Two-stage network DEA: Who is the leader?

Haitao Li, Chialin Chen, Wade D. Cook, Jinlong Zhang and Joe Zhu

Omega, 2018, vol. 74, issue C, 15-19

Abstract: The non-cooperative two-stage network DEA approach requires the assumption as to whether the first or second stage is the leader or follower. In many real-world situations such as evaluating sustainable design performances, however, information about the leader (dominant) stage is often unavailable as a firm׳s internal decision process may not be observable for outsiders. In the current study, we extend the work by Despotis, Sotiros and Koronakos (2016) [9] to generate a Pareto solution and identify the leader stage. We show that the optimal solution for the extended model is also a leader-follower solution and that the global optimal solution can be identified by comparing the efficiency score difference for the upper and lower bounds of the two stages. We also perform empirical tests with data from the insurance industry and automobile industry to demonstrate the applications of the proposed model in identifying the leader stage in two-stage DEA. It is shown that, in the absence of a priori knowledge, our analytical results can be used to uncover the dominant decision stage in a two-stage decision making process with interesting implications in performance evaluation in the two selected industries.

Keywords: Data envelopment analysis (DEA); Efficiency; Intermediate measure; Two-stage (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S030504831630651X
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:74:y:2018:i:c:p:15-19

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.2016.12.009

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 ().