Chinese liquor company management efficiency from a social responsibility perspective: a two stage dynamic directional distance function

Abstract

Because the liquor industry is an important industry in China, alcohol companies have greater social responsibilities when upgrading their production processes to improve efficiencies. Two main data envelopment analysis (DEA) methods have been used for efficiency analyses: radial models, such as CCR (Charnes, Cooper, Rhodes) and BCC (Banker, Charnes, Cooper) and non-radial methods such as SBM (slacks-based model); however, both have disadvantages. The radial DEA model ignores the non-radial slacks and the non-radial DEA model ignores the characteristics of the same proportion in the radial DEA model. Therefore, this research used a dynamic two-stage directional distance function (DDF) model to analyse the production efficiencies of Chinese listed liquor companies from 2016 to 2018 by evaluating each company’s poverty alleviation input efficiencies, business operations efficiencies, and their social responsibility efficiencies, which was based on their wastewater treatment efficiencies. To overcome the disadvantages in traditional data envelopment models, the DDF model consisted of both input and output direction vectors, the indicator values for which indicated their relative importance or priorities. The analyses found that the indicator efficiencies at most liquor companies had declined, with the poverty alleviation indicator efficiencies being generally lower than the wastewater treatment indicator efficiencies. Several policy and management recommendations are given to improve the overall corporate efficiency and social responsibility in the Chinese liquor industry.