Benchmarking firm performance from a multiple-stakeholder perspective with an application to Chinese banking

We know very little about how a firm would compare against its peers when evaluated from a multiple-stakeholder perspective where the same variables are interpreted differently. Since most medium-to-large organizations acknowledge the multi-dimensional nature of their operations, finding out the performance evaluations of various stakeholders can inform managerial decision-making. Thus, the main motivation for this study is to capture the interactions among different perceptions on a common set of performance measures. Using data envelopment analysis (DEA), we work with an approach that allows a flexible designation of inputs and outputs based on varying perspectives of five key stakeholders in banking. The versatile approach demonstrates that different views from the stakeholder universe can be summarily captured in DEA scores. A numerical example on Chinese commercial banks identifies the compliant (efficient) banks versus rigid (inefficient) banks, as well as the amenable stakeholders (those evaluating banks as efficient) versus the recalcitrant stakeholders (those evaluating banks as inefficient). The aligned views held by management and shareholders as evidenced by significant correlation among performance rankings imply reduced agency costs. Similarly, shared perceptions between customers and employees may encourage management to examine how this important business interface can be improved.     

Benchmarking for small- to medium-sized enterprises

This paper identifies which benchmarking databases are available for small- to medium-sized enterprises and the best way to conduct a benchmarking project given the limiting factors which exist at the present time. First, the meaning of benchmarking and performance measures, and their importance to an enterprise are explained. Second, frameworks for the identification of critical performance measures are considered. Third, different types of industrial benchmarking are identified and defined. Fourth, publicly accessible databases are critically reviewed against the requirements of industrial benchmarking. Fifth, the results of the critical review are presented in tabular form. Sixth, conclusions are drawn as how best to proceed with a benchmarking project at the present time. Seventh, recommendations for how best to address the issues raised by the critical review are presented.     

基于差距分析的绿色供应链标杆测评

绿色供应链从战略高度对组织的实践活动进行环境管理,通过提高资源利用率,消除废弃物,减少业务活动对环境的影响,可以赢得企业在革新和经营上的竞争优势.文章对比了反向供应链与绿色供应链在功能上的不同,采用基于差距分析法的标杆测评,评估了供应链的绿色度,绘制的蛛网图可反映出当前供应链与目标供应链之间的绿色度差距.企业可以据此来优化供应链的业务流程,合理配置资源.     

Robust gate assignment procedures from an airport management perspective

The assignment of aircraft arriving out of schedule to available stands at the terminal is a major issue with feasible solutions when stands are placed in the same zone, but it is very difficult to solve when candidate alternative stands are placed in different zones due to passenger movement through the terminal. In order to tackle arrival delays while preserving quality factor services to passengers and protecting turnaround aircraft times, most airports have modified their infrastructure by increasing the number of stands at the terminal. In this paper a simulation-based experimental approach that evaluates the minimum amount of stands at the terminal necessary to cope with arrival/departure pattern traffic under a time delay limit is presented. Emergent dynamics are analyzed when the number of stands is increased and a causal model to evaluate shortages and benefits of different policies and strategies for gate assignment to mitigate undesirable consequences is introduced.     

Association of DEA super-efficiency estimates with financial ratios: Investigating the case for Chinese banks

The great majority of applications of the popular frontier technique data envelopment analysis (DEA) do not test for the association of efficiency estimates with key performance indicators used by industry observers. Nevertheless, identifying efficiency estimates’ associations with commonly accepted financial measures of performance could guide benchmarking activities, pricing decisions, and regulatory monitoring. Thus, the current paper investigates to what extent bank DEA super-efficiency estimates are associated with key financial ratios. A low correlation may present an opportunity to address inefficiencies that were not obvious in financial ratio analysis, thus enabling an update of inferences drawn from ratios. Regressing ratios on efficiency estimates may also help predict financial ratios. Where an input–output specification is comprised of key financial ratios, DEA can also be used to objectively identify benchmarks for ratio analysis based on actual observed data collected from peers. Nine super-efficiency DEA formulations across two profitability models are systematically tested. The slacks-based measure of DEA with a parsimonious profitability efficiency model emerges as the most significant combination explaining the variation in the two industry ratios, post-tax profit/average total assets and return on average equity.     

