Profitability Efficiency Comparison between Canadian and Chinese Resource Companies using Data Envelopment Analysis

Abstract

In today's competitive atmosphere, financial management is a key indicator of a corporation's efficiency. The top management wants to identify and eliminate the underlying causes of inefficiencies, thus helping their firms to gain competitive advantage, or, at least, meet the challenges from others. Consequently, efficiency management has become part of their management practices. This paper presents an evaluation of profitability efficiency of 60 resource companies, 40 of which are Canadian companies and the remaining are Chinese companies, during year 2004 using data envelopment analysis (DEA). Special emphasis was placed on how to present the DEA results to management so as to provide more guidance to them on what to manage and how to accomplish the changes. Generally speaking, Chinese resource companies are slightly more efficient than Canadian resource companies while they are comparable on the whole