Abstract
In today’s increasingly competitive markets, it is essential to be able to determine the position of a company as opposed to its competitors. Today the traditional financial ratios are most widely used to measure corporate performance, but more and more authors begin to criticize their use. It is difficult to use financial ratios as a complex measurement tool. It is crucial to use an appropriate method or tool to measure corporate performance, which can measure the company’s performance in a complex way represented by one indicator. In this study, the Data Envelopment Analysis (DEA) method is used, which is one of the potential tools available. Several researchers have used the DEA method to measure corporate performance. Many authors consider DEA as a useful tool for measuring corporate performance, while others criticize it. The authors analyze the performance of retail food companies in Hungary’s Northern Great Plain region. The companies analyzed were chosen from the region investigated, and they have “food retail grocery store” as their main activity, and they had six cleared annual reports in the period 2012–2017. There was a total of 887 companies in the region examined, and 563 (63.5%) met the conditions. The analysis was made using the time-series data of companies for 2012–2017 based on their financial reports, and the authors dealt with various possibilities for extending DEA, which can support its more accurate use. Based on evaluating the retail food companies’ performance in the Northern Great Plain region, one can state that the efficiency of companies shows a very mixed picture over the years examined. The study suggests solutions to the indicated problem. The findings indicate that the application of extended DEA methods gives better results; that is, one can get better estimates of the efficiency of companies.
Highlights
In a globalized world in which companies have to compete with all operators in the market, both internal and external, comparison of the company’s performance, i.e., benchmarking, is becoming more and more critical
Since more and more researchers dealt with corporate performance measurement in the middle of the 1990s, it has started to become a discipline within the new approach to management (Neely et al, 2004)
Based on evaluating the performance of retail food companies in the Northern Great Plain region, we can state that the efficiency of companies shows a very mixed picture over the years examined
Summary
In a globalized world in which companies have to compete with all operators in the market, both internal and external, comparison of the company’s performance, i.e., benchmarking, is becoming more and more critical. The Data Envelopment Analysis (DEA) method, which has been chosen for measurement, has undergone significant development in the last 40 years. Many people have used this method in different areas of economy and society, and many criticisms have been expressed regarding its applicability. One of the subjects of this study is to show how DEA can be utilized in measuring and comparing the performance of companies through the example of retail food companies in Hungary’s Northern Great Plain region. The article differs from what was described in the previous benchmarking definitions in that it examines not a chosen company, but compares companies in the region with each other and focuses to a significant extent on the method used and its application. One cannot present every extension within the framework of this study; a few of those were highlighted and considered as most important
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