Measuring Balanced Efficiency with DEA: New Approach and Case Study of German Business Schools' Research Performance

Abstract

Cone ratios, assurance regions and similar data envelopment analysis (DEA) approaches measuring the efficiency of decision making units (DMU) restrict their ability to “show themselves in the most favorable light”. Indeed they limit the relations or the multipliers of inputs and outputs as efficiency factors and thus induce a certain balance among them. We develop an alternative approach which – based on the conventional DEA methodology and additionally to the usual efficiency score – assesses a degree of balance or balanced efficiency for each DMU. For that purpose we assume that a region within the data envelopment can be specified in which all DMUs are 100% balanced. In a case study, measuring the balanced effectiveness of German business schools’ research performance, we obtain plausible results providing informative insights into German business research. This confirms the reasonable use of the new method.