Julie Harrison

Data Envelopment Analysis with Nonhomogeneous DMUs

Data envelopment analysis (DEA), as originally proposed, is a methodology for evaluating the relative efficiencies of a set of homogeneous decision-making units (DMUs) in the sense that each uses the same input and output measures (in varying amounts from one DMU to another). In some situations, however, the assumption of homogeneity among DMUs may not apply. As an example, consider the case where the DMUs are plants in the same industry that may not all produce the same products. Evaluating efficiencies in the absence of homogeneity gives rise to the issue of how to fairly compare a DMU to other units, some of which may not be exactly in the same “business.” A related problem, and one that has been examined extensively in the literature, is the missing data problem; a DMU produces a certain output, but its value is not known. One approach taken to address this problem is to “create” a value for the missing output (e.g., substituting zero, or by taking the average of known values), and use it to fill in t...

Relative efficiency measurement: The problem of a missing output in a subset of decision making units

Data envelopment analysis (DEA), as originally proposed by Charnes et al. (1978) viewed the efficiency measurement problem as one wherein each of a set of DMUs uses the same input and output measures, albeit in amounts that vary from one DMU to another. In some situations, however, the assumption that all DMUs use the same measures may fail. While there is a well known literature related to the problems of missing data and ‘zeros’ in the data, we argue that there is a difference between the situation where a DMU commits the resources to produce an output (but fails to do so, or else a non-zero amount exists but is unknown), and the situation where the DMU intentionally does not produce that output. In the current paper we examine the problem of measuring the efficiency of a set of steel fabrication plants wherein a subset of those plants produce one less than the full set of outputs produced by the others. We develop a DEA-type model for handling this missing output problem.

A revenue management perspective of management accounting practice in small businesses

Purpose - – The purpose of this paper is to develop a framework for the systematic examination of management accounting practices in small businesses using a revenue management perspective. This highlights the multi-faceted nature of size as a contextual factor and emphasises the role of management accounting in supporting profit-oriented decision-making, rather than its traditional role of co-ordination, control, and accountability. Design/methodology/approach - – The framework is theoretically derived from the management accounting, revenue management, and small business literature. An illustrative case study of a small fast-food business is presented to demonstrate the applicability of this framework to practice. Findings - – The paper identifies that various dimensions of business size have different and sometimes opposing effects on management accounting practices. Given heterogeneity is a common feature of small businesses, the framework considers alternative specifications of the size contingency variable. Research limitations/implications - – The synthesis of small business characteristics and revenue management perspective offers a more incisive understanding of what has traditionally been considered a simple practice. The case study illustrates some of the influences of small business characteristics identified in the framework. Given its narrow scope, the findings are used for theorisation rather than offering generalisable results. Further cross-sectional comparisons of small businesses are needed to confirm size influences. Practical implications - – The framework can assist practitioners to gauge the strengths and weaknesses of their management accounting practices and can help assess the value of adopting more sophisticated management accounting practices, given their particular business environment. A synthesis of these small business attributes can help practitioners identify key barriers to implementation. Originality/value - – The revenue management perspective and the inclusion of key characteristics of small businesses provide a new approach to evaluating management accounting practices in small businesses.

Cost and Performance: Complements for Improvement

Activity-based costing (ABC) and Data Envelopment Analysis (DEA) share similar views of resource consumption in the production of outputs. While DEA has a high level focus typically using aggregated data in the form of inputs and outputs, ABC is more detailed and oriented around very disaggregated data. We use a case study of immunisation activities in 24 New Zealand primary care practices to illustrate how DEA and ABC can be used in conjunction to improve performance analysis and benchmarking. Results show that practice size, socio-economic environment, parts of the service delivery process as well as regular administrative tasks are major cost and performance drivers for general practices in immunisation activities. It is worth noting that initial analyses of the ABC results, using contextual information and conventional methods of analysis such as regression and correlations, did not result in any patterns of significance. Reorganising this information using the DEA efficiency scores has revealed trends that make sense to practitioners and provide insights into where to place efforts for improvement.

Classifying Revenue Management: A Taxonomy to Assess Business Practice

As revenue management (RM) techniques evolve there is a need to take stock of how organizations practice RM and the interactions among techniques. This would help practitioners and researchers better understand how RM practice is influenced by the business setting, including those not traditionally associated with advanced RM techniques. Also, it would facilitate investigations of which practices lead to better outcomes in different contexts. Research to date has focused on individual techniques within individual business settings, with limited attention to the range of environments in which RM practice occurs. This suggests a need for a common framework to classify and assess differences in practice. In this article, we present a taxonomy which comprises (i) seven indicators of practice and (ii) a decision tree to measure RM across diverse businesses. We test the classification system in a survey of 232 businesses. Results show the taxonomy provides a comprehensive view of RM practice, with meaningful discrimination across settings. Findings also offer insight into how practices vary across different settings. Our taxonomy contributes to future research by facilitating systematic comparisons of RM practices, the settings in which it is adopted, and its impact on performance.

