Comparison of Total Factor Productivity and Total Productivity for Their Relationship Attributes with Profit

This study compares two productivity metrics, Total Factor Productivity (TFP) and Total Productivity (TP), for their associations with one another and two types of profits. Several attributes of the direct productivity-profit relationship, not mediated by any other firm characteristic, are evaluated, such as the existence of bi-directionality in the predictive association between productivity and profit. The influence of productivity on profit is reaffirmed; crucially, the impact of profit on productivity is found to exist as well. The unique contribution of this study is that it demonstrates that TFP outperforms TP considerably in its ability to associate with and predict profits. The influence of seasonal and non-seasonal time delays on the productivity-profit association are found to be important implications for engineering managers.