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Cognitive strategic groups and long-run efficiency evaluation : the case of Spanish savings banks

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  • Prior, Diego

Abstract

In the framework of Cognitive Approach, this paper proposes a new method to identify strategic groups (SG) using Data Envelopment Analysis (DEA) methods. Two assumptions are maintained in the SG literature: first, firms grouped together value inputs and outputs similarly, and, second, some degree of stability in those valuations should be identified. Virtual weights obtained from DEA are extremely useful in the valuation of the strategic variables, but a problem emerges when longitudinal analysis is performed. This problem is addressed by defining a long run DEA evaluation. SGs are determined by means of Cluster Analysis, using virtual outputs and virtual inputs as variables and Spanish savings banks as observations. The traditional method of determining SGs by clustering on the original variables is also applied and the results are compared. It is shown that the long run DEA weights approach has advantages over the traditional methodology.

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  • Prior, Diego, 2007. "Cognitive strategic groups and long-run efficiency evaluation : the case of Spanish savings banks," DEE - Working Papers. Business Economics. WB wb071004, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    • Handle: RePEc:cte:wbrepe:wb071004
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    1. Boussofiane, A. & Dyson, R. G. & Thanassoulis, E., 1991. "Applied data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 52(1), pages 1-15, May.
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    1. Aysan, Ahmet Faruk & Ertek, Gurdal & Ozturk, Secil, 2009. "Assessing the adverse effects of interbank funds on bank efficiency through using semiparametric and nonparametric methods," MPRA Paper 38113, University Library of Munich, Germany.

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