Measuring and Improving Productivity in Services
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Measuring and Improving Productivity in Services

Issues, Strategies and Challenges

  • Services, Economy and Innovation series

Faridah Djellal and Faïz Gallouj

The definition and measurement of productivity in services raises important conceptual, methodological and strategic problems. This book aims to provide a critical review of the main debates on productivity in the domain of services. The first part examines the theoretical consequences of services specificities on the concept of productivity and reviews the attempts to measure it. The second part is devoted to the main determinants of productivity growth and the strategies to increase productivity in service firms and organisations.
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Chapter 1: A Key Notion in Economic Analysis: Definitions, Measurements, Issues and Controversies

Faridah Djellal and Faïz Gallouj

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1. A key notion in economic analysis: definitions, measurements, issues and controversies INTRODUCTION Productivity is a notion that is apparently easy to define but difficult to measure. The issues surrounding it are regarded as extremely important, not only for the models used by economists and managers but also, and above all, in the day-to-day management of firms and other organizations. Thus it lies at the heart of all economic theories. Corporate managers seldom make a statement without exhorting their workforces to be more productive and the distribution of productivity gains continues to be the focus of tough negotiations between trade union representatives and company managers. For all its centrality, however, its validity under certain circumstances has been called into question and it has given rise to a certain number of theoretical and methodological controversies. This general introductory chapter, which does not put services at the heart of the analysis, is divided into three sections. The first section is given over to a general definition of the notion of productivity, in which we indicate the various levels of analysis that can be envisaged and note the confusions to be avoided. In the second section, we survey the main methods used to measure productivity, whether they be index-based methods or (parametric or non-parametric) frontier techniques. The third section is devoted to a theoretical consideration of the place of the concept of productivity in economic theory. By way of conclusion, we outline a number of current controversies that call...

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