Technical Efficiency Measures Research Articles

Evaluation of performance at Palestinian public hospitals using Pabón Lasso model.

Hospitals have a paramount role in provision of health care services, which in turn significantly impacts the performance of any health system, especially in developing countries. This study aimed to evaluate the performance of the Ministry of Health general hospitals in Gaza according to their surgical and internal medicine departments during a 3-year period (2016, 2017 and 2018) using Pabón Lasso model. This descriptive study includes the overall public general hospitals in Gaza Strip (7). Data have been collected from the officially disseminated reports, mainly about average length of stay, bed occupancy rate, and bed turnover ratio in the surgical and internal medicine departments for the study period. Pabón Lasso charts have been drawn using MS Excel 2013. For surgical departments, about 42.8% were efficient (zone 3) during the 3 years, while, 42.8% were inefficient (zone 1). Only one hospital was relatively efficient (zone 4) in 2017 and 2018. Regarding internal medicine departments, 28.6%-42.8% of hospitals were efficient during the study period, 14.3%-42.8% were inefficient, and 28.6%-42.8% were relatively efficient (zone 2 and 4). It is recommended to count on such type of analysis in decision-making and identify obstacles for best utilization of the available resources. Inefficiency in hospitals serves as a good opportunity for resources mobilization or innovation in demand-creating interventions, thereby, regular evaluation of resources' distribution. Further research is required by applying frontier techniques of efficiency measurement.

Intangible assets and the efficiency of manufacturing firms in the age of digitalisation: the Russian case

AbstractA wide consensus exists on the role of intangible assets in both developed and developing economies, especially now, with the new generation of information and communication technologies. Emerging economies generally demonstrate lower endowment with intangibles (Dutz et al., 2012), but follow the same positive patterns for long-run development. In Russia, the contribution of intangibles to growth is still modest, and its capacity to foster productivity has not been achieved. As previous studies showed, efficiency represents one of the main channels of total factor productivity growth. This paper studies the effects of intangibles on the efficiency of Russian manufacturing firms in 2009–2018. Considering the heterogeneity of sectors and firms, the stochastic frontier model is applied. In general, the impact of intangibles is positive but small and influenced by external shocks and structural features. The paper provides evidence on different contributions of intangibles to efficiency for high-tech and low-tech firms and its change over time. It contributes to the strand of literature regarding the technical efficiency measurement on the microlevel. On the practical side, the paper suggests an analytical framework for differentiated policy mechanisms to drive investments in intangibles, which are essential for current digital transformation.

The impact of energy costs on industrial performance: identifying price and quantity effects in the aluminum industry using a data envelopment analysis approach

We build a frontier function model with technical and cost efficiency measures to assess the impact of energy costs on competitiveness in the aluminum industry, a heavy energy consumer, by identifying what may be attributed to price and quantity effects. First, we estimate a data envelopment analysis model and measure the efficiency scores using the Farrell and Tone approaches. Then, we explain efficiency scores with a set of environmental factors using a truncated regression model, applying the double-bootstrap method proposed by Simar and Wilson in 2007. By considering the Tone efficiency scores, we highlight the fact that efficiencies are differentiated depending on geographic region and production technologies. This could explain the loss of competitiveness observed in certain industrial units in recent years. We also highlight other factors that impact cost efficiency, such as global market share, multinational status and the exchange rate with respect to the dollar. These factors have a significant, positive effect on relative efficiency in terms of aluminum smelter costs. Our results provide a better understanding of the reasons for the changes in this industry, which has been marked by major technological and economic shifts, and allow us to assess the role of energy in these changes.

