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Banker, R. D., Chang, H., Janakiraman, S. N., & Konstans, C. (2004). A balanced scorecard analysis of performance metrics. European Journal of Operational Research, 154(2), 423–436.
Abstract: Many organizations have invested substantial resources in recent years to implement a balanced scorecard of performance metrics. From a historical focus exclusively on financial metrics of performance, the emphasis has shifted recently to a consideration of a portfolio of nonfinancial performance metrics related to customers, business process and technology. In this paper, we investigate the best practice frontier relationship between a financial performance metric (return on assets – ROA) and three nonfinancial performance metrics (number of access lines per employee, percentage of digital access lines and percentage of business access lines) reported and used in the US telecommunications industry. Analyzing detailed data from over fifty local exchange carriers for a period of five years (from 1993 to 1997), we find that managers must tradeoff contemporaneous ROA when increasing the percentage of business access lines. We also find that managers do not have to trade off ROA with the other two nonfinancial performance metrics because these metrics are contemporaneously congruent.
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Banker, R. D., Chang, H., & Cooper, W. W. (2004). A simulation study of DEA and parametric frontier models in the presence of heteroscedasticity. European Journal of Operational Research, 153(3), 624–640.
Abstract: This paper studies the effects of heteroscedasticity on the following five types of estimators: (1) Data Envelopment Analysis (DEA) per se as well as DEA joined to regression forms, (2) Corrected Ordinary Least Squares based on maximum residual (COLS-R), (3) Corrected Ordinary Least Squares based on moments of residuals (COLS-M), (4) Maximum Likelihood Estimation (MLE), and (5) Goal Programming with one-sided deviations as in Aigner and Chu (AandC). This is accomplished with simulated data in an experiment designed around a single output-single input production function which is piecewise Cobb-Douglas. Robustness of results is confirmed with another experiment employing a shifted smooth Cobb-Douglas production function. The model has a composed error term consisting of two components – one for measurement error and the other for inefficiency. The simulation results indicate that heteroscedasticity does not have an adverse impact on DEA-based estimators and that DEA-based estimators are the best estimators of efficient output even under heteroscedasticity.
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Banker, R. D., & Chang, H. (1995). A simulation study of hypothesis tests for differences in efficiencies. International Journal of Production Economics, 39(1-2), 37–54.
Abstract: This paper reports the results of a simulation study to evaluate the performance of Banker’s (1993) new asymptotic DEA tests for inefficiency differences between two groups. Their performance is evaluated relative to the performance of conventional parametric corrected ordinary least squares (COLS) tests and the Welch and Mann-Whitney tests used earlier in the DEA literature. We consider five different underlying production functions, four different inefficiency distributions and four different sample sizes in our study. Our results include the following:
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Banker, R. D., Chang, H. - H., & Cooper, W. W. (1996). Chapter 11: Simulation studies of efficiency, returns to scale and misspecification with nonlinear functions in DEA. Annals of Operations Research, 66(4), 233–253.
Abstract: Using statistically designed experiments, 12,500 observations are generated from a 4-pieced Cobb-Douglas function exhibiting increasing and decreasing returns to scale in its different pieces. Performances of DEA and frontier regressions represented by COLS (Corrected Ordinary Least Squares) are compared at sample sizes ofn=50, 100, 150 and 200. Statistical consistency is exhibited, with performances improving as sample sizes increase. Both DEA and COLS generally give good results at all sample sizes. In evaluating efficiency, DEA generally shows superior performance, with BCC models being best (except at corner points), followed by the CCR model and then by COLS, with log-linear regressions performing better than their translog counterparts at almost all sample sizes. Because of the need to consider locally varying behavior, only the CCR and translog models are used for returns to scale, with CCR being the better performer. An additional set of 7,500 observations were generated under conditions that made it possible to compare efficiency evaluations in the presence of collinearity and with model misspecification in the form of added and omitted variables. Results were similar to the larger experiment: the BCC model is the best performer. However, COLS exhibited surprisingly good performances –- which suggests that COLS may have previously unidentified robustness properties –- while the CCR model is the poorest performer when one of the variables used to generate the observations is omitted.
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Chang, H. - H. (1998). Determinants of hospital efficiency: the case of central government-owned hospitals in Taiwan. Omega, 26(2), 307–317.
