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Production Frontier Methodologies and Efficiency as a Performance Measure in Strategic Management Research

Strategic Management Journal, Forthcoming

39 Pages Posted: 10 Oct 2013  

Chien-Ming Chen

Nanyang Technological University (NTU) - Nanyang Business School

Magali A. Delmas

University of California, Los Angeles (UCLA)

Marvin B. Lieberman

UCLA Anderson School of Management

Date Written: October 8, 2013

Abstract

The measurement of corporate performance is central to strategic management research. A common objective of this research is to identify top performers in an industry and their sources of competitive advantage. Despite this focus on best firms and practices, most researchers utilize statistical methods that identify average effects in a sample, and they assess a single performance dimension while ignoring other relevant dimensions. Emphasis on purely financial measures can overlook the fact that a firm’s efficiency in transforming resources has been shown as a major source of competitive advantage. In this article we demonstrate how frontier methodologies, such as Data Envelopment Analysis and the Stochastic Frontier approach, can address these challenges. We provide an illustration based on longitudinal data from U.S. and Japanese automobile producers.

Keywords: Performance Measurement, Data Envelopment Analysis, Stochastic Frontier Analysis, Research methodology, Efficiency

JEL Classification: B4, C14, D21, L62, M11

Suggested Citation

Chen, Chien-Ming and Delmas, Magali A. and Lieberman, Marvin B., Production Frontier Methodologies and Efficiency as a Performance Measure in Strategic Management Research (October 8, 2013). Strategic Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2337697

Chien-Ming Chen

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore, 639798
Singapore

Magali A. Delmas (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Marvin Lieberman

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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