Efficiency of glass firms in India: an application of data envelopment analysis

Abstract

Purpose

The purpose of the present study is to evaluate the efficiency of glass firms in India.

Design/methodology/approach

Data envelopment analysis (DEA) has been employed to study the technical, scale and super efficiency measures of glass firms in India.

Findings

Major findings of DEA analysis show that 65 percent firms are found to be technically efficient. Returns to scale analysis indicate that five firms are operating at decreasing returns to scale and two firms are exhibiting increasing returns to scale. Further, results show that small– and medium–scale firms are more efficient than large–scale firms. Old firms are more efficient compared to the young firms and foreign-owned firms are technically more efficient compared to the domestic firms.

Practical implications

The results of this study would help the managers to assess their relative efficiency and take corrective measures to efficiently use their resources.

Originality/value

This seems to be the first study to apply DEA to analyze the efficiency of glass firms in India. No previous study on glass industry seems to have decomposed the measure of overall technical efficiency into its components, namely pure technical efficiency and scale efficiency and no study seems to have examined whether ownership, age and size of a firm are significant for its efficiency. In addition, no earlier study seems to have ranked the glass firms based on their efficiency values. Further, target values of inputs and outputs are demonstrated in this study. Stability of efficiency scores is also checked.

Citation

Kundi, M. and Sharma, S. (2016), "Efficiency of glass firms in India: an application of data envelopment analysis", Journal of Advances in Management Research, Vol. 13 No. 1. https://doi.org/10.1108/JAMR-03-2015-0019