Context-based competition strategy and performance analysis with fixed-sum outputs: an application to banking sector

In the prior literature on performance measurement of firms with fixed-sum outputs, an equilibrium-efficient frontier is constructed. This paper shows that a single equilibrium-efficient frontier needs a significant trade-off between efficient and inefficient firms, and this may be impossible in practical applications. We develop a data envelopment analysis (DEA) model to construct multiple equilibrium-efficient frontiers in the presence of fixed-sum outputs. The approach uses context-dependent DEA that refers to a DEA approach where a set of firms are assessed against a particular assessment context. Numerical examples are used to illustrate the applicability of the approach.