Impact of an input-output specification on efficiency scores in data envelopment analysis: A banking case study

The paper stresses the importance of making an appropriate specification of inputs and outputs in technical efficiency measurement and provides empirical evidence that this initial step of an efficiency measurement project should not be underestimated. Oriented on a case study of Slovak commercial banks for the period from 2005 to 2016, the paper explores to what extent different input-output specifications affect the comparability or congruence of technical efficiency scores in a banking application produced by four different data envelopment models differing in the efficiency measure and orientation. Building on the long-standing controversy in the banking literature about the most appropriate description of banking production, the paper compares technical efficiency scores for 9 input-output specifications of the intermediation approach, 9 specifications of the production-like approaches and 3 network integrated specifications. All these specifications were empirically applied earlier in the literature. The efficiency scores produced by different input-output specifications and models are confronted by six measures of association or dependence, and their levels are explained in a regression framework. The results attest that the choice of the input-output set is a critical judgemental input to efficiency measurement since there is vast diversity in efficiency scores of input-output sets coming from different approaches but also for input-output sets associated with the same approach. In addition, intermediation input-output specifications tend to produce higher efficiency scores than production-like specifications.

A new measure of technical efficiency in data envelopment analysis based on the maximization of hypervolumes: Benchmarking, properties and computational aspects

The measurement of technical efficiency attracts considerable interest in the literature. In fact, following on from the seminal works by Koopmans (1951), Debreu (1951), Shephard (1953) and Farrell (1957), a substantial amount of literature has been dedicated to methods for estimating production frontiers and measuring the technical efficiency of production units. Data Envelopment Analysis (DEA) has an important role among current techniques for determining technical efficiency due to its flexibility when it comes to confronting multiple inputs and outputs as well as its non-parametric nature. Many different DEA-based technical efficiency measures have evolved over the last forty years, including radial, hyperbolic, directional, (weighted) additive, slacks-based measures, etc. Nevertheless, there is still room for harnessing new measures that are capable of satisfying interesting properties. For instance, slacks-based measures generally yield solutions with zero values in some slacks, which may mean overloading some of the other dimensions to reach the efficient frontier, thereby involving unbalanced efforts that are unrealistic. Moreover, the projection point determined by standard measures is not unique which is a further weakness from a benchmarking perspective. The purpose of this paper is to propose a novel technical efficiency performance measure in DEA on the premise of maximizing the hypervolume, while dealing with these problems and satisfying additional properties at the same time. In particular, we prove that the new approach yields unique projection points, which is not a usual property of DEA technical efficiency measures. From a computational perspective, second-order cone programming is capable of solving the new measure. Finally, an empirical example extracted from the literature serves to illustrate the new methodology.

Sustainable Development of the China Tourism Sector: Implications from Technical and Scale Efficiency Measurements

This paper investigates one of the key factors of sustainable development in the tourism sector: productive efficiency. A firm is technically inefficient when it can produce a higher output level with existing input quantities. Technical inefficiency can be reduced by stimulating the incentive of workers and employing suitable managers. On the other hand, scale inefficiency occurs when an enterprise is not producing in the constant returns to scale region. Such inefficiency can be lessened by reallocating resources to achieve an optimal production scale. Most previous empirical studies of efficiency analysis are based on the assumption of convex production sets. This paper points out that when this assumption does not hold, policies on resources allocation would be misled. To remedy this deficiency, this paper adopts a newly developed empirical frontier to model nonconvexity in the production set. It is found that, in the tourism sector, travel agents and hotels are technically efficient and scale inefficient. Consequently, a policy which leads to the merging of small firms to improve the efficiency of the market will best suit the sustainable development of the tourism sector. Our results are very different from those derived from the existing production frontiers in Data Envelopment Analysis.

Evaluating the Performance of Indian Domestic Banks Through the Lens of Pareto–Koopmans Efficiency

