High-tech industries overseas investment performance evaluation - Application of Data Envelopment Analysis

Abstract

With the rapid change of the social environment, Mainland China has become a new economic market due to the great domestic demand caused by its enormous population and the increasing economic growth rate. Taiwanese businesses have gradually turned to develop in China under the pressure of increasing domestic wages and land costs for expanding factories as well as the enhancement of environmental protection. Mainland China presents the advantages of ample land, low labor costs, monoethnicity, and easy language communication making it an attractive major investment location for Taiwanese high-tech industries. Data Envelopment Analysis (DEA) is applied to measure overseas investment efficiency evaluation of Taiwanese high-tech businesses in China, where the Delphi Method is used for selecting the inputs of the number of employees, RandD expenses, and gross sales in total assets. Sensitivity Analysis is further utilized for acquiring the most efficient unit and individual units with operating efficiency. The research results show that 1.Three high-tech businesses that present constant returns to scale perform optimally with overseas investment efficiency 2.Two high-tech companies with decreasing returns to scale appear that they could improve the overseas investment efficiency by decreasing the scale to enhancing the marginal returns, and 3.Sixteen high-tech enterprises reveal increasing returns to scale, showing that they could expand the scale to enhance the marginal returns and further promote efficiency.