DEA performance evaluation based on BSC indicators incorporated

Abstract

PurposeThe purpose of this paper is to evaluate the performance of the semiconductor industry in Taiwan, which is the main economic life‐line in Taiwan. Operational performance is normally deemed as a key factor in industry. The importance of this issue can be measured through performance indices to observe the operational performance of Taiwan's semiconductor industry.Design/methodology/approachA combination of the data envelopment analysis (DEA) and the balanced scorecard (BSC) was employedFindingsThis study finds that the efficiency of every domestic semiconductor manufacturer is generally good, and concerning the four perspectives of the balanced scorecard, the most important for the domestic firm is the financial perspective, second is the internal process perspective, third the learning and innovation perspective, and most unimportantly customer perspective.Research limitations/implicationsOwing to the difficulties in data collection and the widespread ranges of the four major aspects, the application of the indices is limited in this paper. Therefore, the main suggestion of this study regarding future research directions is to expand the indices of the four aspects, in the hope of measuring the operating efficiency of enterprises in each aspect using more and improved indices.Practical implicationsThis application can be extended by the usage of the ratio analysis and the BSC method to enhance the validity of the DEA.Originality/valueWhen implementing DEA, traditional financial indices cannot obtain an in‐depth understanding of an enterprise, hence this study considers the four major constructs of the balanced scorecard in index selection, and employed these four major contracts to expand the indices that can be available for selection and gain a deeper understanding not only of the financial aspects, but also of customers, the internal process, learning, and innovation. It should be noted that the balanced scorecard can develop the performance goal from the perspective of job fulfillment, and uses this view to assess management performance. These indicators can reflect different focuses regarding job fulfillment, and produce pluralism in the performance indices.