Using Thermodynamics Entropy To Modelling Economic Value Added Analysis of Manufacturing Firms (Iranian Chemical Industries Case Study)

Abstract

Based on natural Law's capabilities in the Economic modeling, this study compares the economic value added (EVA) in various groups of chemical industries by thermodynamics principles. At first the EVA per unit computed. Then by providing equivalents for thermodynamic and economic variables, the intrinsic value of economic inputs and outputs per unit was calculated by using thermodynamic equations of state (EOS) and their absolute entropy changes were determined. Next, statistical correlation of EVA with absolute entropy changes in each of the EOS was investigated. Finally, based on the obtained thermodynamic results, chemical industry groups were classified. The statistical sample contains about 61 units from 155 active Chemical Industries in Fars province, Iran and was determined using stratified random sampling. Findings indicate that despite the existence of significant correlation coefficient of EVA with Entropy changes in all equations of states (sig=0.05), Van-der-Waals equation had the highest correlation. On the other hand, the highest ratio of entropy changes to the absolute entropy of resources was observed in large and medium sized industries. It seems that the top industries in this ranking have higher technical knowledge over others. A comparison of productivity in accordance with the laws of thermodynamics confirms the obtained results.