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The mystification of operational competitiveness rating analysis

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  • Shouhong Wang

    (Department of Marketing|Business Information Systems, Charlton College of Business, University of Massachusetts Dartmouth, Dartmouth, MA 02747-2300, USA)

  • Hai Wang

    (Department of Finance and Management Science, Sobey School of Business, Saint Mary's University, Halifax, NS, Canada B3H 3C3)

Abstract

This note examines the fault of the operational competitiveness rating analysis (OCRA) method. The premise of the OCRA method requires that a single scalar measurement must be applied to inputs and outputs to calculate the performance ratings for production units. This property renders the OCRA method worthless, since simple comparisons of the aggregated inputs and outputs can generate accurate productive efficiency evaluation results for production units if the simple aggregation can be done. To avoid this problem, the OCRA method includes subjective weighting elements for input and output categories, so called calibration constants, into the performance rating computation. This approach of the OCRA method introduces much confusion for productive efficiency evaluation, and it violates the economics axiom of output|input maximization in its application context. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Shouhong Wang & Hai Wang, 2005. "The mystification of operational competitiveness rating analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 535-538.
    • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:8:p:535-538
    DOI: 10.1002/mde.1244
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    References listed on IDEAS

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    1. Agrell, Per J. & Martin West, B., 2001. "A caveat on the measurement of productive efficiency," International Journal of Production Economics, Elsevier, vol. 69(1), pages 1-14, January.
    2. A. Charnes & W. W. Cooper & E. Rhodes, 1981. "Evaluating Program and Managerial Efficiency: An Application of Data Envelopment Analysis to Program Follow Through," Management Science, INFORMS, vol. 27(6), pages 668-697, June.
    3. Parkan, Celik & Wu, Ming-Lu, 1999. "Measurement of the performance of an investment bank using the operational competitiveness rating procedure," Omega, Elsevier, vol. 27(2), pages 201-217, April.
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    2. Ender Coskun & Abdulvahap Ozcan, 2016. "Finansal Sikinti Surecinde Sirketlerin Etkinlik Duzeylerinin Belirlenmesi," EconWorld Working Papers 16001, WERI-World Economic Research Institute, revised Apr 2016.

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