Evaluating Capital Management: A New Approach

The objective of this article is to develop a methodology for evaluating capital management performance. We have employed a new methodology, fuzzy rule–based systems (FRBS), that allows evaluators to break down complex systems into manageable components. FRBS can also use a variety of data types by converting data into ordinal input measures that are not overly sensitive to small measurement errors. In developing an overall performance measure, the evaluator under an FRBS creates explicit rules for combining inputs that can reflect the complex contextual judgments commonly made by evaluators. Using survey data on 35 large American cities from the Government Performance Project, we develop an FRBS for city capital management.