Abstract: This paper combines data envelopment analysis (DEA) with regression analysis to evaluate the previous termefficiencynext term of previous termcentralnext term government-owned hospitals in Taiwan over the five fiscal years between 1990 and 1994. previous termEfficiencynext term is first estimated using DEA with the choice of inputs and outputs being specific to hospital operations. A multiple regression model is then employed in which the previous termefficiencynext term score obtained from the DEA computations is used as the dependent variable, and a number of hospital operating characteristics are chosen as the independent variables. The results indicate that the scope of services and proportion of retired veteran patients are negatively and significantly associated with previous termefficiencynext term, whereas occupancy is positively and significantly associated with previous termefficiencynext term. Furthermore, the results also show that hospital previous termefficiencynext term has improved over time during the periods studied and, given the contemporary focus on concerns regarding previous termefficiencynext term in health care, the results provide an indication that inter-temporal previous termefficiency gains are attainable in the health-care sector in anticipation of the implementation of the National Health Insurance Programme (Act).
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Banker, R. D., Chang, H., & Cooper, W. W. (1996). Equivalence and Implementation of Alternative Methods for Determining Returns to Scale in Data Envelopment Analysis. European Journal of Operational Research, 89(3), 473–481.
Abstract: his paper discusses alternative methods for determining returns to scale in DEA. The methods for estimating returns to scale in DEA, as developed by Banker (1984), Banker, Charnes and Cooper (1984) and Banker and Thrall (1992), are proved to be conceptually equivalent to the two-stage methods of Färe, Grosskopf and Lovell (1985) when their assumptions apply. Here the emphasis is on the CCR model of DEA and very simple methods are introduced for determining returns to scale locally with this model by reference to Banker’s concept of Most Productive Scale Size.
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Banker, R. D., Chang, H., & Natarajan, R. (2007). Estimating DEA technical and allocative inefficiency using aggregate cost or revenue data. Journal of Productivity Analysis, 27(2), 115–121.
Abstract: In this paper, we address the question of Data Envelopment Analysis (DEA) evaluation of efficiency when aggregate cost or revenue data must be used. We show that the DEA technical inefficiency measure using total revenues as the single output variable or total costs as the single input variable equals the aggregate technical and allocative inefficiency. We employ this result to estimate allocative inefficiency and construct statistical tests of the null hypothesis of no allocative inefficiency analogous to those of the null hypothesis of no scale inefficiency. We illustrate our method using revenue and personnel data for the top U.S. public accounting firms over 1995-1998. Our empirical results indicate the existence of statistically significant allocative inefficiency in the public accounting industry.
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Banker, R. D., Chang, H., & Kemerer, C. F. (1994). Evidence on economies of scale in software development. Information and Software Technology, 36(5), 275–282.
Abstract: Researchers and practitioners have found it useful for cost estimation and productivity evaluation purposes to think of software development as an economic production process, whereby inputs, most notably the effort of systems development professionals, are converted into outputs (systems deliverables), often measured as the size of the delivered system. One central issue in developing such models is how to describe the production relationship between the inputs and outputs. In particular, there has been much discussion about the existence of either increasing or decreasing returns to scale. The presence or absence of scale economies at a given size are important to commercial practice in that they influence productivity. A project manager can use this knowledge to scale future projects so as to maximize the productivity of software development effort. The question of whether the software development production process should be modelled with a non-linear model is the subject of some recent controversy. This paper examines the issue of non-linearities through the analysis of 11 datasets using, in addition to standard parametric tests, new statistical tests with the non-parametric Data Envelopment Analysis (DEA) methodology. Results of this analysis support the hypothesis of significant non-linearities, and the existence of both economies and diseconomies of scale in software development.
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Chang, H., Chang, W. - J., Das, S., & Li, S. - H. (2004). Health care regulation and the operating efficiency of hospitals: Evidence from Taiwan. Journal of Accounting and Public Policy, 23(6), 483–510.
Abstract: Using data from the Annual Survey of Hospitals compiled by the Department of Health in Taiwan for years 1994 through 1997, we employed Data Envelopment Analysis (DEA) to evaluate the impact of a National Health Insurance (NHI) Program on the operating efficiency of district hospitals in Taiwan. We find that, on average, efficiency of district hospitals in Taiwan decreased following the implementation of the NHI Program. Our results are robust to the inclusion of control variables that have been shown to affect hospital operating performance in prior research, and alternative efficiency measurements.
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Chang, H., Cheng, M. - A., & Das, S. (2004). Hospital Ownership and Operating Efficiency: Evidence from Taiwan. European Journal of Operational Research, 159(2), 513–527.
Abstract: This paper employs the non-parametric data envelopment analysis to document empirical evidence on the relationship between hospital ownership and operating efficiency using annual cross-sectional data on Taiwan hospitals over the period 1996-1997. Hospitals within the same category are compared on the basis of their relative efficiency. Conventional and data-envelopment-analysis-based test procedures are employed to test for efficiency differences between public and private hospitals. The statistical test results indicate that, in general, public hospitals are less efficient than private hospitals for both regional and district hospitals. Specifically, we provide evidence that private hospitals without intensive-care units outperform their public counterparts.
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