Two-step method based on DEA efficiency decomposition model and HCA model for industrial enterprises efficiency analysis

Abstract

According to the fundamental principle of the DEA efficiency decomposition model and the HCA (Hierarchical Cluster Analysis) model, considered these two models complement each other very well to overcome the obvious limitation when being used separately, and proposed a two-step method based on both the models for using in industrial enterprise efficiency analysis. Then, empirical studies are conducted with relevant data of Chinese listed nonferrous metal companies, using two-step method to divide the companies into several industrial enterprises groups with significantly different efficiency. We conclude that the two-step method based on integrated use of DEA efficiency decomposition model and the HCA model is an effective method for industrial enterprise efficiency study.