DEA non-radial approach for resource allocation and energy usage to enhance corporate sustainability in Japanese manufacturing industries

Abstract

This article discusses how to enhance corporate sustainability by simultaneously measuring operational and environment achievements. In past decades, most companies have made steady efforts to enhance their sustainability levels. However, they still have strategic space for improving sustainability. This research proposes a new use of environmental measurement by data envelopment analysis. We apply the approach to Japanese industrial sectors and obtain five implications. First, they maintain a high level of unified efficiency on resource allocation and energy usage under natural disposability (priority: operation). Second, the efficiency under managerial one (priority: environment) is generally lower than that of natural disposability. Third, among the industries with high operational achievement, only the pharmaceutical product industry presents high attainment on environmental protection. Fourth, the pulp and paper industry as well as the textile product industry have a potential for efficiency improvement by investing in green technology. Finally, desirable congestion indicates a potential of performance improvement by investing in green technology. Those results imply that the current business situation is different from the previous image on Japanese industries, often referred to as “Japan Inc.”, where all firms used to operate like a single entity under the governmental regulation.