Comparing the Efficiency and Productivity of Construction Firms in China, Japan, and Korea Using DEA and DEA-based Malmquist

Abstract

The competitiveness of construction firms may be achieved by effective decision-making and high productivity. Therefore, it is necessary to analyze the efficiency and productivity of construction firms. This study aims to compare the efficiency and productivity of Chinese, Japanese and Korea construction firms between 2005 and 2011 using Data Envelopment Analysis (DEA) and DEA-based Malmquist methods. The analysis process is as follows: 1) Decision Making Units, input and output variables are selected. 2) Efficiency of Chinese, Japanese and Korean construction firms is analyzed by applying DEA and selected variables. 3) Productivity of construction firms is presented as the Malmquist Productivity Index (MPI) by using DEA-based Malmquist and by dividing the MPIs into Technical Change Index and Technical Efficiency Change Index. The analysis results are: 1) the average efficiency score of Korean construction firms (0.861) is higher than those of Japanese construction firms (0.775) and Chinese construction firms (0.639), 2) the average MPI of Chinese construction firms (5.5%) is higher than those of Korean construction firms (0.9%) and Japanese construction firms (-0.1%). The results show that Korean construction firms need to improve productivity more than efficiency to enhance their competitiveness in the market.