Data Envelopment Analysis with Non-Homogeneous DMUs

Data envelopment analysis (DEA), as originally proposed is a methodology for evaluating the relative efficiencies of a set of homogeneous decision making units (DMUs) in the sense that each uses the same input and output measures (in varying amounts from one DMU to another). In some situations, however, the assumption of homogeneity among DMUs may not apply. As an example, consider the case where the DMUs are plants in the same industry which may not all produce the same products. Evaluating efficiencies in the absence of homogeneity gives rise to the issue of how to fairly compare a DMU to other units, some of which may not be exactly in the same ‘business’. A related problem, and one that has been examined extensively in the literature, is the missing data problem; a DMU produces a certain output, but its value is not known. One approach taken to address this problem is to ‘create’ a value for the missing output (e.g. substituting zero, or by taking the average of known values), and use it to fill in the gaps. In the present setting, however, the issue isn’t that the data for the output is missing for certain DMUs, but rather that the output isn’t produced. We argue herein that if a DMU has chosen not to produce a certain output, or for any reason cannot produce that output, and therefore does not put the resources in place to do so, then it would be inappropriate to artificially assign that DMU a zero value or some ‘average’ value for the nonexistent factor. Specifically, the desire is to fairly evaluate a DMU for what it does, rather than penalize or credit it for what it doesn’t do. In the current chapter we present DEA-based models for evaluating the relative efficiencies of a set of DMUs where the requirement of homogeneity is relaxed. We then use these models to examine the efficiencies of a set of manufacturing plants.

The deductibility of Sarbanes-Oxley costs incurred by Australasian companies

Purpose - – This paper aims to examine the nature of Sarbanes-Oxley (SOX) costs incurred by subsidiaries of USA parent companies, and considers whether any value flows to non-USA subsidiaries. Deductibility is analysed under both the general deductibility provisions and the transfer pricing regimes of Australia and New Zealand (NZ). Reference is also made to the Organisation for Economic Cooperation and Development (OECD) transfer pricing guidelines and the US transfer pricing regulations. Australasian and New Zealand subsidiaries of US parent companies frequently incur costs related to their parent’s regulatory reporting requirements under the Sarbanes-Oxley Act of 2002. Tax authorities, generally, view these costs as “shareholder activities”, i.e. activities performed for the benefit of the parent only. As such, they are considered non-deductible to the subsidiaries of USA parents because an independent party dealing at arm’s length would not pay to receive similar services. We consider circumstances in which some costs may be deductible. Design/methodology/approach - – Legal analysis. Findings - – We conclude that there can be circumstances where these so-called shareholder activities do provide value to subsidiaries and, accordingly, may (or should) be deductible in the local jurisdiction. Research limitations/implications - – This analysis is limited to a consideration of Australian, NZ, OECD and US sources. Practical implications - – This paper provides an analysis of the deductibility of a type of expenditure commonly encountered by subsidiaries of US parent companies. Originality/value - – Limited research is available that deals with this issue. In most cases, only general statements on deductibility of similar types of expenditure are available to taxpayers.

Boundary objects for institutional work across service ecosystems

Institutional arrangements for collaborative purposes have gained increasing attention within research on service ecosystems. For collaborations to be effective, actors need to undertake institutional work that will result in new institutional arrangements. When institutional work takes place across service ecosystems, actors may be confronted with non-harmonious or conflicting institutional arrangements, which need to be reconciled by translating the incompatible views of diverse ecosystems. Therefore, the purpose of this paper is to introduce the concept of boundary objects as a means of facilitating institutional work across ecosystems, and present their mechanism in undertaking institutional work.,Longitudinal qualitative interviews were conducted with three key actors (funding agency, service provider and clinicians) in providing home-based support services (HBSS). The data were analyzed by undertaking a thematic analysis of the transcripts, which helped to identify the actors’ views on the nature of HBSS and its impact as a boundary object within the implementation of the case-mix system, and thus to empirically illustrate the theoretical assumptions.,The data assisted in the creation of a conceptualization that maps out the process of boundary objects facilitating (disrupting and creating) institutional work. This study supports that boundary objects disrupt boundaries between actors’ ecosystems, which was a sufficient condition to dismantle institutional support for the practices of individual fields. Furthermore, the object has changed the type and extent of interaction between actors in an ecosystem to allow these actors to redefine their identity and role in the new institutional arrangement.,This work has developed a novel conceptualization for a boundary object-led translation process in facilitating institutional work. To the researchers’ knowledge, this is the first study to explore the processes and mechanisms of boundary objects in facilitating institutional work across ecosystems.

DEA and Accounting Performance Measurement

This chapter considers the use of accounting information in DEA. We examine some of the advantages and pitfalls of using this type of information in DEA models. We also discuss some typical accounting measures used in DEA and suggest three models using publicly available accounting information. The chapter also examines how DEA can be used in conjunction with accounting approaches to measurement, including the balanced scorecard and activity-based costing. We demonstrate, using case studies, how the combined use of these methods can improve the insights obtained. The chapter concludes by discussing contingency theory and how it can be used to inform DEA research on the relationship between performance and environmental factors.