The comparative productivity efficiency of Taiwan's integrated circuits packaging/testing firms

This paper reconciles diverse efficiency measures to characterize the productivity efficiency of Taiwan's integrated circuits (IC) packaging/testing firms. 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 with the classical radial measure, non-radial efficiency measure and efficiency achievement measure, respectively, combining multiple outputs and inputs to measure the magnitude of performance differences between the IC firms. 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 IC packaging/testing firms, which can be treated as support for future mergers and acquisitions between the firms. The operating efficiency of the IC packaging/testing firms is negatively related to the market-entry time of these firms. In addition, the empirical results in this study indicate that the non-radial efficiency model and the efficiency achievement model can provide more discriminate efficiency measures for the IC firms, while the traditional radial efficiency model can rank the firms by their scale efficiencies as well as analyze the scale profits of the firms.