A Review of the Application of the Concept of Economic and Smart Sustainable Value Added (SSVA) in Industries Performance Evaluations

Nikolai Siniak, Daniela Koteska Lozanoska

Abstract


In today’s global digital world, smart sustainable development, value and wealth creation are among the most important goals of society. Industry performance entails the incorporation of the objectives of smart sustainable development, namely social and territorial cohesion, economic efficiency, innovation, digital and environmental performance, into a company's operational practices. Companies that compete globally are increasingly required to commit to and report on the overall smart sustainability performances of operational initiatives. The current indicator frameworks that are available to measure overall business sustainability do not effectively address all aspects of sustainability at an operational level, especially in developing countries such as Romania, Belarus or Macedonia. For the sake of achieving these goals and objectives, the corporation, investor and government need some instruments in order to measure the potential value of each investment opportunity. It is clear that these instruments are not capable of predicting the exact future, they just provide some piece of information and advice that help the investor and government in the decisions he makes. Among these criteria, the most common types are Return on Investment (ROI), economic and sustainable value added (EVA and SVA). These criteria follow the performance assessment with regard to the changes in the sustainable value and alongside maximizing the long-term shareholder and society returns. In this paper, one of the most important criteria; i.e. EVA, is investigated from several viewpoints. First, it is demonstrated the attempt to calculate EVA at the industry level using aggregate indicators according to the common business methodology. For this, we generally assume that economic value is created by investment in excess return compared to its cost. We adopted EVA indicator to Belarusian general economic conditions and specifics of available aggregate sector data by adjusting return on investment and cost of capital.

Keywords


Performance Evaluation; Performance Analysis; Value Creation; Economic Value Added; Smart Sustainable Value Added

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