In this article, we use data envelopment analysis to obtain Pareto–Koopmans (PK) measures of technical efficiency (TE) of India’s domestic commercial banks for the period between the global financial crisis and merger of the State Bank of India and its associates. This article aims to contribute to the growing body of literature on the efficiency of Indian banks by adopting the concept of PK efficiency to overcome the restrictive nature of radial and orientation-specific TE measures. To the best of our knowledge, this article is the first of its kind where one can disaggregate overall TE into two separate components by measuring input and output efficiency in the Indian banking sector. We assume a three-input three-output technology for both groups and utilize a balanced panel of 26 public sector banks (PSBs) and 19 private banks (PVBs) from 2010–2011 to 2016–2017. The mean PK efficiencies across the study period are 0.86 and 0.72 for PSBs and PVBs, respectively. Hence, there is considerable scope of improvement in the productive performance of PVBs. The disaggregation of PK efficiencies into input- and output-specific components reveals that for PSBs, the inefficiencies primarily result from physical assets, while for PVBs, they emerge mainly from other incomes. Hence, the management should specifically target these aspects of banking operations to improve their performance. Second-stage regression analysis reveals that PK-TE has a non-linear relationship with the size of a bank. Deposit to liability ratio and management quality negatively impact PK efficiency, while priority sector lending positively influences it.

Positive Dynamic Partial Effects of Head Start for Jointly Dependent Good and Bad Outcomes

We adopt a framework to specify a household's child development technology with a set of interdependent inputs and outputs, finding significant, productive dynamic effects due to young children's Head Start participation. Our panel data estimates show that initial counter-productive partial effects from Head Start relative to non-Head Start participation are quickly overcome as the child matures so that this program causes significant improvements in math and reading scores as well as a significant reduction of behavioral problems over time. Measures of technical efficiency and productivity change over time for children with Head Start are highly consistent with these trends.

Russell Graph efficiency measures in Data Envelopment Analysis: The multiplicative approach

The measurement of technical efficiency is a topic of great interest. Since the beginning, many researchers have developed new approaches to gauge technical efficiency, mainly in the non-parametric area of Data Envelopment Analysis (DEA). However, the first measures in DEA, the well-known radial models, only accounted for radial inefficiency, which motivated the introduction in the literature of the so-called Global Efficiency Measures (GEMs); non-oriented and non-radial in nature. Two famous GEMs are the Russell Graph Measure and the Enhanced Russell Graph Measure, also known as the Slacks-Based Measure. These approaches aggregate input and output specific efficiencies through the arithmetic mean, which may not be the most appropriate aggregator function when input and output efficiency ratios are considered, as will be shown. In this paper, in contrast, we propose aggregating input and output specific inefficiencies by applying the geometric average, which will allow us to define new multiplicative versions of the Russell Graph Measures. We also prove some theoretical results and introduce an iterative algorithm, based upon Second Order Cone Programming, to solve the new models. Finally, the implementation of the introduced approaches is empirically illustrated through a data set taken from the literature.

Parametric estimation of a gauge function and a measure of technical efficiency

PurposeThis paper proposes the use of a gauge function as a measure of technical efficiency. The measure of technical inefficiency from a gauge function is desirable as the estimation of a gauge function is not subject to the endogeneity problem under the behavioral assumption of profit maximization in the competitive market.Design/methodology/approachThe authors address three important properties of a gauge function, i.e. linear homogeneity, monotonicity and convexity in inputs and outputs, and show how such properties are utilized in its estimation. Then, the authors apply the estimation of a gauge function to US Blacksmiths in 1850 and 1880 to show that a failure to satisfy such properties may lead to an incorrect inference on the technical efficiency.FindingsThe authors find that the Blacksmiths in the 1850s were technically more efficient than the ones in the 1880s, indicating technical regress in Blacksmithing when the properties are satisfied.Originality/valueThis paper introduces a measure of technical inefficiency from a gauge function and shows how to estimate the gauge function parametrically for the measure. The authors show McFadden's gauge function and its properties, which differ from the properties of other distance functions. The authors emphasize linear homogeneity as well as monotonicity and convexity in inputs and outputs, which must be satisfied in the estimation of a gauge function.

