Worst-Practice Benchmarking with Inverted VEA

Giannis Karagiannis, Stavros Kourtzidis, Panagiotis Ravanos

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Abstract

In this paper we use Value Efficiency Analysis to introduce managerial preferences in the assessment of worst-practices of Decision Making Units (DMUs). The method involves a Decision Maker (DM) who identifies a specific DMU residing on the DEA worst-practice frontier. The DM’s choice defines a range of input-output mixes that is the least preferred according to managerial preferences. The results of the associated linear program, referred to as Inverted VEA, are higher or equal to the respective Inverted DEA scores. Higher (lower) differences between Inverted DEA and Inverted VEA scores highlight the utilization of input-output mixes that lie farther (closer) to the un-preferred range of mixes. This helps the DM identify DMUs which should be marked for closer monitoring and inspection or put through a restructuring process. We also provide an empirical application of the Inverted VEA model concerning the performance of 97 European banks for the year 2014.
Original languageEnglish
Publication statusPublished - 2020
Event11th North American Productivity Workshop (NAPW XI Virtual) - University of Miami Business School (Virtual), Miami, United States
Duration: 8 Jun 202012 Jun 2020
https://www.bus.miami.edu/thought-leadership/business-conferences/napw/

Conference

Conference11th North American Productivity Workshop (NAPW XI Virtual)
CountryUnited States
CityMiami
Period8/06/2012/06/20
Internet address

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