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X-Efficiency of Innovation Processes: Concept and Evaluation based on Data Envelopment Analysis

Herimalala, Rahobisoa and Gaussens, Olivier (2012): X-Efficiency of Innovation Processes: Concept and Evaluation based on Data Envelopment Analysis.

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Abstract

This paper is part of an application-oriented research project to assess innovation processes in Small and Medium-sized Enterprises (SMEs). It investigates the X-(in)efficiency of these innovation processes. We have adopted the following approach: (1) we provide both a concept of X-(in)efficiency and a model of innovation processes for each SME; (2) from this model we evaluate both the inputs and the outputs of the innovation processes, as well as the X-(in)efficiency of these processes using a variant of the Data Envelopment Analysis (DEA) model; (3) finally, we characterize X-inefficiency by using techniques of exploratory analysis derived from an empirical analysis. Our approach has been applied to regional SMEs in Normandy (France) with a representative random sample of 80 innovative businesses. The results show the existence of X-inefficiency in the innovation processes of SMEs in 71% of cases. This X-inefficiency arises primarily from the difficulties that entrepreneurs face in implementing the interacting rules and standards of exploitation and exploration activities.

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