Efficiency decomposition for multi-level multi-components production technologies

This paper addresses the efficiency measurement of firms composed by multiple components, and assessed at different decision levels. In particular it develops models for three levels of decision/production: the subunit (production division/process), the DMU (firm) and the industry (system). For each...

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Bibliographic Details
Published in:Journal of productivity analysis 2023-12, Vol.60 (3), p.273-294
Main Authors: Peyrache, Antonio, Silva, Maria C. A.
Format: Article
Language:English
Subjects:
Accounting/Auditing
Data envelopment analysis
Decision making
Decomposition
Econometrics
Economics
Economics and Finance
Efficiency
Microeconomics
Operations Research/Decision Theory
Productivity
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Summary:This paper addresses the efficiency measurement of firms composed by multiple components, and assessed at different decision levels. In particular it develops models for three levels of decision/production: the subunit (production division/process), the DMU (firm) and the industry (system). For each level, inefficiency is measured using a directional distance function and the developed measures are contrasted with existing radial models. The paper also investigates how the efficiency scores computed at different levels are related to each other by proposing a decomposition into exhaustive and mutually exclusive components. The proposed method is illustrated using data on Portuguese hospitals. Since most of the topics addressed in this paper are related to more general network structures, avenues for future research are proposed and discussed.
ISSN:0895-562X
1573-0441
DOI:10.1007/s11123-023-00690-3