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Centralized resource planning and Yardstick competition

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  • Varmaz, Armin
  • Varwig, Andreas
  • Poddig, Thorsten

Abstract

Multidivisional and decentralized firms often operate inefficiently. In most cases, central management's instruments to influence its branches' behavior are limited. Although relative performance evaluation has been argued to be of great use in defining incentive mechanisms, such approaches cannot be transferred easily to internal performance management. We approach this issue by changing the perspective of performance evaluation. Based on the recently introduced CRA-DEA model, we develop a new super-efficiency measure that enables to establish purposive intra-organizational incentive mechanisms. By means of a numerical example, analyzing the performance of a German retail bank, the applicability of our measure is shown and compared to standard DEA models. Centralized super-efficiency seems able to suit the specific needs of intra-organizational performance management.

Suggested Citation

  • Varmaz, Armin & Varwig, Andreas & Poddig, Thorsten, 2013. "Centralized resource planning and Yardstick competition," Omega, Elsevier, vol. 41(1), pages 112-118.
  • Handle: RePEc:eee:jomega:v:41:y:2013:i:1:p:112-118
    DOI: 10.1016/j.omega.2011.10.005
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    Cited by:

    1. Fang, Lei, 2015. "Centralized resource allocation based on efficiency analysis for step-by-step improvement paths," Omega, Elsevier, vol. 51(C), pages 24-28.
    2. Afsharian, Mohsen & Ahn, Heinz & Thanassoulis, Emmanuel, 2017. "A DEA-based incentives system for centrally managed multi-unit organisations," European Journal of Operational Research, Elsevier, vol. 259(2), pages 587-598.
    3. Kovalyov, Mikhail Y. & Pesch, Erwin, 2014. "A game mechanism for single machine sequencing with zero risk," Omega, Elsevier, vol. 44(C), pages 104-110.
    4. Fang, Lei, 2013. "A generalized DEA model for centralized resource allocation," European Journal of Operational Research, Elsevier, vol. 228(2), pages 405-412.
    5. Avilés Sacoto, Sonia & Güemes Castorena, David & Cook, Wade D. & Cantú Delgado, Humberto, 2015. "Time-staged outputs in DEA," Omega, Elsevier, vol. 55(C), pages 1-9.

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