Productivity model
This task is alleviated by the fact that such characteristics can unmistakably be identified by their measurement formula.
On the other hand, if it cannot describe the production function or if it can do so only partly, the model is not suitable for its task.
The differences play an insignificant role, and the solutions that are optional can be recommended for good reasons.
Based on Davis’ model several versions have been developed, yet, the basic solution is always the same (Kendrick & Creamer 1965, Craig & Harris 1973, Hines 1976, Mundel 1983, Sumanth 1979).
PPPR is the abbreviation for the following function: In this model, the variables of profitability are productivity and price recovery.
The American models of REALST (Loggerenberg & Cucchiaro 1982, Pineda 1990) and APQC (Kendrick 1984, Brayton 1983, Genesca & Grifell, 1992, Pineda 1990) belong to this category of models but since they do not apply to describing the production function (Saari 2000) they are not reviewed here more closely.
PPPV models measure profitability as a function of productivity, volume and income distribution (unit prices).
The method of implementing the measurements varies to a degree, depending on the fact that the models do not produce similar results from the same calculating material.
From the comparison it is evident that the models of Courbois & Temple and Kurosawa are purely based on calculation formulas.
The variance accounting is applied to elementary variables, that is, to quantities and prices of different products and inputs.
Conceptually speaking, the amount of total production means the same in the national economy and in business but for practical reasons modelling the concept differs, respectively.
When the output is calculated by the value added, all purchase inputs (energy, materials etc.)
Accordingly, it is possible to measure the total productivity in business which implies absolute consideration of all inputs.
(Saari 2006b) The productivity measurement based on national accounting has been under development recently.
KLEMS is an abbreviation for K = capital, L = labour, E = energy, M = materials, and S = services.
The problem of aggregating or combining the output and inputs is purely measurement technical, and it is caused by the fixed grouping of the items.
Short life-cycle products will not have any basis of evaluation because they are born and they die in between the two basic years.
Obtaining good productivity by elasticity is ignored if old and long-term fixed prices are being used.
In business models this problem does not exist, because the correct prices are available all the time.