An Overview of a Multimedia Benchmarking Analysis for Three Risk Assessment Models: RESRAD, MMSOILS, and MEPAS

Multimedia modelers from the United States Environmental Protection Agency (EPA) and the United States Department of Energy (DOE) collaborated to conduct a detailed and quantitative benchmarking analysis of three multimedia models. The three models—RESRAD (DOE), MMSOILS (EPA), and MEPAS (DOE)—represent analytically-based tools that are used by the respective agencies for performing human exposure and health risk assessments. The study is performed by individuals who participate directly in the ongoing design, development, and application of the models. Model form and function are compared by applying the models to a series of hypothetical problems, first isolating individual modules (e.g., atmospheric, surface water, groundwater) and then simulating multimedia-based risk resulting from contaminant release from a single source to multiple environmental media. Study results show that the models differ with respect to environmental processes included (i.e., model features) and the mathematical formulation and assumptions related to the implementation of solutions. Depending on the application, numerical estimates resulting from the models may vary over several orders-of-magnitude. On the other hand, two or more differences may offset each other such that model predictions are virtually equal. The conclusion from these results is that multimedia models are complex due to the integration of the many components of a risk assessment and this complexity must be fully appreciated during each step of the modeling process (i.e., model selection, problem conceptualization, model application, and interpretation of results).     

Generalized symmetric weight assignment technique: Incorporating managerial preferences in data envelopment analysis using a penalty function

In this paper, we generalize the Symmetric Weight Assignment Technique to incorporate all managerial preferences in Data Envelopment Analysis (DEA). This is a method that promotes managerial preferences, while not changing the feasibility region of the nominal DEA model, unlike standard techniques such as cone ratio and assurance region that potentially yield infeasible problems. We discuss how this generalization is motivated by a real word problem where the decision maker's preference is not precisely known. We also discuss how we are using our generalization in solving a workforce allocation problem for the United States Navy.     

Common benchmarking and ranking of units with DEA

This paper develops a common framework for benchmarking and ranking units with DEA. In many DEA applications, decision making units (DMUs) experience similar circumstances, so benchmarking analyses in those situations should identify common best practices in their management plans. We propose a DEA-based approach for the benchmarking to be used when there is no need (nor wish) to allow for individual circumstances of the DMUs. This approach identifies a common best practice frontier as the facet of the DEA efficient frontier spanned by the technically efficient DMUs in a common reference group. The common reference group is selected as that which provides the closest targets. A model is developed which allows us to deal not only with the setting of targets but also with the measurement of efficiency, because we can define efficiency scores of the DMUs by using the common set of weights (CSW) it provides. Since these weights are common to all the DMUs, the resulting efficiency scores can be used to derive a ranking of units. We discuss the existence of alternative optimal solutions for the CSW and find the range of possible rankings for each DMU which would result from considering all these alternate optima. These ranking ranges allow us to gain insight into the robustness of the rankings.     

How to better identify the true managerial performance: State of the art using DEA

Our motivation is to detail a potential improvement on the three-stage analysis published by Fried et al. [Accounting for environmental effects and statistical noise in data envelopment analysis. Journal of Productivity Analysis 2002;17:157–74] that can distinguish true performers from those that may be advantaged by favourable environments or measurement errors. The method starts with data envelopment analysis (DEA), and continues with stochastic frontier analysis to explain the variation in organisational performance in terms of the operating environment, statistical noise and managerial efficiency. It concludes with DEA again using adjusted data to reveal a measure of performance based on management efficiency only. Our proposed contributions include (i) a comprehensive approach where total input and output slacks are identified simultaneously for non-radial inefficiencies before levelling the playing field, (ii) identifying percent adjustments attributable to the environment and statistical noise, and (iii) using a fully units-invariant DEA model.     

