Application of the DEA double bootstrap to analyze efficiency in galician sheltered workshops

Abstract

Sheltered workshops (SW), as social enterprises, need to be efficient and maintain a balance between social aspects and economic prosperity. An important part of research on the subject has been focused on measuring the economic value created by these entities. In this study, we analyzed performance of SWs in Galicia (Spain), from the point of view of efficiency, combining social and economic aspects and investigating its key determinants. Using panel data from 609 entities from 2008 to 2017, we followed Simar and Wilson's two-stage approach (2007). Specifically, we used data envelopment analysis (DEA) at the first stage to estimate efficiency scores and then used truncated regression estimation with double-bootstrap to test the significance of explanatory variables. Our results show that SWs have high levels of performance, higher in economic than in social terms, and we found that several factors, such as size and age, positively influence total, economic and social efficiency individually. We also found a positive, significant relationship between social efficiency and economic profitability.