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Measuring technical efficiency using the example of construction companies

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  • Marek Vochozka
  • Jan Váchal
  • Jarmila Straková

Abstract

This paper presents one of the possible approaches for measuring business performance, or more precisely, the measurement of technical efficiency for a set of construction companies. The theoretical basis of technical efficiency is defined. This provides information on the level of utilization of factors of production by a company whereby it is possible to identify the potential of the business and its potential losses. Single-factor linear production functions are used for this purpose. The test file includes 15,189 construction companies from all regions of the Czech Republic. A production function for the observed set of companies is defined, as are the strengths of the individual production parameters. A specification of the derived production function according to the year and relevant region is also given. The set method allows us to predict the production functions in the respective regions and their average production at the set structure of production factors which expresses the specifics of the respective region.

Suggested Citation

  • Marek Vochozka & Jan Váchal & Jarmila Straková, 2015. "Measuring technical efficiency using the example of construction companies," Ekonomika a Management, Prague University of Economics and Business, vol. 2015(2).
    • Handle: RePEc:prg:jnleam:v:2015:y:2015:i:2:id:252
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    References listed on IDEAS

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    1. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    2. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
    3. William Cooper & Kyung Park & Jesus Pastor, 1999. "RAM: A Range Adjusted Measure of Inefficiency for Use with Additive Models, and Relations to Other Models and Measures in DEA," Journal of Productivity Analysis, Springer, vol. 11(1), pages 5-42, February.
    4. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2006. "Introduction to Data Envelopment Analysis and Its Uses," Springer Books, Springer, number 978-0-387-29122-2, December.
    5. Richmond, J, 1974. "Estimating the Efficiency of Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(2), pages 515-521, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business performance; Technical efficiency; Single-factor production function; Business performance; Technical efficiency; Single-factor production function;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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