Risk management and managerial efficiency in Chinese banks: A network DEA framework

Risk management in Chinese banks has traditionally been the Cinderella of its internal functions. Political stricture and developmental imperative have often overridden standard practice of risk management resulting in large non-performing loan (NPL) ratios. The training and practice of risk managers remain second class compared with foreign banks operating in China. This paper surveys Chinese bank risk managers and constructs metrics of risk management practice and risk management organisation. The metrics are used as intermediate inputs in a Network DEA framework to produce a measure of income efficiency. A statistical test is carried out to assess the importance of the risk metrics in evaluating bank income efficiency.     

A flexible model for the pricing of perishable assets

We present a flexible and versatile model which addresses the problem of assigning optimal prices to assets whose value becomes zero after a fixed expiry date. (Such assets include the important example of seats on airline flights.) Our model is broad in scope, in particular encompassing the ability to deal with arrivals of customers in groups. It is highly adaptable and can be adjusted to deal with a very extensive set of circumstances.Our approach to the problem is based on elementary and intuitively appealing ideas. We model the arrival of customers (or groups of customers) according to an inhomogeneous Poisson process. We incorporate into the model time dependent price sensitivity (which may also be described as “time dependent elasticity of demand”). In this setting the solution to the asset pricing problem is achieved by setting up coupled systems of differential equations which are readily amenable to numerical solution via (for instance) a vectorised Runge-Kutta procedure. An attractive feature of our approach is that it unifies the treatment of discrete and continuous prices for the assets.     

Evaluating the dynamic performances of business groups from the carry-over perspective: A case study of Taiwan׳s semiconductor industry

This study evaluates the dynamic operating performances of Taiwan׳s semiconductor industry from 2006 to 2012 by using the dynamic DEA, a technique based on the perspective of inter-period carry-over in accounting. The industry׳s various characteristics are investigated to determine their relationships to the semiconductor industry׳s efficiency. The following empirical results are found: companies within a business group are more efficient on average than ones under a non-business group; while integrated circuit (IC) design companies are more efficient than others, companies with high level scopes generally operate better than those with low level scopes. The potential applications and strengths of using DEA to assess the semiconductor industry are also highlighted.     

Incorporating quality into data envelopment analysis of nursing home performance: A case study

When using data envelopment analysis (DEA) as a benchmarking technique for nursing homes, it is essential to include measures of the quality of care. We survey applications where quality has been incorporated into DEA models and consider the concerns that arise when the results show that quality measures have been effectively ignored. Three modeling techniques are identified that address these concerns. Each of these techniques requires some input from management as to the proper emphasis to be placed on the quality aspect of performance. We report the results of a case study in which we apply these techniques to a DEA model of nursing home performance. We examine in depth not only the resulting efficiency scores, but also the benchmark sets and the weights given to the input and output measures. We find that two of the techniques are effective in insuring that DEA results discriminate between high and low quality performance.     

Exploring the factors of achieving supply chain excellence: a New Zealand perspective

The objective of the paper is to analyse supply chain (SC) excellence from the practitioners’ perspective in the New Zealand (NZ) context. The extant literature does not focus on achieving this excellence with the contemporary factors of this dynamic field. The study is an exploratory one using the structured Delphi technique to understand the ground level experience of the practitioners on the constructs of supply chain excellence. In this paper, we have administered three poll rounds to gather insights from the SC practitioners on the various enablers and barriers that impact supply chain excellence in the NZ environment. Seven supply chain management constructs are explored for their relationships with barriers and enablers in achieving the excellence in supply chains. The outcomes reveal that the people relevant issues (i.e. SCM knowledge education and supply chain culture) are more significant than other technical and operational factors. However, the influences from specific NZ business environment issues become far less important than a few years ago. This paper seeks the integration of practice-based views with the academic supply chain literature and original contributions from the NZ context.     

Personal values and managerial decision-making: Evidence from a developing economy

This study attempts to investigate to what extent the personal values of managers from a developing economy affect their managerial decisions. Previous studies have suggested the relationship between values and managerial behavior. The purpose of the study was to examine this relationship in the context of a developing, less industrialized economy, identify peculiar issues given the context of the study, and discuss the managerial implications of the findings. The subjects studied were Nigerian managers, using the value survey designed by England. Results showed that values do affect behavior, but more significantly, that the cultural values of the managers play a significant role in their managerial decisions.     

