Input orientation and output orientation: Which one is more challenging? A study of agricultural co-operative

Abstract

Co-operatives have unique characteristics that are not found in other entities; namely, members are the owner and the user or consumer of its product. Therefore, Co-operative members have the right to determine the direction of co-operative development and at the same time, get optimal service from the co-operative. Every year, the co-operative holds an annual member meeting, and at that moment, the remaining income is distributed based on the contribution of each member. In connection with that matter, co-operatives need to earn positive income to serve members sustainably. To achieve a business surplus, a strategy is needed whether to optimize input or output optimization. The objective of this study is to measure the level of efficiency of agricultural co-operatives compared to other types of co-operatives from the perspective of input orientation and output orientation. The analytical method used is descriptive-analytical, using data from the Central Statistics Agency from 2010 to 2019. Data analysis uses Data Envelopment Analysis with the assumption of Variable Return to Scale. The results showed that based on input and output orientation, agricultural co-operatives were relatively inefficient compared to other co-operatives year by year. Between the two orientations, it is recommended that agricultural co-operatives choose output orientation to achieve its goal.