Evaluation and Factor Analysis of the Intensive Use of Urban Land Based on Technical Efficiency Measurement—A Case Study of 38 Districts and Counties in Chongqing, China

Reasonable evaluation of the intensive urban land use has emerged as an important issue and hot topic for urban development. This paper aims to construct a unified framework for evaluating the intensive use of urban land and analyzing its influence channels. It combines the advantages of the approach of the indicator system and that of efficiency measurement, and provides an empirical test to apply this analytical framework using the panel data of 38 districts and counties in Chongqing, China, ranging from 2009 to 2018. To achieve our goals, we used the panel data model and stochastic frontier analysis (SFA) model with decomposed technical inefficiency. Our results show that: (1) the level of intensive use of urban land in all districts and counties of Chongqing is steadily increasing, and the gap among regions is narrowing, (2) all districts and counties of Chongqing face severe and increasing difficulty in improving their intensive urban land use, and, (3) currently, the degree of external dependence is not a stable influential factor for land-use efficiency and intensive potential in these districts and counties, and improving the land use structure, increasing population density, strengthening fiscal expenditure on education, and promoting transportation convenience can markedly reduce land use inefficiency and simultaneously increase intensive land use. In conclusion, the framework for evaluating intensive use of urban land based on the SFA model with decomposed technical inefficiency can better integrate intensive land-use evaluation and the factor analysis process, and retain the scalability of factor analysis. For all districts and counties in Chongqing, we clarify several effective channels to promote the intensive use of urban land, which provides reference and technical support for formulating land policies.

Has the affordable care act affected health care efficiency?

We utilize health care input and output data to evaluate how state-level efficiency in health care has changed in the wake of the Affordable Care Act (ACA). We use a Stochastic Frontier model to estimate annual measures of technical and cost efficiency before, and after, ACA implementation. Results show that following the ACA, states’ technical efficiency scores improved and converged across states. However, cost efficiency scores declined suggesting health outputs rose by a proportionally smaller margin than health care costs. We further investigate efficiency changes for ACA-induced Medicaid expansions. We find Medicaid expansion led to decreased cost efficiency scores, but may have led to increased technical efficiency scores. Overall, results suggest the ACA represents a package of reforms that present a trade-off between technical and cost efficiency.

Evaluating the Technical Efficiency of Hospitals Providing Tertiary Health Care in Turkey: An Application Based on Data Envelopment Analysis

Tertiary care hospitals use more resources compared to other hospitals, which makes technical efficiency measurements specific to these hospitals important. This study explored the factors affecting the efficiencies of training and research hospitals affiliated to the Ministry of Health (n = 41) and university hospitals (n = 51) in Turkey via Data Envelopment Analysis, Malmquist Total Factor Productivity Index and panel Tobit Regression. The results showed that hospital size and the status of being a training and research or a university hospital affected the technical efficiency (p < 0.05). The size and the status of the hospitals should be taken into consideration while allocating the resources.

Non-radial technical efficiency measurement of irrigation water relative to other inputs used in Arkansas rice production

Groundwater from the Mississippi River Valley alluvial aquifer is an essential resource for agricultural irrigation in Arkansas, but groundwater from this valuable resource is being withdrawn more rapidly than aquifer recharge in many parts of the state. Rice accounts for a significant portion of groundwater withdrawn from the aquifer. Rice is also a high-cost crop relative to other field crops. This study uses data envelopment analysis and non-radial technical efficiency to evaluate irrigation water efficiency along with the efficiency of other key rice production inputs using data from 142 rice fields enrolled in the University of Arkansas Rice Research Verification Program (RRVP). The study also evaluates the impacts of management practices on input use efficiency using fractional regression. This study differs from most other studies that focus specifically on irrigation water efficiency in that efficiencies of other related rice inputs are also evaluated. We found irrigation water was overused on average by 37.3 % across the 142 fields, with 60 fields (42.3 % of all fields evaluated) over-applying irrigation water by over 50 %. Other rice inputs identified as highly inefficient included herbicides, diesel, and labor, which were overused on average by 46.4 %, 54.6 %, and 58.9 %, respectively, across the 142 fields. Results of the fractional regression analysis revealed management practices significantly improving irrigation water efficiency also significantly improved diesel and labor efficiency as well as overall field efficiency.

