Which is more important to a firm:  efficiency or effectiveness?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

It is impossible to say which of these is more important since no business can thrive unless it is both effective and efficient.

Efficiency has to do with making your product using the fewest possible resources, particularly time and money.  Effectiveness has to do with making the right product.  Both are absolutely essential.  If a firm is not effective, it will not stay in business.  A firm cannot prosper if it makes a product for which there is no demand.  Therefore, effectiveness is necessary.  At the same time, however, it is necessary for a firm to make its product efficiently.  If a firm makes a popular product, it can still fail if it is not efficient.  If it is not efficient, competitors will make the same product for less money and the firm will fail.

Therefore, both of these are equally vital to a firm.

jesseldridge's profile pic

jesseldridge | (Level 1) Salutatorian

Posted on

It’s very clear that to run a successful organization there should be a balance of efficiency and effectiveness. Because efficiency is required to achieve your goals with the least resource and the effectiveness is required to ensure you achieve the desired goal. That's why, I think both of them are equally important for an organization.

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