Abstract
Since Charnes, Cooper, and Rhodes introduced data envelopment analysis (DEA) in 1978, later called the DEA-CCR model, many studies applied this technique to different fields. Based on the original CCR model, many modified DEA models were developed by researchers. Since 1999, Seiford and Zhu presented a two-stage DEA model. Later, these models were widely used in many studies. However, the relationship between the efficiency scores that are obtained from the original CCR model and the two-stage DEA model remains unknown. To fill this gap, this study proposed a theoretical relationship between the efficiency scores that are calculated from the two-stage DEA model and those that are obtained from the original CCR model. How the sets of nonsymmetrical weights affected the efficiency scores were also investigated. Theorems regarding the relationship were developed, and then the model was utilized to evaluate the two-stage efficiency scores of the insurance companies (non-life) and bank branches. The results show that using a two-stage DEA model can get more information about operational efficiency than the traditional CCR model does. The findings from this study about the two-stage DEA technique can provide significant reasons for using this model to evaluate performance efficiency.
Highlights
Since Charnes, Cooper, and Rhodes [1] first presented data envelopment analysis (DEA), a methodology commonly called the DEA-CCR model, to identify the relative efficiency of decision-making units (DMUs), this approach has been widely employed in many fields and industries [2,3,4,5].Along with the rapid pace of development of the global economy, international enterprises are developing stronger than ever before
DEA model is adopted for the analysis, the results show something different: while DMU5 is efficient with respect to profitability, DMU15 is efficient with respect to the marketability aspect
This study has focused on examining the two-stage DEA model to assess the relationship between efficiency scores
Summary
Since Charnes, Cooper, and Rhodes [1] first presented data envelopment analysis (DEA), a methodology commonly called the DEA-CCR model, to identify the relative efficiency of decision-making units (DMUs), this approach has been widely employed in many fields and industries [2,3,4,5]. It is able to determine the factors that affect managerial efficiency This model can only be used to measure overall performance with initial inputs and outputs. Few studies have theoretically examined the relationship between the efficiency scores in one-stage and two-stage DEA models It will be very useful if a bridge between these two models can be built to help decision-makers to flexibly apply the DEA technique to evaluate performance flexibly in their organizations. This study assesses the importance and advantages of a two-stage DEA model in evaluating the operational efficiency of organizations and companies. Decision makers and investors could make better decisions in their businesses and improve their managerial abilities This will help decision makers gain an objective perspective on using a two-stage CCR model to measure performance efficiency. The study proposes suggestions for further studies on the DEA technique in terms of developing and expanding the CCR model and other DEA models
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