Health Effects Caused by Primary Fine Particulate Matter (PM2.5) Emitted from Buses in the Helsinki Metropolitan Area, Finland

Fine particle (PM(2.5)) emissions from traffic have been associated with premature mortality. The current work compares PM(2.5)-induced mortality in alternative public bus transportation strategies as being considered by the Helsinki Metropolitan Area Council, Finland. The current bus fleet and transportation volume is compared to four alternative hypothetical bus fleet strategies for the year 2020: (1) the current bus fleet for 2020 traffic volume, (2) modern diesel buses without particle traps, (3) diesel buses with particle traps, and (4) buses using natural gas engines. The average population PM(2.5) exposure level attributable to the bus emissions was determined for the 1996-1997 situation using PM(2.5) exposure measurements including elemental composition from the EXPOLIS-Helsinki study and similar element-based source apportionment of ambient PM(2.5) concentrations observed in the ULTRA study. Average population exposure to particles originating from the bus traffic in the year 2020 is assumed to be proportional to the bus emissions in each strategy. Associated mortality was calculated using dose-response relationships from two large cohort studies on PM(2.5) mortality from the United States. Estimated number of deaths per year (90% confidence intervals in parenthesis) associated with primary PM(2.5) emissions from buses in Helsinki Metropolitan Area in 2020 were 18 (0-55), 9 (0-27), 4 (0-14), and 3 (0-8) for the strategies 1-4, respectively. The relative differences in the associated mortalities for the alternative strategies are substantial, but the number of deaths in the lowest alternative, the gas buses, is only marginally lower than what would be achieved by diesel engines equipped with particle trap technology. The dose-response relationship and the emission factors were identified as the main sources of uncertainty in the model.     

Exploring the efficiency of Mexican universities: Integrating Data Envelopment Analysis and Multidimensional Scaling

National policy initiatives require the expenditure of large amounts of resources over several years. It is common for these initiatives to generate large amounts of data that are needed in order to assess their success. Educational policies are an obvious example. Here we concentrate on Mexico׳s “Educational Modernisation Programme” and try to see how this plan has affected efficiency in teaching and research at Mexico׳s universities. We use a combined approach that includes traditional ratios together with Data Envelopment Analysis models. This mixture allows us to assess changes in efficiency at each individual university and explore if these changes are related to teaching, to research, or to both. Using official statistics for 55 universities over a six year period (2007–2012), we have generated 12 ratios and estimated 21 DEA models under different definitions of efficiency. In order to make the results of the analysis accessible to the non-specialist we use models that visualise the main characteristics of the data, in particular scaling models of multivariate statistical analysis. Scaling models highlight the important aspects of the information contained in the data. Because the data is three-way (variables, universities, and years) we have chosen the Individual Differences Scaling model of Carroll and Chang. We complete the paper with a discussion of efficiency evolution in three universities.     

The interface of the top management team and the board: A dynamic managerial capabilities perspective

Although top management teams use their human capital, social capital, and cognition (i.e., dynamic managerial capabilities) to drive strategic change in their firms, faultlines within these teams may dampen the strategic change that they produce. While boards can enable but also restrict these change efforts, we know little about how precisely a board's monitoring and advice-giving condition the impact of the top management team's dynamic managerial capabilities on strategic change. We clarify how intense monitoring and advice-giving affect strategic change when faultlines between the top management team's and board's dynamic managerial capabilities are more or less salient. We explain that intense monitoring further stifles both the breadth and speed of strategic change that can be accomplished, and that this is more pronounced when the faultlines between the two bodies are strong. Furthermore, we outline that intensive advice-giving can be beneficial in improving the breadth of strategic change, but more so when these faultlines are weak and less so when they are strong. Notably we illuminate that the reverse happens in terms of speed of strategic change: intensive advice-giving can be detrimental engendering a further dampening of strategic change speed which is more pronounced when these faultlines are strong but less when they are weak.