Measuring the Operating Efficiency of Solar Cell Companies in Taiwan with Data Envelopment Analysis

Abstract

This study discusses the Data Envelopment Analysis (DEA) approach to measure the operating efficiency of solar cell companies. With active and constructive advancement of the government, competition in the solar cell industry became even tenser. When drawing up the competitive strategies, one firm should identify the key indicators of its operating efficiency. This study incorporates three inputs (the number of employees, fixed asset, operating expenses) and three outputs (fund and investment, shareholders equity, sales revenue, gross margin) to measure the operating efficiency of 12 DMUs (solar cell companies) to provide reference for these companies in determining competitive strategies. Data are gathered from the market observation post system in Taiwan. The result indicates that there are six efficient DMUs and six inefficient DMUs. For the relatively inefficient DMUs, a slack variable analysis is performed and the efficiency scores to understand the usage of inputs and performance improvement of inefficient DMUs. The findings could benefit company operators seeking performance improvement in which they could benchmark practices being adapted by the most efficient companies. Together with Malmquist productivity index analysis, companies are able to assess the productivity change of DMUs over time. Finally, managerial implications are provided.