Operational efficiency of plastic producing firms in Iran: a DEA approach

Abstract

Purpose Firms are working in a complex environment in which the updated information increase the pace of precise decision making and reduce the risk of wrong decisions. Therefore, discovering firms’ performance is a major issue. The purpose of this paper is to evaluate the efficiency of Iranian plastic producing companies by using data envelopment analysis (DEA). It also discovers various drivers that significantly affect the efficiency of enterprises. Design/methodology/approach The authors studied a sample of 17 manufacturing firms to examine the relative efficiency of companies. They, then, evaluated the effects of efficiency drivers and used two methods for these purposes: DEA and bootstrapped Tobit regression model. Findings The study has shown that two manufacturing firms out of selected 17 are efficient under the Charnes, Cooper, and Rhodes model. Also, nine out of 17 plastic producing companies are productive under the Banker, Charnes, and Cooper model. The results of Tobit regression shows that only two efficiency drivers out of four have a significant positive influence on the efficiency of plastic producing firms. Research limitations/implications Considering one industry and country limits the generalizability of the results provided. Besides, data availability has limited the analysis in some parts, particularly in bootstrapped Tobit regression. Practical implications The authors listed this section into benchmarking and strategical management; more importantly, the suggestions for improving the chemical industry and its future evolution are presented. Originality/value The paper is classified into two issues: the efficiency of plastic producing firms in Iran and evaluating the reason for inefficiency, apart from internal managerial procedures.