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Measuring the efficiency of NBA teams: additive efficiency decomposition in two-stage DEA

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  • Chih-Hai Yang
  • Hsuan-Yu Lin
  • Chiang-Ping Chen

Abstract

This paper evaluates the efficiency of National Basketball Association (NBA) teams under a two-stage DEA framework. Applying the additive efficiency approach, we decompose overall team efficiency into first-stage wage efficiency and second-stage on-court efficiency and find out the individual endogenous weights for each stage. The empirical results show that NBA teams present a better performance on wage efficiency than for on-court efficiency, as on-court efficiency is influenced by many uncontrollable factors. Moreover, NBA teams, on average, tend to possess a higher weight on the first stage, suggesting that teams’ managers can enhance organizational efficiency more efficaciously by prudentially recruiting players. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Chih-Hai Yang & Hsuan-Yu Lin & Chiang-Ping Chen, 2014. "Measuring the efficiency of NBA teams: additive efficiency decomposition in two-stage DEA," Annals of Operations Research, Springer, vol. 217(1), pages 565-589, June.
    • Handle: RePEc:spr:annopr:v:217:y:2014:i:1:p:565-589:10.1007/s10479-014-1536-3
    DOI: 10.1007/s10479-014-1536-3
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