Higher Education Efficiency Frontier Analysis: A Review of Variables to Consider

The measurement of efficiency in higher education has gained a growing interest in recent years, especially due to the expansion of the university system. This paper provides a review of the literature on efficiency in higher education institutions by covering empirical articles which applied frontier efficiency measurement techniques from 1997 to 2019. We review the methodological approaches used, both parametric and non-parametric techniques, such as Data Envelopment Analysis, Malmquist index and Stochastic Frontier Analysis. Secondly, we list the applied inputs, input prices, outputs, quality, and environment variables and based on the overview, we discuss the advantages and drawbacks of the different empirical proxy variables used. We address the importance of characterizing students and research funding as raw materials of both the teaching and research services, respectively, and we provide suggestions on how to deal with them empirically. We also discuss the difference between quality and environmental variables, and we give some practical indications to distinguish them in doubtful cases.

A strong efficiency measure for CCR/BCC models

The Farrell technical efficiency measure computes the maximum proportional reduction that can be operated on inputs without affecting the level of output. In a multi-input and multi-output context, the first mathematical programming based reformulation of this problem is known as CCR/BCC efficiency measures. There are two drawbacks to this measure. First, it does not give value to any inefficiency resulting from the possibility of reducing some inputs and/or increasing some outputs in addition to the maximum proportional reduction in inputs. Second, as a result of the above, it does not unequivocally identify Pareto-Koopmans efficient activities.This article presents a strong efficiency measure similar to CCR/BCC models which overcome these drawbacks. It accounts for all non-zero slacks in inputs and outputs once the proportional reduction path in the inputs has been exhausted. This allows for the correct classification of production units in an efficiency ranking and facilitates the measurement of inefficiency by inputs and outputs, thereby helping to improve business management decision-making. We extend our model to deal with zero and negative input or output values. A numerical example shows the applicability of our approach.

Environmental efficiency in South Asian agriculture: A potential of reducing CO2 emissions and fertilizers usage

South Asian governments have introduced renewable energy policies for the reduction of CO2 emissions while keeping up with the demand for food by enhancing agricultural production. Therefore, it is a need to examine the efficiency analysis of agriculture by incorporating CO2 emissions as a bad output for measuring sustainability in their agriculture practices. Also, the study calculated the potential reduction of CO2 emissions and the usage of fertilizers to make agricultural practices sustainable and environmentally efficient. This study estimated the productivity change, technical, and environmental efficiency of rice production for selected South Asian countries. Data were obtained from the FAO‐STAT website from 2002 to 2014. The change in rice productivity was measured through total factor productivity (TFP) scores by applying the Malmquist Index (MI) approach. Traditional data envelopment analysis (DEA) models and Slacks based model (SBM‐DEA) were applied for the measurement of technical and environmental efficiency, respectively. The results of the MI approach showed that Bangladesh, Bhutan, India, Pakistan, and Sri Lanka were found to have positive changes in TFP. The results of technical and environmental efficiency indicated that Bangladesh, Bhutan, and India were found efficient throughout the study period. Afghanistan and Pakistan were found environmentally most inefficient. The slack obtained from the SBM‐DEA indicated that Pakistan, Afghanistan, and Sri Lanka had a huge potential to reduce CO2 emissions and usage of fertilizers. Furthermore, this study provides an overview of the sustainable status of agriculture and also provides suggestions in selected South Asian countries.

Potential for, and drivers of, private voluntary initiatives for the\xa0decarbonisation of short sea shipping: evidence from a Swedish ferry line

