Operational efficiency across the Chinese aerospace industry: a DEA and Malmquist analysis

Abstract

Purpose – The purpose of this paper is to study the operational efficiency of aerospace industry in China and compare the difference in efficiency between the private aerospace enterprises and the state-owned aerospace enterprises. This paper enriches the study on evaluating the operational efficiency of aerospace industry and develops the theory on aerospace industry management. Design/methodology/approach – The sample comprises all the aerospace enterprises listed in the A share market for which financial data are collected from the RESSET for subsequent analysis. Data envelopment analysis (DEA) and Malmquist productivity index (MPI) are used to derive findings. Findings – The paper finds both the scale and the technical level of the industry increased during the period, and this was mainly due to the growth of the state-owned enterprises. However, with the increase of scale, the total factor productivity of the sample decreased. This was mainly because the performance of the leading enterprises regressed. Overall, the operational efficiency of the industry was still relatively low. By comparing the private enterprises and the state-owned enterprises, this paper finds, in terms of scale, the private enterprises were far lower than the state-owned enterprises. However, as for operational efficiency, the private was more efficient, which indicates an imbalance in the development of the industry. Originality/value – This paper explores the operational efficiency across the Chinese aerospace industry, a focus currently lacking in research, presenting an overview of the industry and examining the difference in efficiency between the private aerospace enterprises and the state-owned aerospace enterprises to provide policymakers and managers with some practical suggestions to promote the development of the industry.