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Firm operation performance analysis using data envelopment analysis and balanced scorecard

Author

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  • Tser‐yieth Chen
  • Chie‐Bein Chen
  • Sin‐Ying Peng

Abstract

Purpose - The purpose of this paper is to present a case study showing how the selection of performance indices affects performance results and the evaluation of a firm's performance. Design/methodology/approach - This paper employs a data envelopment analysis (DEA) framework using four kinds of performance indices selection, which include basic input/output items, balance scorecard (BSC) indices, balanced scorecard with risk management, and traditional financial indices, to evaluate banking operations. Findings - Shows that a DEA‐based evaluation of performance produces a similar view of the firm's well‐being as does an analysis of financial indices; however, a BSC‐based evaluation produces a different assessment. Research limitations/implications - This study was based on the following assumptions: first, when organizational units achieve technical efficiency, they will improve their organizational performance. Secondly, the inputs and outputs selected for the data envelopment analysis provided an indicator of the changes of bank's technical efficiency over the six‐year period. Practical implications - This research was based on the data envelopment analysis approach to find different performance efficiency to apply four performance indicator selections, which include basic inputs/outputs items, balanced scorecard indices, balanced scorecard with risk management, and traditional financial indices, to evaluate bank operation. Originality/value - Combines the balanced scorecard concept with data envelopment analysis measurements (model information) to generate measures of technical efficiency for a Taiwanese bank. It shows how comparisons can be made within and across companies on the basis of balanced scorecard measures.

Suggested Citation

  • Tser‐yieth Chen & Chie‐Bein Chen & Sin‐Ying Peng, 2008. "Firm operation performance analysis using data envelopment analysis and balanced scorecard," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 57(7), pages 523-539, September.
    • Handle: RePEc:eme:ijppmp:v:57:y:2008:i:7:p:523-539
    DOI: 10.1108/17410400810904010
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    Citations

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    Cited by:

    1. Amado, Carla A.F. & Santos, Sérgio P. & Marques, Pedro M., 2012. "Integrating the Data Envelopment Analysis and the Balanced Scorecard approaches for enhanced performance assessment," Omega, Elsevier, vol. 40(3), pages 390-403.
    2. Nguyen Ngoc-Tan & Aleš Gregar, 2019. "Knowledge Management and Its Impacts on Organisational Performance: An Empirical Research in Public Higher Education Institutions of Vietnam," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 18(02), pages 1-29, June.
    3. Basso, Antonella & Casarin, Francesco & Funari, Stefania, 2018. "How well is the museum performing? A joint use of DEA and BSC to measure the performance of museums," Omega, Elsevier, vol. 81(C), pages 67-84.
    4. Debmallya Chatterjee & Amol S. Dhaigude, 2020. "An Integrated Fuzzy Cognitive Map Approach in Modelling Factors of Management Quality in Banking Performance," Global Business Review, International Management Institute, vol. 21(3), pages 763-779, June.
    5. Mahmoud Dehghan Nayeri & Malihe Rostami, 2016. "Effectiveness of six sigma methodology through BSC in banking industry," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 6(1), pages 13-21, January.
    6. Mohammad Abdul Matin Chowdhury & Razali Haron, 2021. "The efficiency of Islamic Banks in the Southeast Asia (SEA) Region," Future Business Journal, Springer, vol. 7(1), pages 1-16, December.
    7. Cândida Ferreira, 2020. "Evaluating European Bank Efficiency Using Data Envelopment Analysis: Evidence in the Aftermath of the Recent Financial Crisis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(4), pages 391-405, November.
    8. Filzah Mohamed Othman & Nor Aiza Mohd-Zamil & Siti Zaleha Abdul Rasid & Amin Vakilbashi & Mozhdeh Mokhber, 2016. "Data Envelopment Analysis: A Tool of Measuring Efficiency in Banking Sector," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 911-916.
    9. Bošković Aleksandra & Krstić Ana, 2020. "The Combined Use of Balanced Scorecard and Data Envelopment Analysis in the Banking Industry," Business Systems Research, Sciendo, vol. 11(1), pages 4-15, March.
    10. Aliasghar Aliakbarzadeh & Akbar Alem Tabriz, 2014. "Performance Evaluation and Ranking the Branches of Bank using FAHP and TOPSIS Case study: Tose Asr Shomal Interest-free Loan Fund," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(12), pages 199-217, December.
    11. Dinh Xuan Cuong & Hoang Thi Hien & Tran Long, 2018. "Multi-Criteria Decision-Making Model Evaluating the Performance of Vietnamese Commercial Banks," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(1), pages 132-141, January.

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