Business Efficiency Evaluation of Machine Tool Manufacturers by Data Envelopment Analysis (DEA): A Case Study of Taiwanese Listed Machine Tool Companies

Jui-Lung Chen

International Business Research, 2021, vol. 14, issue 12, 125

Abstract: Data envelopment analysis (DEA) is widely used to measure the business efficiency of many industries, among which the Taiwanese machine tool industry is well-known for its complete supply-chain system. Relying on DEA and Malmquist Productivity Index to analyze the business efficiency of Taiwanese listed machine tool manufacturers from 2018 to 2019, this study compared the changes in their business efficiencies and productivities. According to the five change indicators of Malmquist, only the technical efficiency, pure technical efficiency, and scale efficiency of the overall industry posted some growth during the research period, showing that the whole industry is actively improving its technical efficiency and striving to achieve the scale efficiency. However, technical change and total factor productivity declined slightly, indicating that the industry still makes more technical progress. Thus, companies should adjust their inputs and outputs to improve the production boundary for technical progress. The purposes of this study are to identify the success factors of the excellent performance of manufacturers and the benchmarking indicators of the decision-making unit on the efficient frontier results to provide some references for formulating future business strategies and direction.

Date: 2021
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