ABSTRACT
Effective performance evaluation typically requires measures that enable a multidimensional perspective to be provided. This comes at a cost which is the added complexity in synthesising multiple measures into a more tractable form. Typically, this is a single measure more commonly known as a composite measure that embodies multiple measures. This chapter examines both reflective and formative composite measures and describes various approaches to deriving a composite measure. While these approaches differ, they all require some system of weights and/or prices and include ratio analysis, total factor productivity (TFP), the Lee method and Data Envelopment Analysis (DEA).
