Detecting information technology impact on firm performance using DEA and decision tree

Authors:
Desheng Wu
Affiliations:
School of Business, University of Science and Technology of China, Hefei Anhui 230026, PR China/ Department of Mechanical and Industrial Engineering, University of Toronto, Toronto M5S 3G8, Canada
Venue:
International Journal of Information Technology and Management
Year:
2006

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Abstract

In a modern organisation, it is crucial and common for managers to effectively detect the impact of Information Technology (IT) on firm performance. This allows companies to maintain a competitive edge in rapidly changing business environments and outperform the competitors in the global marketplace. To detect the impact of IT on firm performance, this paper presents a generic model using Data Envelopment Analysis (DEA) and Decision Trees (DTs). The model consists of two modules: module 1 applies a two-stage DEA and classifies the IT-affected Decision Making Units (DMUs) into efficient and inefficient clusters based on the resulting efficiency scores. Module 2 utilises firm performance related data to train DT model and apply the trained DT model to new firms. Our results yield a favourable classification accuracy rate.