An Optimal Control on the Efficiency of Technology Companies in Malaysia with Data Envelopment Analysis Model

Lam Weng Siew, Liew Kah Fai, Lam Weng Hoe

Abstract


Technology company is a type of business entity that focuses primarily on the development and manufacturing of technology. Technology sector plays an imperative role in the country as technological advancement can lead the country to move forward for continuous improvement. Therefore, efficiency is important in the evaluation on the performance of companies. The efficiency of the companies can be measured by using Data Envelopment Analysis (DEA) model. DEA is a linear programming model which measures the relative efficiency of the companies as the ratio of the sum-weighted outputs to sumweighted inputs. Efficiency is used to describe how well an organizational unit is performing in utilizing resources to generate outputs or outcomes. The objective of this study is to propose a DEA model by using financial ratio to evaluate and compare the efficiency of the companies from the technology sector in Malaysia. Besides that, this study aims to determine the optimal control of inputs and output weights in maximizing the efficiency for each company. The data consists of the listed companies from the technology sector in Malaysia stock market from year 2011 until 2015. In this study, LINGO software is used to solve the DEA model. The major findings of this study indicate that AMTEL, ELSOFT, GRANFLO, GTRONIC, KESM, MPI, UNISEM and VITROX are ranked as efficient companies. This implies that 44% of the listed companies from technology sector in Malaysia stock market are efficient. This study is significant because it is a pioneer study of proposing a DEA model by using financial ratio to evaluate and compare the efficiency of the listed companies from technology sector in Malaysia stock market.

Keywords


Data Envelopment Analysis; Efficiency; Linear Programming Model; LINGO Software; Technology Company;

Full Text:

PDF

References


M. C. Lai and S. F. Yap, “Technology development in Malaysia and the newly industrializing economies: A comparative analysis,” Asia-Pacific Development Journal, vol. 11, no. 2, pp. 53-80, 2004.

A. Charnes, W. W. Cooper and E. Rhodes, “Measuring the efficiency of decision making units,” European Journal of Operational Research, vol. 2, vol. 6, pp. 429-444, 1978.

R. Banker, A. Charnes, W. W. Cooper, “Some models for estimating technical and scale inefficiencies in Data Envelopment Analysis,” Management Science, vol. 30, no. 9, pp. 1078-1092, 1984.

I. Jemric and B. Vujcic, “Efficiency of banks in Croatia: A DEA approach,” Comparative Economic Studies, vol. 44, no. 2, pp. 169-193, 2002.

J. Zhu, Quantitative Models for Performance Evaluation and Benchmarking. London: Kluwer Academic Publishers, 2003.

G. Sahin, L. Gokdemir and D. Ozturk, “Global crisis and its effect on Turkish banking sector: A study with data envelopment analysis,” Procedia Economics and Finance, vol. 38, pp. 38-48, 2016.

R. Tehrani, M. R. Mehragan and M. R. Golkani, “A model for evaluating financial performance of companies by data envelopment analysis,” International Business Research, vol. 5, no. 8, pp. 8-16, 2012.

L. Asandului, M. Roman and P. Fatulescu, “The efficiency of healthcare systems in Europe: A data envelopment analysis approach,” Procedia Economics and Finance, vol. 10, pp. 261-268, 2014.

W. S. Lam, K. F. Liew and W. H. Lam, “An empirical comparison on the efficiency of healthcare companies in Malaysia with Data Envelopment Analysis model,” International Journal of Service Science, Management and Engineering, vol. 4, no. 1, pp. 1-5, 2017.

W. S. Lam, K. F. Liew and W. H. Lam, “An empirical investigation on the efficiency of healthcare companies with Data Envelopment Analysis model,” Biomedical Statistics and Informatics, vol. 1, no. 1, pp. 19-23, 2016.

S. P. Mogha, S. P. Yadav and S. P. Singh, “Performance evaluation of Indian private hospitals using DEA approach with sensitivity analysis,” International Journal of Advances in Management and Economics, vol. 1, no. 2, pp. 1-12, 2012.

Y. A. Ozcan and M. J. McCue, “Development of financial performance index for hospitals: DEA approach,” The Journal of the Operational Research Society, vol. 47, no. 1, pp. 18-26, 1996.

J. Nazarko and J. Saparauskas, “Application of DEA method in efficiency evaluation of public higher education institutions,” Technological and Economic Development of Economy, vol. 20, no. 1, pp. 25-44, 2014.

Y. Yuan and M. F. Shan, “The educational efficiency evaluation framework: By using DEA model and CA method,” Indian Journal of Information and Education Technology, vol. 6, no. 12, pp. 923-926, 2016.

K. S. Thagunna and S. Poudel, “Measuring bank performance of Nepali Banks: A Data Envelopment Analysis (DEA) perspective,” International Journal of Economics and Financial Issues, vol. 3, no. 1, pp. 54-65, 2013.

K. F. Liew, W. S. Lam and W. H. Lam, “Financial analysis on the company performance in Malaysia with multi-criteria decision making model,” System Science and Applied Mathematics, vol. 1, no. 1, pp. 1- 7, Jul. 2016.

V. M. Dalfard, A. Sohrabian, A. M. Najafabadi and J. Alvani, “Performance evaluation and prioritization of leasing companies using the super efficiency Data Envelopment Analysis model,” Acta Polytechnica Hungarica, vol. 9, no. 3, pp. 183-194, 2012.

L. Zamani, R. Beegam and S. Borzoian, “Portfolio selection using Data Envelopment Analysis (DEA): A case of select Indian investment companies,” International Journal of Current Research and Academic Review, vol. 2, no. 4, pp. 50-55, Apr. 2014.

S. Hasanloo, E. Karim, M. R. Mehregan and R. Tehrani, “Evaluating performance of companies by new management tools,” Journal of Natural and Social Sciences, vol. 2, no. 3, pp. 165-169, 2013.

W. S. Lam, K. F. Liew and W. H. Lam, “An empirical investigation on the efficiency of healthcare companies with Data Envelopment Analysis model,” Biomedical Statistics and Informatics, vol. 1, no. 1, pp. 19-23, 2016.

Bursa Malaysia, Company Announcements | Bursa Malaysia Market. [online] Available at: [Accessed 15 February 2017]


Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

ISSN: 2180-1843

eISSN: 2289-8131