Journal
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
Volume 16, Issue 2, Pages 257-271Publisher
WILEY
DOI: 10.1111/j.1475-3995.2009.00675.x
Keywords
free disposal hull; efficiency measurement; environmental variables; metafrontier; water industry
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Environmental factors add complexity to the comparison between specific activities or entire entities. Decision making units with an inferior performance are tempted to invoke that their organization is different from the others in the data set. By reinterpreting and extending the metafrontier literature, we propose an all-embracing concept to fully capture the operational environment. We suggest the 'Group Specific Technical Efficiency as a new measure to assess the overall efficiency of a utility while allowing for environmental differences. A real-world example of drinking water utilities from five different countries illustrates the concept.
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