Metafrontier Framework Research Articles

Analysis of disequilibrium and driving factors of carbon emission efficiency: Evidence from five major urban agglomerations in China

Urban agglomerations (UAs) are not only highly integrated economic communities but also communities of shared destiny with integrated environmental protection and ecological construction. Although low-carbon development within UAs has garnered significant attention, a lack of comprehensive analysis remains regarding the imbalances and driving factors influencing carbon emission efficiency (CEE) in these regions. This study investigates the CEE of China's five national UAs from 2006 to 2020 by incorporating the meta-frontier framework into the super slack-based model. The global Malmquist index analyzes dynamic trends in CEE by decomposing the total factor productivity of carbon emissions to examine the catch-up, innovation, and technological leadership effects. In addition, this paper employs the Theil index to explore the disequilibrium of CEE among the five UAs. Outcomes reveal that, first, CEE has regional heterogeneity, with the Pearl River Delta UA (PRDUA) having the highest CEE and the Beijing–Tianjin–Hebei UA (BTHUA) having the lowest CEE. The gap between BTHUA's CEE and that of other UAs is widening. Second, the overall CEE holds improvement room, with its disequilibrium resulting from uneven city growth within the UA. Third, the innovation effect is the key to improving CEE. Fourth, PRDUA serves as the technical leader among all UAs, while the two UAs in the inland area possess the potential for technical leadership. Finally, drawing from the empirical results, this paper provides specific suggestions for advancing industrial transformation, boosting innovation capabilities, and minimizing internal imbalances within UAs. The goal is to steer UAs in China toward low-carbon development.

Comparative efficiency of Chilean water utilities: a Bayesian stochastic frontier approach

ABSTRACT Assessing the potential relationship between ownership and performance of water utilities is relevant for water regulators. Incorporating technological heterogeneity among groups of water utilities could solve any incomparability issues and lead to more appropriate policy implications. This can be done with the use of the metafrontier framework which assumes that utilities operate under different technologies. The study applies this framework to compare the efficiency of private water utilities (PWU) and concessionary water utilities (CWU) in Chile using Bayesian Stochastic Frontier Analysis (SFA) techniques. The results indicated that PWU performed better than CWU. Nevertheless, both types of water utilities presented considerable cost inefficiency. PWU and CWU should considerably reduce costs by 34% and 48% using the industry technology as a whole, respectively. The methodological approach proposed in this study could be used to compare the performance of other groups of water utilities to support the decision making of water regulators.

Extension and improvement of three-level meta-frontier framework based on multiple combined projection methods

Extension and improvement of three-level meta-frontier framework based on multiple combined projection methods

Has benchmarking improved the performance of the Australian electricity distribution utilities? A meta-frontier model

This research evaluates the effects of performance benchmarking for public utilities using the Australian experience, providing empirical support for the significance of mechanism design in implementing revenue-cap regulation. We estimate the efficiency and productivity of Australian electricity distribution providers by utilizing the meta-frontier framework with panel data covering the period from 2007 to 2021. Our findings indicate that introducing benchmarking has facilitated technological progress and reduced efficiency gaps among companies. However, there is no statistically significant difference in the average efficiency between the periods before and after the reform, potentially due to strategic behavior exhibited by network service providers.

How to establish input and output targets for airlines with heterogeneous production technologies: A nash bargaining DEA approach within the meta-frontier framework

In order to take into consideration the presence of technological heterogeneity in the aviation industry, numerous studies over the past ten years have embraced the data envelopment analysis (DEA)-based meta-frontier framework. Since group targets and meta targets are calculated independently to evaluate the technology gap in airlines, there is a possibility of obtaining unrealistic targets. Estimating the projected inputs and outputs of the evaluated units separately at both the group and meta-frontier does not automatically ensure superiority on the meta-frontier compared to the group frontier. Our proposed combined Nash bargaining model that integrates group technology and metatechnology presents a potential answer to the current unreasonable targets issue and gives more reliable outcomes. The results of the empirical application on a dataset of Alliance and Non-alliance airlines show that the proposed approach generates targets for inputs and outputs which are realistic and optimal, as well as a valid and reasonable technology gap. The finding thus validates the utilisation of our suggested model and it can be used by airline managers to improve the airline operational process.

