scholarly journals Finance Function Performance Measurement-A Data Envelopment Analysis Approach

2018 ◽  
Vol 9 (6) ◽  
pp. 109-121
Author(s):  
Stephen Migiro ◽  
Patricia Shewell
Keyword(s):  
Data Envelopment Analysis ◽  
Value Chain ◽  
Critical Evaluation ◽  
Data Envelopment ◽  
Company Performance ◽  
Support Unit ◽  
Performance Metric ◽  
Business Support ◽  
Finance Function ◽  
A Performance

 The practice of measuring performance of the finance function as a business support unit is not widespread. This study assessed the importance of measuring finance function performance, by ascertaining whether such measurement facilitates identification of the relative efficiency of business finance functions, and by establishing its impact, if any, on overall company performance. Focussing on a sample of companies in the South African Freight Forwarding industry, a performance metric was developed and implemented to measure finance function performance. Relative finance function efficiency was then evaluated using inputorientated data envelopment analysis (DEA) to identify ‘best in class’ performance and to benchmark participants’ performance. Further, value chain DEA (VC-DEA) was applied to evaluate finance function efficiency simultaneously with overall company efficiency. Results show that implementation of the performance metric together with DEA facilitated the benchmarking of the finance functions of the sample group and the establishment of improvement targets for the finance functions determined as inefficient. In addition, a link between overall company performance and finance function performance in terms of inputs was confirmed; however, this link was not conclusively established as regards finance function performance in terms of outputs. The contribution of the study includes confirmation that implementation of the performance metric together with DEA facilitates the critical evaluation of finance function performance, thus establishing the importance of measuring the performance of the finance functions. In addition, incorporating the use of DEA in a performance framework for the finance function as a business support unit has extended the range of applications of DEA.  

scholarly journals THE IMPACT OF INTERNATIONALIZATION AND DIVERSIFICATION ON CONSTRUCTION INDUSTRY PERFORMANCE

2016 ◽  
Vol 20 (2) ◽  
pp. 172-183 ◽  
Author(s):  
Isabel M. HORTA ◽  
Magdalena KAPELKO ◽  
Alfons OUDE LANSINK ◽  
Ana S. CAMANHO
Keyword(s):  
Data Envelopment Analysis ◽  
Financial Performance ◽  
Construction Industry ◽  
Positive Impact ◽  
Data Envelopment ◽  
Company Performance ◽  
Truncated Regression ◽  
Time Data ◽  
Analysis Technique ◽  
The Impact

This paper investigates the impact of internationalization and diversification strategies on the financial performance of construction industry companies. The results obtained can guide the design of strategies to pursue company growth and achieve competitive advantage. The evaluation of companies’ performance is based on the use of the Data Envelopment Analysis technique to aggregate financial indicators using optimized weights. The impact of internationalization and diversification on company performance is explored using truncated regression, controlling for the effect of contextual factors such as company age, size and time. Data Envelopment Analysis and truncated regression were complemented with bootstrapping to ensure the robustness of the results obtained. The activity of Portuguese and Spanish contractors in the period 2002 to 2011 is used as case study. The empirical results show that internationalization has a positive impact on financial performance, although this effect is only statistically significant for Spanish contractors. Diversification has a nonlinear relationship with performance, benefiting companies with either a small number of core activities or companies with a broad scope of activities.

The Technical Efficiency of Engineering Industry Cluster at Hosur

2019 ◽  
Vol 46 (2) ◽  
pp. 100-116
Author(s):  
Ethirajan Bhaskaran
Keyword(s):  
Sustainable Development ◽  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Value Chain ◽  
Value Added ◽  
Engineering Industry ◽  
Export Market ◽  
Data Envelopment ◽  
Inclusive Growth ◽  
Value Chain Analysis

For inclusive growth and sustainable development Engineering Industries (EIs) in Hosur have adopted the Cluster Development Approach (CDA). The objective is to study the value chain analysis, correlation analysis and data envelopment analysis by finding Technical Efficiency (Ø), Peer Weights (li), Input Slacks (S-) and Output Slacks (S+) of 50 EIs. The methodology adopted is data envelopment analysis of output-oriented Banker–Charnes–Cooper Model by taking the number of employment, plant and machinery as input and Gross Value Added (GVA) as output. The non-zero li’s represents the weights for efficient clusters. The S > 0 obtained reveals the excess machinery or number of employment (S-) and shortage in GVA (S+). To conclude, the variables are highly correlated, and for inclusive growth and sustainable development, the inefficient EI should increase their GVA or decrease the employment or machinery. Moreover, for sustainable development, the EI should strengthen infrastructure interrelationships, technology interrelationships, procurement interrelationships, production interrelationships and marketing interrelationships to decrease costs and to increase productivity and efficiency to compete in the indigenous and export market.

scholarly journals Data envelopment analysis in performance measurement: a critical analysis of the literature

2016 ◽  
Vol 14 (3) ◽  
pp. 705-713 ◽  
Author(s):  
Patricia Shewell ◽  
Stephen Migiro
Keyword(s):  
Decision Making ◽  
Data Envelopment Analysis ◽  
Performance Measurement ◽  
Measurement Data ◽  
Jel Classification ◽  
Data Envelopment ◽  
Programming Tool ◽  
Intermediate Outcomes ◽  
Business Support ◽  
Decision Making Units

This study examines the benefits of data envelopment analysis (DEA) in evaluating the performance of decision making units (DMUs). DEA is a mathematical programming tool applied in performance measurement. The problem identified is establishing business support units as value adding business units. A case is made for applying DEA when evaluating the performance of such business support units. To this end, a literature review of the results of applications of DEA to the evaluation of information technology and purchasing supply chain management functions was conducted. The findings indicate the benefits of DEA are that the method identifies efficient performers in a given population and, therefore, allows for benchmarking against the ’best in class’ performer. This as opposed to more commonly used parametric methods, such as regression analysis, which result in a comparator that represents the average performance for a given population, therefore, allowing only for measurement against the average. In addition, the findings indicate that in respect of business support units, the DEA methodology allows for the incorporation of intermediate outcomes, which facilitates the measurement of the contribution of these units to overall company performance. Although the DEA methodology has been widely applied, it is still not as well known or generally applied as the more common approaches. The recommendations made in this paper will be beneficial in bringing DEA to the attention of decision-makers. The recommendations will also raise awareness of the potential benefits to be realised when applying the method in developing performance measurement frameworks for business support units. Keywords: performance measurement, data envelopment analysis, decision making units, business support units. JEL Classification: C61, L25

Sign in / Sign up

Export Citation Format

Share Document