Error Correction Model for the Service Company

Purpose of this applicative project research was the identification and analysis of the key performance indicators (KPIs’) which significantly contribute to the benefits of the business processes exploitation in the Port of Luka Koper, d. d. With this case study we attempted to get deeper understanding, and to clarify and evaluate the causalities between enablers and results. For this purpose we developed a single equation microeconomic Error Correction Model (ECM) with the Engle–Granger (1987) two step method. With the ECM approach we performed application on the KPIs and estimated short and long term effects between them. Final ECM indicates that that there is a lot of nonlinearity at the microeconomic level between KPIs and that a two step method should be used for the time series (KPIs) analyses at the microeconomic level and for forecasting. From the literature review is evident that this kind of approach is not used very often with exception for the macroeconomic level. Longterm framed qualitative and quantitative analyses indicate the benefit of the identificated KPIs’ and their influence on the fulfilment of the strategic directions.