Nonparametric efficiency measurement of undergraduate teaching by university size

Conventional data envelopment analysis (DEA) models assume that all decision-making units (DMUs) are homogenous. While higher education institutions (HEIs) of very different sizes challenge the homogeneity of DMUs, DEA studies have paid relatively little attention to university size when assessing the performance of HEIs. This article proposes novel, effective methods for evaluating university performance and identifying useful benchmarks for improving the operations of inefficient performers. Specifically, DEA and cluster analysis (CA) are applied for the evaluation of the performance of traditional Spanish public universities. DEA is utilized to examine the relative performance of these universities in terms of undergraduate teaching output. CA is applied to find similar-in-scale universities prior to the DEA to facilitate peer-groupings. The advantage of this method is that when DMUs are clustered based on their size, one can obtain homogenous groups of units with comparable operating environments. Furthermore, using the meta-frontier framework, this research finds significant evidence that there is an efficiency advantage for medium- and large-sized universities over small ones in providing undergraduate teaching. A bootstrapped, non-parametric meta-frontier approach also verifies this latter result. Some of the factors that contribute to the differences in the relative efficiencies are identified as well.

Using a Bayesian meta-frontier approach to evaluate airline performance: The nexus between airline efficiency and customer satisfaction

A balanced panel of 83 airlines during 2011–2019, classified into (a) high perceived service quality and (b) low perceived service quality, was incorporated into the Bayesian meta-frontier framework. Our findings were obtained from applying a novel method to data sourced from the ICAO Data+ and Skytrax databases. We obtained consistent efficiency and meta-technology efficiency estimates, shedding light on airlines’ business models, products, and services to improve their efficiency and customer satisfaction. Specifically, we did not identify a trade-off between customer satisfaction and airline efficiency. However, larger firms were more likely to achieve this dual objective. Airlines classified as having high service quality reported greater allocative inefficiency than their low-quality service counterparts. During periods with or without minor external shocks (e.g., 2011–2019), airlines could offer premium products at reasonable prices or with a better quality and cost-of-service balance (e.g., premium economy cabins, extra legroom, inflight entertainment, and Internet).

Analysis of productivity performance of real estate and construction firms in Indonesia

Sustained total factor productivity (TFP) growth of firms is essential to achieve sustained supply growth, which is necessary to solve the housing shortage and affordability problems. Existing productivity literature focuses on large firms whilst smaller firms make a significant contribution to the total supply. This paper investigates the productivity of 363 Indonesian real estate construction firms of medium and large sizes. We estimate Färe-Primont TFP measures under the meta-frontier framework, accounting for differences in the overall technologies under which each group of firms operates. Results deliver several important findings. First, large firms have higher productivity levels than medium firms, but average productivity levels are very low. Second, the productivity growth of large and medium firms is negative, which contributes to the growth of the housing shortage in Indonesia from 2012 to 2016. Third, in case of easier transfer or spill-over of production technologies between two firm groups, firms could enhance further their efficiency and productivity. Fourth, those factors related to branch numbers, legal structure and experience of doing business have positive correlations with the productivity performance of firms in both large and medium groups. Additionally, medium firms could gain higher productivity by diversifying their income. Importantly, our study shows evidence to support that government subsidies have a positive influence on the productivity level of medium firms.

Evaluating different groups of mutual funds using a metafrontier approach: Ethical vs. non-ethical funds

Ethical mutual funds (MFs) have grown in popularity over the past few years. However, the investors generally have concerns about their profitability compared to the investment group of non-ethical MFs. Performance comparison could be a potential way to address this concern, but the differences in their essential investment objectives raise the issue of heterogeneity between the ethical and non-ethical investment groups. Motivated by addressing this heterogeneity, this article proposes a general nonconvex metafrontier framework for comparing different investment groups of MFs. Investment groups can exhibit heterogeneity from different perspectives, such as from regulations, resource constraints, to name a few. To provide a rather complete framework for estimating the frontiers, the diversified, convex and nonconvex evaluation approaches are adapted and presented in a multi-moment setting. The proposed metafrontier framework is then applied to an empirical example where the investment groups are heterogeneous from the ethical perspective. The empirical results suggest that the ethical constraint does not necessarily lead to a worse financial performance; quite the contrary, the results provide some evidence on the outperformance of ethical MFs over the non-ethical MFs.

