Measuring and decomposing group performance under centralized management

To compare the performance of groups under central management scenarios, a metafrontier centralized performance index was recently proposed and decomposed into the efficiency index and the technological gap index. However, we identify a significant drawback of the index decomposition. Using a simple numerical example, we show that the interpretation of the technological gap component in terms of the dominance of the best-practice frontier can be inconsistent with its numerical value, thereby resulting in an erroneous interpretation of this component. To overcome the drawback, in this paper, we propose a new approach to decompose the metafrontier centralized performance index. Finally, an empirical example is used to illustrate the advantages of the proposed approach.