Show Less
Restricted access

Data Envelopment Analysis: From Normative to Descriptive Performance Evaluation


Nadia Vazquez Novoa

The question of modern performance evaluation has been extensively discussed in the literature, leading to a call for models including non-optimizing behaviors of decision makers and non-financial performance criteria. A promising management instrument is data envelopment analysis (DEA), which enables the aggregation of financial and non-financial indicators into a single measure. This work contributes to a better understanding of DEA from two perspectives: (i) it offers a normative solution to the zero-value weight problem and (ii) it provides the first experimental results on behavioral DEA based on an original taxonomy of cognitive biases related to performance evaluation. Behavioral DEA is a completely new research area which yields plenty of research opportunities.

Show Summary Details
Restricted access

5. DEA scores as performance markers and the halo effect


← 180 | 181 →

5.   DEA scores as performance markers and the halo effect781

Performance evaluation has traditionally been based on accounting measures as financial performance criteria. Nevertheless, this can tempt managers to focus only on short-term monetary results. For this reason, non-financial criteria have become more important.782 The additional consideration of non-financial performance criteria offers a series of benefits to the decision maker, but it also poses significant challenges.783 It has been shown that more comprehensive measurement systems reinforce managers’ existing points of view784 and bear the risk of failure due to their complexity.785 Other issues that have been mentioned include data availability,786 criteria weights,787 and the usefulness of aggregated data.788 The last two aspects are closely connected, especially because subjective criteria weighting can cause undesired behavior.

To meet some of these challenges, different instruments have been developed, e.g. DEA, which remains unknown to most practitioners. This may be due to methodological aspects or to cognitive difficulties experienced by the decision maker when interpreting the results. In this chapter, the use of DEA scores for aggregating non-financial measures and its influence on a posterior assessment of financial performance is analyzed by means of an experiment. Subchapter 5.1 provides a brief overview of the heuristics and biases associated to multiple attribute choice and their manifestations. On this basis, the hypotheses of the study are developed. The methodological aspects of the experiments are described in Subchapter 5.2, the results are presented in Subchapter 5.3 and...

You are not authenticated to view the full text of this chapter or article.

This site requires a subscription or purchase to access the full text of books or journals.

Do you have any questions? Contact us.

Or login to access all content.