Data envelopment analysis -- a flexible device to assessing SMEs performance

Abstract

In a context of global economy, addressing SMEs performance within a local framework appears rather a naive approach. The key drawback of such an approach stems from its restriction to socio-economic factors that might lead to biased decisions regarding potential venues for performance improvement. In practice, the key objective of performance analysis consists in identifying benchmarks for best managerial practices with respect to resource allocation as well as production level setting. Conducting the analysis within a specific country, let it be a developing country, may be misleading. Although, the best of the class (benchmark) can be a valid reference for its peers within the same class, its status might not be preserved if the analysis is projected outside the borders of the class. Indeed, the likelihood for outperformance is high. In order to set targets for global competition, decision makers ought to look at the concept of performance from a broader geographical perspective, instead of confining it to a local scope. Here, we analyze, through a case study, SMEs performance within local and global production technology frameworks and we highlight the impact of the economy scope on various decisions. Data envelopment analysis (DEA) is used as a mathematical tool to support such decisions.