Measuring Input-Specific Productivity Change Based on the Principle of Least Action

Posted: 4 Aug 2016

See all articles by Juan Aparicio

Juan Aparicio

University Miguel Hernandez - Center of Operations Research

Magdalena Kapelko

Wroclaw University of Economics, Institute of Applied Mathematics, Department of Logistics

Bernhard Mahlberg

Institute for Industrial Research (IWI); Vienna University of Economics and Business - Institute for Production Management

Jose Sainz-Pardo

Vienna University of Economics and Business

Date Written: Ocotober 10, 2015

Abstract

In for-profit organizations efficiency and productivity measurement with reference to the potential for input-specific reductions is particularly important and has been the focus of interest in the recent literature. Different approaches can be formulated to measure and decompose input-specific productivity change over time. In this paper, we highlight some problems within existing approaches and propose a new methodology based on the Principle of Least Action, which is related to the notion of least distance. The new method also allows for the determination of strongly efficient targets. This model is operationalized in the form of a non-radial Luenberger productivity indicator based on data envelopment analysis. In our approach overall productivity change is the sum of input-specific productivity changes. Overall productivity change and input-specific changes are broken up into indicators of efficiency change and technical change. This decomposition enables the researcher to quantify the contributions of each production factor to productivity change and its components. In this way, the drivers of productivity development are revealed. For illustration purposes the new approach is applied to a recent dataset of Polish dairy processing firms.

Keywords: Data Envelopment Analysis, weighted additive model, closest targets, input-specific productivity change

JEL Classification: C43, C61, Q12

Suggested Citation

Aparicio, Juan and Kapelko, Magdalena and Mahlberg, Bernhard and Sainz-Pardo, Jose, Measuring Input-Specific Productivity Change Based on the Principle of Least Action (Ocotober 10, 2015). Available at SSRN: https://ssrn.com/abstract=2817874 or http://dx.doi.org/10.2139/ssrn.2817874

Juan Aparicio

University Miguel Hernandez - Center of Operations Research ( email )

Instituto CIO
Av. de la Universidad s/n.
Elche (Alicante), Alicante 03202
Spain

Magdalena Kapelko

Wroclaw University of Economics, Institute of Applied Mathematics, Department of Logistics ( email )

Komandorska 118/120
Wrocław, 53-345
Poland

HOME PAGE: http://https://sites.google.com/site/magdalenakapelko/

Bernhard Mahlberg (Contact Author)

Institute for Industrial Research (IWI) ( email )

Mittersteig 10/4
Vienna, 1050
Austria
+43 1 513 44 11 0 (Phone)
+43 1 513 44 11 2099 (Fax)

HOME PAGE: http://www.iwi.ac.at/

Vienna University of Economics and Business - Institute for Production Management ( email )

Welthandelsplatz 1
Building D2, Entrance C, 3rd floor
Vienna, 1020
Austria
+43 1 313 36 - 5615 (Phone)

HOME PAGE: http://https://www.wu.ac.at/en/prodmanengl/

Jose Sainz-Pardo

Vienna University of Economics and Business

Welthandelsplatz 1
Vienna, Wien 1020
Austria

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