Abstract
Using data envelopment analysis, this paper presents a scheme to decompose industry efficiency into two components: learning efficiency and harmony efficiency. This decomposition scheme is empirically illustrated on 23 life insurance companies in India for 8 years (2011–2012–2018–2019). Our two broad empirical findings reveal that first, as per the year‐wise results, the Indian life insurance industry has the potential to increase its efficiency by 28% by improving its learning efficiency by 20% and harmony efficiency by 10%; and second, based on the results on the top 75 promising mergers, the potential gains stem from learning rather than harmony.
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