The aim of this paper is to analyse shipping firms’ reactions to environmental challenges and identify how significant reductions in energy consumption and air emissions can come about by implementing a variety of voluntary initiatives. The paper focuses on the various sustainability initiatives implemented by the Swedish short sea shipping operator, Stena Line, either on a purely voluntary basis as part of their corporate social responsibility (CSR) strategy or as their chosen route for compliance with regulations. A conceptual model is developed based on stakeholder theory, the theory of planned behaviour and resource dependence theory to understand the main drivers of the firm’s adoption of sustainability initiatives and the factors affecting the integration of CSR in maritime companies. According to our findings, the company operates within a strongly enforced regulatory environmental framework and needs to exceed this framework to differentiate its service and strengthen its relationships with its customers by addressing their social and environmental concerns. As the firm’s competitive strategy focuses on service differentiation, a large pool of complementary resources is available for CSR and the implementation of sustainability practices. The results of this paper bring new insights to the potential of local private voluntary initiatives for the reduction of maritime air emissions. These include the provision of onshore power supply, the conversion of vessels to use methanol, ferry electrification, the construction of larger RoPax vessels and the implementation of an energy-saving program that focuses on crew involvement and continuous training. The environmental outcomes derived from a combination of local operational and technical energy efficiency measures are found to be significant and can contribute to the efforts for the achievement of sustainable maritime transport undertaken by international and regional organisations. The main barriers for the adoption of voluntary sustainability initiatives in the maritime sector are economic and technological. To encourage the wider adoption of these initiatives, the provision of economic incentives at national or regional level is crucial, as such initiatives usually imply high initial installation costs that should be somehow compensated for both vessels and terminals.

Evaluation of decontamination methods for commercial and alternative respirator and mask materials – view from filtration aspect

This study aims to evaluate the filtration performance of three commercially available (3M 8210 respirator, Halyard 48207 surgical mask, and 3M 1820 procedure mask) and two alternative face mask and respirator materials (Halyard H600 sterilization wrap and Cummins EX101) after selected decontamination treatments, including isopropanol (IPA) treatments (soaking or spraying), ultraviolet germicidal irradiation (UVGI), and heat treatments (dry heat at 77 °C or steam heat). Both IPA soaking and spraying removed most electrostatic charges on all four electret materials (three commercial and one alternative), causing significant deterioration of filtration efficiency to unacceptable level. The other non-electret alternative material sustained its N95-grade performance after both IPA soaking and spraying treatments, demonstrating the possible application of IPA disinfection for non-electret alternative respirator/mask materials. UVGI preserved the filtration of all three commercially available respirator/mask materials after up to 10 treatments, suggesting it can be a possible decontamination method for hospital and clinic use without compromising respirator/mask performance. The considerations of the practical implementation of this method was discussed. Between the two heat treatment methods tested, dry heat showed better compatibility with electret material by sustaining both filtration efficiency and fit (tested on commercial respirator only), although adding moisture was reported in favor of virus inactivation. Heat treatment is easily accessible method for general publics to implement at home, while it is recommended to maintain the moisture level below saturation. Comparing to size-integrated method, the size-resolved fractional efficiency measurement technique, although more time consuming, proved to be a better method for evaluating respirator/mask filtration performance after decontaminations by providing more sensitive detection of performance degradation and the capability of distinguishing charge loss to other mechanisms causing efficiency deterioration. Detailed descriptions are provided in methodology part to emphasize the cares needed for an appropriate efficiency evaluation. The limited results in this study on worn masks made of alternative sterilization wrap indicated possible performance degradation of electret material caused by normal human wearing activities, suggesting the need of assessing respirator/mask decontamination strategy by testing practically worn-and-decontaminated/reused samples instead of unworn only-decontaminated counterparts.

A Well-Defined Composite Indicator: An Application to Corporate Social Responsibility

This paper introduces a model to construct composite indicators for performance evaluation of decision making units, which is based upon the determination of the least distance from each assessed unit to a frontier estimated by data envelopment analysis. This generates less demanding targets from a benchmarking point of view. The model also makes it possible to account for the existence of slacks in all the considered dimensions (sub-indicators), playing with the notion of Pareto efficiency. Additionally, our approach satisfies units invariance, translation invariance and strong monotonicity and ensures that the weights used for the aggregation of the sub-indicators are always strictly positive. All previous approaches based on data envelopment analysis have failed to satisfy at least one of these properties. We also implement a new version of the Russell output measure of technical efficiency working with full-dimensional efficient facets. Finally, the new approach is illustrated by an application to the sphere of corporate social responsibility, showing the main empirical implications of the theoretical properties.