A sterner test: one of the weaknesses of the current body of research on how firms use EVA, the performance measurement system developed by Stern Stewart & Co, is that much of the practical evidence has come from Stern Stewart itself. Josie McLaren reports on a CIMA-sponsored study into the development of EVA in three firms in New Zealand. (Economic Value Added).

Financial Management (Chartered Institude of Management Accountants), July, 2003 by McLaren, Josie

The increasingly popular philosophy of benefit-sharing is that the explicit recognition of secondary stakeholders such as employees, suppliers and customers maximises value to the primary stakeholders--ie, the shareholders. Economic value added (EVA) is one measurement system that's consistent with this belief. Managers can set a goal of EVA maximisation in order to achieve the primary objective, recognising the secondary stakeholders explicitly via value drivers that are identified throughout the business.

EVA has been vigorously promoted by its developer, Stern Stewart & Co. It claims that the system can be cascaded through an organisation to business units and even to processes and products. The rationale is that there are no conflicts of interest between...

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