A rational road to effectiveness attainment

Zervopoulos, Panagiotis and Vargas, Francisco and Cheng, Gang (2011): A rational road to effectiveness attainment.

Abstract

Operational effectiveness goes beyond efficiency while it incorporates exogenous variables, non-controllable by the service units. Effectiveness is a fundamental driver for the success of an operational unit within a competitive environment. In this context, we seek to identify the active units that meet both the high or technical efficiency and the perceived high quality criteria. We also aim to develop a roadmap for effectiveness for every operational unit and we consider the feasibility of the results produced by the effectiveness assessment process in the short run. The target values uncovered by comparative optimization techniques (e.g. Data Envelopment Analysis) for efficiency and effectiveness measurement generally have limited managerial implications due to production constraints, available resources, and legal status. This paper introduces a modified Quality-driven – Efficiency-adjusted Data Envelopment Analysis (MQE-DEA) model to assess effectiveness and provide a step-by-step path to achieve high quality and high efficiency in every operational unit under evaluation. The MQE-DEA model has particular applicability to the effectiveness assessment of homogenous service units in which an inverse relationship underlies the two dimensions of effectiveness embraced in this study (e.g. bank branches, restaurant chain stores, governmental one-stop-shops).

• Item Type: MPRA Paper
• Language: English
• Keywords: Data Envelopment Analysis (DEA); Context-dependent DEA; Effectiveness; Efficiency; Perceived Quality
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B21 - Microeconomics; C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis

References

Banker, R., Charnes, A. and Cooper, W.W. (1984) ‘Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis’, Management Science, 30 (9), 1078-1092.

Bessent, A., Bessent, W., Elam, J. and Long, D. (1984) ‘Educational Productivity Council Employs Management Science Methods to Improve Educational Quality’, Interfaces, 14 (6).

Brissimis, S.N. and Zervopoulos, P. (2011) ‘Developing a Step-by-Step Effectiveness Assessment Model for Customer-Oriented Service Organizations’, MPRA Paper 30765, University Library of Munich.

Charnes, A., Cooper, W.W. and Rhodes, E. (1978) Measuring Efficiency of Decision Making Units, European Journal of Operational Research, 2, 429-444.

Chilingerian, J. and Sherman, D. (1990) ‘Managing Physician Efficient and Effectiveness in Providing Hospital Services’, Health Service Management Research, 3 (1), 3-15.

De Bruijn, H. (2007) Managing Performance in the Public Sector (2nd ed.). Routledge, Oxon, UK.

Paradi, J., Vela, S. and Yang, Z. (2004) Assessing Bank and Bank Branch Performance: Modeling Considerations and Approaches, cited in Cooper, W., Seiford, L. and Zhu, J., Handbook on Data Envelopment Analysis. Kluwer Academic Publishers, London, UK, 349-400.

Seiford, L.M. and Zhu, J. (2003) ‘Context-Dependent Data Envelopment Analysis: Measuring Attractiveness and Progress’, OMEGA, 31 (5), 397-480.

Sherman, D. and Zhu, J. (2006) ‘Benchmarking with Quality-Adjusted DEA (Q-DEA) to Seek Lower-Cost High-Quality Service: Evidence from a U.S. Bank Application’, Annals of Operations Research, 145, 301-319.

Soteriou, A. and Zenios, S.A. (1999) ‘Operations, Quality and Profitability in the Provision of Banking Services’, Management Science, 45 (9), 1221-1238.

Zervopoulos, P. and Palaskas, T., forthcoming. ‘Applying Quality-Driven, Efficiency-Adjusted DEA (QE-DEA) in the Pursuit of High-Efficiency – High-Quality Service Units: An Input-Oriented Approach’. IMA Journal of Management Mathematics (DEA special issue)