Additive efficiency decomposition in two-stage DEA
TL;DR: The current paper develops an additive efficiency decomposition approach wherein the overall efficiency is expressed as a (weighted) sum of the efficiencies of the individual stages and can be applied under both CRS and variable returns to scale (VRS) assumptions.
About: This article is published in European Journal of Operational Research.The article was published on 2009-08-01. It has received 563 citations till now. The article focuses on the topics: Data envelopment analysis.
Citations
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TL;DR: The five most active DEA subareas in recent years are identified; among them the “two-stage contextual factor evaluation framework” is relatively more active.
Abstract: This study surveys the data envelopment analysis (DEA) literature by applying a citation-based approach. The main goals are to find a set of papers playing the central role in DEA development and to discover the latest active DEA subareas. A directional network is constructed based on citation relationships among academic papers. After assigning an importance index to each link in the citation network, main DEA development paths emerge. We examine various types of main paths, including local main path, global main path, and multiple main paths. The analysis result suggests, as expected, that Charnes et al. (1978) [Charnes A, Cooper WW, Rhodes E. Measuring the efficiency of decision making units. European Journal of Operational Research 1978; 2(6): 429–444] is the most influential DEA paper. The five most active DEA subareas in recent years are identified; among them the “two-stage contextual factor evaluation framework” is relatively more active. Aside from the main path analysis, we summarize basic statistics on DEA journals and researchers. A growth curve analysis hints that the DEA literature’s size will eventually grow to at least double the size of the existing literature.
482 citations
Cites background from "Additive efficiency decomposition i..."
...[79, 80] propose a variety of models under different returns-to-scale assumptions....
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TL;DR: This paper reviews studies on network DEA by examining the models used and the structures of the network system of the problem being studied, and highlights some directions for future studies from the methodological point of view.
446 citations
TL;DR: In this article, the authors present a review of data envelopment analysis (DEA) methods for peer decision-making units (DMUs) and show that all the existing approaches can be categorized as using either Stackelberg (leader-follower) or cooperative game concepts.
Abstract: Data envelopment analysis (DEA) is a method for measuring the efficiency of peer decision making units (DMUs). An important area of development in recent years has been devoted to applications wherein DMUs represent two-stage or network processes. One particular subset of such processes is those in which all the outputs from the first stage are the only inputs to the second stage. The current paper reviews these models and establishes relations among various approaches. We show that all the existing approaches can be categorized as using either Stackelberg (leader-follower), or cooperative game concepts. Future perspectives and challenges are discussed.
436 citations
Cites background from "Additive efficiency decomposition i..."
...[25,26] develop an approach for additive efficiency decomposition....
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TL;DR: In this paper, a two-stage network model is used to estimate the performance of Japanese banks, which use labor, physical capital, and financial equity capital in a first stage to produce an intermediate output of deposits.
Abstract: We model the performance of DMUs (decision-making units) using a two-stage network model. In the first stage of production DMUs use inputs to produce an intermediate output that becomes an input to a second stage where final outputs are produced. Previous black box DEA models allowed for non-radial scaling of outputs and inputs and accounted for slacks in the constraints that define the technology. We extend these models and build a performance measure that accounts for a network structure of production. We use our method to estimate the performance of Japanese banks, which use labor, physical capital, and financial equity capital in a first stage to produce an intermediate output of deposits. In the second stage, those deposits become an input in the production of loans and securities investments. The network estimates reveal greater bank inefficiency than do the estimates that treat the bank production process as a black box with all production taking place in a single stage.
351 citations
TL;DR: In this article, the authors proposed a relational network data envelopment analysis (DEA) model for measuring the innovation efficiency of the NIS by decomposing the innovation process into a network with a two-stage innovation production framework, an upstream knowledge production process (KPP) and a downstream knowledge commercialization process.
327 citations
References
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TL;DR: A nonlinear (nonconvex) programming model provides a new definition of efficiency for use in evaluating activities of not-for-profit entities participating in public programs and methods for objectively determining weights by reference to the observational data for the multiple outputs and multiple inputs that characterize such programs.
25,433 citations
TL;DR: The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs as mentioned in this paper.
Abstract: In management contexts, mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best. In this capacity, mathematical programming serves as a planning aid to management. Data Envelopment Analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments, however they may have been planned or executed. Mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities. The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs. A separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of DEA directly on observational data. Technical inefficiencies are identified with failures to achieve best possible output levels and/or usage of excessive amounts of inputs. Methods for identifying and correcting the magnitudes of these inefficiencies, as supplied in prior work, are illustrated. In the present paper, a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing, constant or decreasing returns to scale in multiple input and multiple output situations. The results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with "contestable market theories."
14,941 citations
"Additive efficiency decomposition i..." refers methods in this paper
...The VRS efficiency scores for the two stages can be determined by the following VRS models (Banker et al., 1984): max E1j0 ¼ PD d¼1gAdzdj0 þ uAPm i¼1vixij0 s:t: PD d¼1gAdzdj þ uAPm i¼1vixij 6 1; j ¼ 1; . . . ;n gAd ; vi > 0 u A free in sign and max E2j0 ¼ Ps r¼1uryrj0 þ u BPD d¼1gBdzdj0 s:t: Ps…...
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2,617 citations
TL;DR: The relational model developed in this paper is more reliable in measuring the efficiencies and consequently is capable of identifying the causes of inefficiency more accurately.
1,112 citations
TL;DR: In this article, the authors examined the performance of the top 55 U.S. commercial banks via a two-stage production process that separates profitability and marketability and uncovered substantial performance inefficiency in both dimensions.
Abstract: Utilizing recent developments in data envelopment analysis (DEA), this paper examines the performance of the top 55 U.S. commercial banks via a two-stage production process that separates profitability and marketability. Substantial performance inefficiency is uncovered in both dimensions. Relatively large banks exhibit better performance on profitability, whereas smaller banks tend to perform better with respect to marketability. New contextdependent performance measures are defined for profitability and marketability which employ a DEA stratification model and a DEA attractiveness measure. When combined with the original DEA measure, the context-dependent performance measure better characterizes the profitability and marketability of 55 U.S. commercial banks. The new approach identifies areas for improved bank performance over the two-stage production process. The effect of acquisition on efficiency and attractiveness is also examined.
878 citations
"Additive efficiency decomposition i..." refers background in this paper
...Seiford and Zhu (1999) presented a twostage process to measure the profitability and marketability of US commercial banks....
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