EconPapers    
Economics at your fingertips  
 

Benchmarking with data envelopment analysis: An agency perspective

Qingxian An, Xiangyang Tao and Beibei Xiong

Omega, 2021, vol. 101, issue C

Abstract: Most studies on benchmarking in data envelopment analysis (DEA) focus on setting targets on the “best practice frontier”, few of them pay attention to motivating decision-making units (DMUs) to realize these benchmarks. Moreover, such “DEA-based best practice” may not be the actual “best practice” of evaluated DMUs. In this paper, subordinates’ strategy behaviors are first considered to realize the actual “best practice” during the benchmarking process, and agency theory is employed to reveal subordinates’ strategy behaviors. A novel incentive game with yardstick competition theory is established. Together with the ex-post targets (“DEA-based best practice”) and the actual production, we propose a reimbursement scheme to motivate DMUs to realize their “best practice”. In addition, we prove that DMUs’ best responses to our incentive game are just to realize their “best practice” when the reimbursement scheme satisfies strong monotonicity in outputs, and these responses constitute the strong Nash equilibrium of our incentive game. Finally, several DEA models are provided to hold the reimbursement scheme's strong monotonicity in outputs and minimize the compensations paid to all DMUs.

Keywords: Data envelopment analysis; Benchmarking; Agency theory; Yardstick competition theory; Nash equilibrium (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305048319303299
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:101:y:2021:i:c:s0305048319303299

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.omega.2020.102235

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-03-09
Handle: RePEc:eee:jomega:v:101:y:2021:i:c:s0305048319303299