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Improvement of Technical Efficiency of Firm Groups

Author

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  • Walter Briec

    (IAE Perpignan - Institut d'Administration des Entreprises - Perpignan - UPVD - Université de Perpignan Via Domitia, LAMPS - LAboratoire de Modélisation Pluridisciplinaire et Simulations - UPVD - Université de Perpignan Via Domitia)

  • Stéphane Mussard

    (CHROME - Détection, évaluation, gestion des risques CHROniques et éMErgents (CHROME) / Université de Nîmes - UNIMES - Université de Nîmes)

Abstract

Cooperation between firms can never improve the technical efficiency of any firm coalition. The directional distance function, by virtue of its additive nature, is a useful tool that outlines this impossibility. In this paper, the additive aggregation scheme of input/output vectors is generalized according to an aggregator. Accordingly, cooperation between firms may increase the technical efficiency of the firm group. This improvement is shown to be compatible with nonjoint semilattice technologies that bring out either output or input (weak) complementarity. Firm games are investigated to show that firms may merge on the basis of their inputs due to constraints imposed on outputs. Conversely, they may merge with respect to the outputs they can produce because of limitations imposed on inputs.

Suggested Citation

  • Walter Briec & Stéphane Mussard, 2019. "Improvement of Technical Efficiency of Firm Groups," Post-Print hal-02387847, HAL.
    • Handle: RePEc:hal:journl:hal-02387847
    DOI: 10.1016/j.ejor.2019.11.048
    Note: View the original document on HAL open archive server: https://hal.science/hal-02387847
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    References listed on IDEAS

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    19. Louisa Andriamasy & Walter Briec & Stephane Mussard, 2016. "On Some Relations between Several Generalized Convex DEA Models," Cahiers de recherche 16-02, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    20. Ravelojaona, Paola, 2019. "On constant elasticity of substitution – Constant elasticity of transformation Directional Distance Functions," European Journal of Operational Research, Elsevier, vol. 272(2), pages 780-791.
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    Cited by:

    1. Wang, Ding & Guo, Peng & Kilgour, D. Marc & Ponnambalam, Kumaraswamy & Hipel, Keith W., 2022. "The evolution of R&D collaboration in inter-organizational project networks: Effects of reference points for competitive preference," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 591(C).
    2. Mussard, Stéphane & Pi Alperin, María Noel, 2021. "Accounting for risk factors on health outcomes: The case of Luxembourg," European Journal of Operational Research, Elsevier, vol. 291(3), pages 1180-1197.
    3. Walter Briec & Marc Dubois & Stéphane Mussard, 2021. "Technical efficiency in firm games with constant returns to scale and $$\alpha $$ α -returns to scale," Annals of Operations Research, Springer, vol. 304(1), pages 35-62, September.
    4. Afsharian, Mohsen & Ahn, Heinz & Harms, Sören Guntram, 2021. "A review of DEA approaches applying a common set of weights: The perspective of centralized management," European Journal of Operational Research, Elsevier, vol. 294(1), pages 3-15.

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    More about this item

    Keywords

    Productivity and competitiveness; Aggregation; Cooperative games; Distance functions; Technical efficiency JEL Codes: D21; D24;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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