Benchmarking by Item Response Theory (BIRTH)

Abstract

Purpose – The purpose of this paper is to present a new method for benchmarking, which allows the construction of scales of competitiveness for the comparison of products using Item Response Theory (IRT). Design/methodology/approach – Theoretically, the method combines classic benchmarking process steps with IRT steps and demonstrates through mathematical models how this technique can measure the competitiveness of products by means of a latent trait. Findings – The IRT method uses the theories of psychometrics to measure the competitiveness of products through qualitative and quantitative interpretation of the tangible and intangible characteristics of those products. To demonstrate the application of the developed method, the items were constructed for teaching staff. Research limitations/implications – The application of the developed method will increase the accuracy of assessments of the competitiveness of a product because this method uses a mathematical model of the IRT to evaluate the characteristics product that reflect market competitiveness. Items must be selected based on theories relevant to the product and/or expert opinion or customers. Practical implications – The applicability of the method results in the construction of a scale in which items identify good practice with greater difficulty because they are represented in the same units that index competitiveness. Thus, managers of companies obtain knowledge about their products and the market, which allows them to assess their performance against their competitors and to make decisions regarding the continuous improvement of their production process and expansion of product characteristics. Originality/value – This work presents a new method for benchmarking using a quantitative technique that enables measurement of the latent trait of “competitiveness” through robust mathematical models.