A Hierarchical Methodology for Performance Evaluation Based on Data Envelopment Analysis: The Case of Companies’ Competitiveness in an Economy

Abstract

In this research, we present a hierarchical Data Envelopment Analysis (DEA) methodology for competitiveness analysis. This methodology takes into account the heterogeneity of the decision making units (DMUs) as well as the diversity of the comparison criteria. We propose to homogenize the DMUs by grouping them hierarchically, which permits a better identification and definition of the criteria in each specific grouping. The methodology proceeds first by the determination of the performances or relative efficiencies, which are in turn aggregated into competitiveness indices in each grouping by the superiority index of [1]; then, the overall competitiveness indices are determined additively along the hierarchical levels. We illustrate the methodology by a competitiveness analysis of several companies belonging to different sectors of activity in an economy, where are suggested ways of improvement for the non-competitive companies within their sectors and within the economy.