Measuring the performance efficiency of Turkish electrical machinery manufacturing SMEs with frontier method

Abstract

Purpose The purpose of this paper is to concentrate on measuring and evaluating the performance efficiency of electrical machinery manufacturing small- and medium-sized enterprises (SMEs) in Turkey. The industry-based efficiency evaluation provides management with information including the relatively best practice firms in the observation sets and locates the relatively inefficient firms by comparing with the frontiers. Design/methodology/approach In this study, an evaluation model, based on previous literature and recent industry SWOT analysis, is proposed to carry out efficiency analysis for electrical machinery manufacturing SMEs and output-oriented CCR data envelopment analysis methodology is used to find out frontier SMEs. The proposed efficiency measurement model is used for 93 SMEs from electrical machinery manufacturing sector. Findings Rely on the model results, efficiency score of the firms are compared and enhancements required for becoming an efficient unit are denoted. This study is based on previous research model that was carried out for ten different industries. The results indicated that 39 out of 93 companies efficiently performed in general perspective. The analysis also resulted that firms have significant resource excesses and shortages on outputs. Originality/value The distinguished way of this study is to evaluate Turkish electrical machinery manufacturing companies’ resources relying on performance efficiency model that compromises of strategic competitive priorities and also the model provides enhancement opportunities to SMEs for being more competitive in the sector. The characteristics features of the firms are offered with respect to demographic, financial and quality perspectives.

Definition of input and output variables to assess operations strategy efficiency frontier

“…The efficiency is established from a ratio between outputs and inputs, and the DMU with the highest index is considered relatively efficient (Chen et al , 2015). Results smaller than one represent inefficient firms (Bulak et al , 2016). When a point is technically inefficient, at least one of its input or output factors can be improved to reach the efficiency frontier (Khezrimotlagh and Chen, 2018; Bulak et al , 2016).…”

“…Results smaller than one represent inefficient firms (Bulak et al , 2016). When a point is technically inefficient, at least one of its input or output factors can be improved to reach the efficiency frontier (Khezrimotlagh and Chen, 2018; Bulak et al , 2016). DEA envelops the data set with the frontier of the most efficient DMU (Chen et al , 2015), and the efficiency index of the DMUs outside the frontier is established according to their gap to the efficient frontier (Liu et al , 2016).…”

A Review of Critical Success Factors Which Drives the Performance of Micro, Small and Medium Enterprises

“…The success and survival of an enterprise will depend on its innovation capability (Talke, Salomo & Kock, 2011;Al-Ansari, Pervan & Xu, 2013;Bulak, Turkyilmaz, Satir, Shoaib & Shahbaz, 2016). There is an argument that innovation is a life blood of an enterprise's growth and survival as it is central in creating value and competitive advantage for the enterprise (Baregheh, Rowley & Sambrook, 2009).…”

“…Enterprises which have a successful growth usually have close contact with their customers and are committed to quality of products and services (Feindt, et al, 2002;Bulak, et al, 2016). The enterprise should develop a close and trusted relationship with its customers for it to achieve a higher performance (Azmat & Samaratunge,2009;Azmat & Samaratunge, 2013;Shi & Yu, 2013) and this can be done through a process of networking with customers (Taipale-Erävala, Heilmann & Lampela, 2014).…”

“…Supplier management is one of the important drivers of financial performance (Quesada & Gazo, 2007;Atristain & Rajagopal, 2010;Shi & Yu, 2013). Enterprises should develop a relationship with their suppliers for them to achieve a competitive advantage and long term organisational performance (Temtime & Solomon, 2002;Tari, Molina & Castejon, 2007;Talib, et al, 2014;Bulak, et al, 2016).…”