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Extended Performance Evaluation Based on DEA

A Multidimensional Point of View


Ludmila Neumann

This study introduces new methodological developments of Data Envelopment Analysis (DEA) that satisfy the demands of business practice and provide a multidimensional point of view on the evaluation of organizational performance. The author extends the focus of performance evaluation based on DEA, which is originally placed on efficiency, to effectiveness and balance. Such a multidimensional point of view provides different insights into organizational performance, which by complementing each other have several implications for managerial decision making.

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3 Evaluation of relative effectiveness


3 Evaluation of relative effectiveness157

A great part of the management literature as well as the majority of organizations focuses on performance management as optimization of efficiency, thereby disregarding the aspect of effectiveness.158 This neglects the fact that it is of vital importance for long-term business success to monitor the fundamental goals of an organization.159 The question to what extent such goals are achieved is usually addressed by the concept of effectiveness. In contrast to efficiency, which has been recognized as a component of performance measurement and management for a long time, effectiveness has only recently begun to receive considerable attention.

In the field of organizational theory, effectiveness has already been a central topic. The wide scope of the literature on the issue of organizational effectiveness documents this fact, by simultaneously revealing the disagreement on the concept of effectiveness. Moreover, the diversity of approaches makes it difficult to establish a comprehensive way for the evaluation of effectiveness. Based on an overview of the current theoretical approaches and problems in the context of effectiveness evaluation, the aim of this chapter is to introduce a new approach that incorporates information provided by performance management systems in terms of predetermined goals and corresponding target levels. This approach should meet the requirements on model design from the managerial point of view in order to be used by practitioners.

This chapter is organized as follows. Section 3.1 discusses the conceptual disorder in the pertinent literature by considering the evolution...

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