Efficiency and innovation in selected Malaysian government-linked companies for the period 2003 to 2008

Abstract

The purpose of this study is to measure and assess the performance of selected Malaysian government linked companies (GLCs). A modified strictly output-oriented data envelopment analysis model is used to measure the relative performance of each company by utilizing a list of normalized performance indicators for the period 2003 to 2008. The data envelopment analysis (DEA) scores indicate that ten and twenty-one of the companies are operating on the best-practice frontier under the assumptions of constant return to scale and variable return to scale respectively. Some of the relatively large companies show serious scale inefficiency and exhibit decreasing return to scale. The Malmquist index of total factor productivity is used to investigate the extent of technical efficiency change and technological progress experienced during the period under study. It was found that most companies experienced technical efficiency change but not technological progress (adaptation of technology rather than adoption of new technology or innovation).