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A Well-Defined Composite Indicator: An Application to Corporate Social Responsibility

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  • Juan Aparicio

    (University Miguel Hernandez of Elche (UMH))

  • Magdalena Kapelko

    (Wrocław University of Economics and Business)

  • Juan F. Monge

    (University Miguel Hernandez of Elche (UMH))

Abstract

This paper introduces a model to construct composite indicators for performance evaluation of decision making units, which is based upon the determination of the least distance from each assessed unit to a frontier estimated by data envelopment analysis. This generates less demanding targets from a benchmarking point of view. The model also makes it possible to account for the existence of slacks in all the considered dimensions (sub-indicators), playing with the notion of Pareto efficiency. Additionally, our approach satisfies units invariance, translation invariance and strong monotonicity and ensures that the weights used for the aggregation of the sub-indicators are always strictly positive. All previous approaches based on data envelopment analysis have failed to satisfy at least one of these properties. We also implement a new version of the Russell output measure of technical efficiency working with full-dimensional efficient facets. Finally, the new approach is illustrated by an application to the sphere of corporate social responsibility, showing the main empirical implications of the theoretical properties.

Suggested Citation

  • Juan Aparicio & Magdalena Kapelko & Juan F. Monge, 2020. "A Well-Defined Composite Indicator: An Application to Corporate Social Responsibility," Journal of Optimization Theory and Applications, Springer, vol. 186(1), pages 299-323, July.
    • Handle: RePEc:spr:joptap:v:186:y:2020:i:1:d:10.1007_s10957-020-01701-1
    DOI: 10.1007/s10957-020-01701-1
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    2. Pereira, Miguel Alves & Camanho, Ana Santos & Marques, Rui Cunha & Figueira, José Rui, 2021. "The convergence of the World Health Organization Member States regarding the United Nations’ Sustainable Development Goal ‘Good health and well-being’," Omega, Elsevier, vol. 104(C).
    3. Ben Lahouel, Béchir & Ben Zaied, Younes & Taleb, Lotfi & Kočišová, Kristína, 2022. "The assessment of socio-environmental performance change: A Benefit of the Doubt indicator based on Directional Distance Function and Malmquist productivity index," Finance Research Letters, Elsevier, vol. 49(C).
    4. Khatab Alqararah, 2023. "Assessing the robustness of composite indicators: the case of the Global Innovation Index," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-22, December.
    5. Monge, Juan F. & Ruiz, José L., 2023. "Setting closer targets based on non-dominated convex combinations of Pareto-efficient units: A bi-level linear programming approach in Data Envelopment Analysis," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1084-1096.
    6. Aparicio, Juan & Kapelko, Magdalena & Ortiz, Lidia, 2023. "Enhancing the measurement of firm inefficiency accounting for corporate social responsibility: A dynamic data envelopment analysis fuzzy approach," European Journal of Operational Research, Elsevier, vol. 306(2), pages 986-997.
    7. José Antonio, Palomero-González & Vicent, Almenar-Llongo & Ramón, Fuentes-Pascual, 2022. "A composite indicator index as a proxy for measuring the quality of water supply as perceived by users for urban water services," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    8. Juan Aparicio & José L. Zofío & Jesús T. Pastor, 2023. "Decomposing Economic Efficiency into Technical and Allocative Components: An Essential Property," Journal of Optimization Theory and Applications, Springer, vol. 197(1), pages 98-129, April.
    9. Amer Ait Sidhoum, 2023. "Assessing the contribution of farmers’ working conditions to productive efficiency in the presence of uncertainty, a nonparametric approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 8601-8622, August.
    10. Yanting Jing & Wei Zhang & Yongjun Tang & Yuzi Zhang, 2022. "The Construction of an Evaluation System of Corporate Social Responsibility to Employees: An Empirical Study in the Chinese Clothing Industry," Sustainability, MDPI, vol. 14(16), pages 1-16, August.

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