Technical efficiency and technology gap in Kenya’s tea industry: accounting for farm heterogeneity

ABSTRACT The study used a cross-county survey from Kenya to investigate smallholder tea farmers’ performance using a stochastic metafrontier framework. According to the results, farmers in all four regions are falling short of their potential with the mean technical efficiency ranging from 0.69, 0.77, 0.61, and 0.74, respectively, for the Nandi, Mau, Kisii, and Kericho regions. Comparing its performance with the technology available in the industry, each region faces a technology gap. Even though some variables were not statistically significant, a combination of socioeconomic and farm-specific factors were identified as sources of technical inefficiency among farmers. The farmers in all regions, however, possess the potential to overcome technological constraints and achieve higher levels of productivity. Kenya Tea Development Agency Ltd should, therefore, enhance its efforts to help the farmers improve their management and technical skills on how to use their resources more efficiently.

Assessing the dynamic efficiency and technology gap of airports under different ownerships: A union dynamic NDEA approach

Airport performance assessment is important to a variety of stakeholders. It is particularly relevant to measure airport operational efficiency and the ways in which it can be improved through measurement can be undertaken by examining the relationship between airport ownership and operational efficiency. In the present study, a new model called the union dynamic network data envelopment analysis model has been propounded and has been employed to analyse the dynamic efficiency and changes of technology gaps of 50 European airports with different ownerships in the period 2011–2017 within the meta-frontier framework. The results demonstrate that over the years, even though the dynamic meta efficiency of private majority airports has been the best in both production and sales stages of operation, public corporation airports have been technology leaders amongst other groups of airports. The findings give direction as to what aspects the airport managers and practitioners need to focus on so as to undertake airport performance improvement.

Measuring the impact of pesticide exposure on farmers’ health and farm productivity

The motivation of this paper stems from the growing concern of heavy pesticide use in developing countries such as Sri Lanka. Its excessive use affects the environment, the economy and farmers’ health and yet farmers still seem unaware of its ill-effects. More worrying is the lack of appropriate government efforts to address this problem. If neglected, heavy use of pesticide eventually renders land useless, reduces future farm output and productivity and can severely affect farmers’ health. This paper investigates pesticide use in agriculture and its impact on farm level technical efficiency using a metafrontier framework with stochastic frontier analysis. Data are collected through surveys of two groups of farmers in Sri Lanka. The first (described as the ‘non-hospitalized farmers’) are farmers who perceive that their ill-health is due to exposure to pesticides and obtained treatment but are not hospitalized. The second group (described as the ‘hospitalized farmers’) are farmers whose ill-health has been diagnosed by doctors and have been treated in hospital for exposure to pesticides. The results show that farmers overuse pesticides because of higher expectations of future returns which has led to an increase in inefficiency and remains unknown to the farmers. Determinants of inefficiency supports the argument that pesticide induced health problems reduce the health capital, while increasing farm level inefficiency.

A study on green technology efficiency of China’s marine ship industry chain based on meta-frontier framework and three-stage EBM model

Under strict resource and environmental constraints, improving the overall green efficiency of the industrial chain is crucial to the sustainable development of the marine ship industry. Based on the data of 40 listed companies in the industry chain from 2015 to 2019, the meta-frontier framework and three-stage epsilon based measure (EBM) model are employed to study the green technical efficiency (GTE) in each link of the industry chain and the technical gap between each link. The impact of the external environment on GTE, the main reasons hindering the development of GTE, and the ways to improve GTE are also discussed for policy reference. The results show that: (1) under the meta-frontier, the GTEs of the whole industry chain and the composed links are all high and rising year by year. (2) There are obvious green technological development gaps among the links of the industry chain. The GTEs are ranked as the upstream>the downstream>the midstream. (3) The inefficiencies of green technology (GTEI) in the upstream and downstream of the industry chain come from endogenous hindrance, while the GTEI of the midstream is due to exogenous hindrance. (4) The external environment has a significant influence on the development of GTE in the industrial chain. Highly open and innovative external environment can effectively reduce the input redundancy. (5) After eliminating the external influencing factors and random interferences, the actual GTE of the industrial chain is only 0.4 or so, with more serious imbalance among the three links. Therefore, it is important for the marine ship industry chain to optimize the allocation of innovation resources and cultivate an open and shared innovation environment.

