement,productivity measurement , total factor productivity (TFP), Cobb–Douglas function,.