USING SUPER-EFFICIENCY DEA TO EVALUATE FINANCIAL PERFORMANCE OF E-BUSINESS INITIATIVE IN THE RETAIL INDUSTRY

Abstract

Electronic Business (EB) on the Internet is an attractive technology for traditional business organizations to improve their financial performance. The Web-based economic model is supposedly more efficient at the transaction cost level. It also provides cost-effective marketing, global market access, and a disintermediation of costly distribution channels. The current paper uses super-efficiency data envelopment analysis (DEA) model to evaluate the financial performance of e-business initiatives in the retail industry. Because of the possible infeasibility of the super-efficiency DEA model, the use of super-efficiency DEA model has been restricted. This paper demonstrates that if super-efficiency is interpreted as input saving or output surplus achieved by a specific efficient DMU, infeasibility does not necessary indicate the best performance. A new approach is applied to correctly characterize and rank the performance of a set of EB companies and non-EB companies in the retail industry. This analysis indicates that the EB companies perform better in some areas than their non-EB counterpart.