Meta-frontier efficiency analysis of real estate and construction firms in Indonesia

Improving the productive efficiency (also called technical efficiency) of real estate and construction firms (RECFs) is essential to tackle the sustained shortage of housing supply and the increasing unaffordability of housing in developing countries. However, there are few studies that focus on this issue in the context of developing countries; and available literature focuses mainly on firms listed on stock markets. Our study employs the meta-frontier framework to measure the efficiency of 832 small, medium, and large RECFs across Indonesia from 2012 to 2016, using a data envelopment analysis technique. The meta-frontier framework allows for different production technologies and different business environments operated by firms of different sizes. Under the specification of group-specific production frontiers, large firms obtain the highest average efficiency scores (0.694), followed by medium firms (0.529), and small firms (0.479). The technology gaps between the meta-frontier and the group-frontiers for small and medium firms are relatively large, suggesting that the overall industry would be able to achieve remarkable efficiency improvement if firms could access technologies used by more efficient firms. Our results also show that determinants of the efficiency vary across firm groups, suggesting that policy and managerial interventions tailored to each group would have more impact on the overall productive efficiency of the entire industry.

Productivity Growth and Technology Gaps of the National Systems of Entrepreneurship: Is There a Convergence Pattern between Efficiency-Driven and Innovation-Driven Countries?

Entrepreneurship is an essential component to national economies, and a formidable engine of economic growth. Recognizing that success in entrepreneurship depends to a large extent on national context and local conditions our aim is to develop a framework to analyze national ecosystems and benchmark them with other countries to gain insights into the success or failure of entrepreneurial policies. This study uses a metafrontier framework with consideration to gauge the entrepreneurial ecosystem productivity across countries that operate under different technologies. Based on the metafrontier Malmquist productivity index, this paper analyzes the national entrepreneurial productivity of 30 countries over the period 2016–2018. By classifying the sample countries according to their level of economic development, we obtain that the efficiency-driven countries are the technology leaders in entrepreneurship, and innovation-driven countries are the followers. During the study period, the efficiency-driven countries have exhibited productivity growth of 0.5% which is mainly attributed by technological progress. Whereas, the innovation-driven countries have deteriorated their productivity by 0.7% which caused by their technological regress. Meanwhile the innovation-driven countries cached-up the world best practice technology at a faster rate than the efficiency-driven countries which indicate there was some convergence between the two groups over time.

Heterogeneity, spillovers and eco-efficiency of European industries under different pollutants’ scenarios. Is there a definite direction?

Eco-efficiency is the ability to create more goods and services with less impact on the environment while it consists a dominant strategy for the European Union in view of the New Green Deal. In recent years, its assessment, especially for the manufacturing sector, has attracted the interest of policymakers as a strategy in the pursuit of sustainability. However, a clear-cut direction on which industries should follow does not exist. In this applied study, we estimate distinct objectives of economic and ecological performance, introducing diverse scenarios regarding specific environmental pressures, by utilizing directional distance functions under a metafrontier framework. The methodology is implemented to a sample of 14 industries from the manufacturing sector from 27 European countries over the period 1995–2011. Our results reveal that the existence of a unified production technology set causes large differences in the eco-efficiency levels of the manufacturing sector while energy intensive industries can be characterized as the most eco-inefficient. Although the speed of industrial eco-efficiency convergence increases throughout the years, the case of CO2 emissions presents an irregular behavior compared to the other greenhouse gases and air pollutants. Thus, a decomposition analysis of the manufacturing CO2 emissions is considered as a further subject of interest in the study.

