Performance efficiency of offshore business groups in China - How Taiwanese firms perform

Wen Min Lu, Shiu Wan Hung

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

China's strong economy and its growing market demand have attracted the investments of numerous offshore entrepreneurs. This paper describes diverse efficiency measures to characterize the productivity efficiency of offshore entrepreneurs in China. Productivity efficiency ratings should be considered as a key element for achieving greater business performance and a better market position. This study applies the Data Envelopment Analysis (DEA) approach combining "operating flexibility" to measure the magnitude of performance differences between the entrepreneurs. Thirty-four leading firms of Taiwan in China were used as samples for analysis. The empirical result reveals that the overall technical inefficiencies of the firms are primarily due to pure technical inefficiencies rather than scale inefficiencies. A scale problem really does exist in these Taiwanese firms in China, which can be treated as support for future mergers and acquisitions between the firms as well as for public policy making for offshore investments. A benchmark-learning roadmap is constructed for those inefficient groups in order to improve their efficiency progressively. In addition, the analysis of the operating performance by DEA can provide the offshore entrepreneurs' operations with insights into resource allocation and competitive advantage as well as help with strategic decision-making, especially regarding operational styles under an intense competitive environment.

Original languageEnglish
Pages (from-to)391-412
Number of pages22
JournalAsia Pacific Management Review
Volume15
Issue number3
StatePublished - Sep 2010

Keywords

  • China
  • DEA
  • Efficiency
  • Offshore entrepreneurs
  • Taiwanese firms

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