Exploring the efficiency and effectiveness in global e-retailing companies

  • Authors:

  • Wen-Min Lu;Shiu-Wan Hung

  • Affiliations:

  • Department of Financial Management, National Defense University, No. 70, Sec. 2, Zhongyang North Rd., Beitou, Taipei 112, Taiwan;Department of Business Administration, National Central University, No. 300, Jung-Da Road, Jung-Li city, Tao-Yuan 320, Taiwan

  • Venue:
  • Computers and Operations Research
  • Year:
  • 2011

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Abstract

Efficiency and effectiveness can be considered as key elements for achieving greater business performance and a better decision making. This study applies the data envelopment analysis (DEA) approach combining multiple outputs and inputs to explore the efficiency and effectiveness of 30 global e-retailing companies. The empirical result reveals that the overall technical inefficiencies of the companies are primarily due to scale inefficiencies rather than pure technical inefficiencies. Approximately 43% of the global e-retailing companies need to reduce their inputs if they are to become efficient. Only 57% of the global e-retailing companies are regarded as efficient. This indicates that overall global e-retailing companies still have room for improving their management practices. Furthermore, when bias-corrected efficiencies were used to rank the global e-retailing company sample, the ranking order changed compared to the ranking order of the original efficiencies. This suggests that any DEA study should also employ bootstrapping as standard practice to detect the reliability of efficiency ranking and to have a more accurate benchmark of the firms.