Sustainability certification and water efficiency in coffee farming: The role of irrigation technologies

The unsustainable use of irrigation water is one of the most serious environmental problems in coffee farming. Rapid expansion of sustainability certifications and adoption of advanced irrigation technologies are expected to promote more sustainable water use through changes in water management practices in coffee farming. However, there lacks empirical evidence on the effects of those certification schemes on water efficiency. This study examines the effect of sustainability certification on the water efficiency of coffee growers, considering distinct irrigation technologies used by farmers - overhead sprinkler and micro-basin irrigation technologies. The meta-frontier framework is used in our empirical analysis of 896 Vietnamese coffee farms over three crop years. Results confirm that irrigation water efficiency in coffee farming is substantially low. There is no evidence supporting the effect of sustainability certification on water efficiency, but advanced irrigation technologies could improve water efficiency. Coffee farms using the sprinkler system are more efficient than those using the micro-basin irrigation technology. Our results also support environmentally friendly farming practices, i.e., having wind-break trees on coffee farms. It also suggests that improving the quality of sustainability certification schemes towards sustainable use of water requires water-saving technologies.

Revenue efficiency across airline business models: A bootstrap non-convex meta-frontier approach

The intense price competition has hurt the revenue performance of the U.S. airline industry. In this context, network-legacy carriers (NLCs), low-cost carriers (LCCs), and ultra-low-cost carriers (ULCCs) in the U.S rely on different competitive advantages to create and promote their revenue efficiency. This study investigates the revenue efficiency differentials of the three airline business models in the U.S – NLC, LCC, and ULCC, using a two-stage data envelopment analysis (DEA) approach. In the first stage, a bootstrap non-convex meta-frontier framework is developed to estimate the DEA-based revenue efficiency of the airlines adopting different business models. In the second stage, a bootstrap truncated regression is employed to explain the differences in the airlines' revenue efficiency. Based on a data sample of the major airlines in the U.S. from 2015 to 2019, the study reveals the following findings: (1) The revenue efficiency varied significantly across the three airline business models. In which, ULCC type exhibited the lowest revenue efficiency; (2) Due to technological constraints, ULCCs averagely collected less than 17.6% of their potential revenue during the study period. Both LCC and NLC types demonstrated the most advanced technologies in generating revenue; however, NLCs generally outperformed LCCs; (3) Service quality, operational size, and airfare significantly impacted the airlines’ revenue performance.

Do innovation and human capital actually narrow the technology gap? Champions and laggards of European regional productive performance

ABSTRACT This paper studies regional productive performance differentials among 243 NUTS-2 European regions for the period 2003–11. Within the last two decades the technology gap between European regions has increased considerably. Building on previous studies that have used data envelopment analysis (DEA) and which have neglected national production structures and pre-existing technological heterogeneity, we examine differences in regional productive performance by using a meta-frontier framework. Our findings confirm significant differences in productive performance across European regions and a large North–South technology gap. A panel vector autoregression (PVAR) shows that this regional technology gap can be attributed to differences in human capital and innovation activity.

Innovation efficiency and technology heterogeneity within China's new energy vehicle industry: A two-stage NSBM approach embedded in a three-hierarchy meta-frontier framework

Exploring innovation efficiency (IE) and technology heterogeneity within the new energy vehicle (NEV) industry is significant for advising industrial growth and healthy development. This paper embeds a two-stage network slacks-based measure (NSBM) approach into a three-hierarchy meta-frontier framework to evaluate the value chain's IE and the technology heterogeneity under the industrial chain structure. The observations were as follows. The industrial IE was low, particularly in the product creation stage, and the downstream IE ranked at the top, followed by the midstream and upstream. Furthermore, technological heterogeneities existed within the industry; the upstream technology level aligned with that of the industry, whereas the gaps between midstream, downstream, and industry were significant. Analogously, the battery enterprises' gap was minor upstream; nevertheless, the gaps between electric engine, electric control enterprises, and upstream were more pronounced. Additionally, management inefficiency contributed more to the industrial innovation inefficiency than the technology gaps inefficiency. Finally, industrial productivity declined sharply due to the technology gaps' change, except in battery enterprises. Our work will provide valuable insights for industrial policies' evaluation and improvement.