Abstract
This study establishes and tests a framework for measuring knowledge workers’ output in the Kingdom of Saudi Arabia (KSA) telecom industry based on the examination of capitalized labor and average revenue per user (ARPU) to measure value added intellectual coefficient (VAIC). Quarterly financial statements from 2008-2015 were used to measure an ARPU composite score of the only four publicly traded telecommunication companies on the Saudi Exchange (Tawadul). The four telecom companies comprise 32 cases which satisfied the required number of cases needed to detect a R 2 that is 50% or higher 80% of the time. A hierarchical regression was performed to measure capitalized labor (CLE), Pulic’s VAIC, and its determinants’ effects on ARPU composite score. The results showed a direct relationship between VAIC, its determinants, and ARPU composite score. The full model explained 78% of the ARPU composite score. CLE and CEE were significant with a combined R 2 of 29%. This study shows how ARPU is linked to functional-level strategies in telecom industry, and can be used as a KPI to measure the productivity of knowledge workers.
Highlights
There comes a time when an organization must rethink strategies to remain relevant in competitive markets
VA is a key part of the value added intellectual coefficient (VAIC) calculation and represents, “how competent a company is in creating value added” [7]
Since the goal of this study was to present a framework for measuring knowledge workers—not to compare the VAIC between all four telecom companies—an average was taken of all factors by quarter
Summary
There comes a time when an organization must rethink strategies to remain relevant in competitive markets. During growth and profitability period complacency or the attitude, “Don’t try to fix something that isn’t broken“ can replace rethinking existing strategies. Contrary to this adage, Drucker stressed that the height of profitability and growth is the perfect time to take a renewed look at one’s strategies [13]. Solid financial analysis focuses on the entire industry in which the organization operates, and goes beyond traditional financial measures such as ROE, ROA, and ROI It includes key performance indicators (KPIs) that show links between an organization’s strategies and the cost structure activities of its business model. These KPIs are used by stakeholders to create public policy and corporate, business, and functional-level strategies respectively
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