A DEA-based analysis of productivity change and intertemporal managerial performance

Data envelopment analysis (DEA) is typically applied to cross-section data to analyze productive efficiency. DEA is infrequently applied to panel data to analyze the variation of productive efficiency over time, but when it is, the technique of choice has been window analysis. Here, we adopt a different approach to the use of DEA with panel data. Following the lead of Färe and others, we use DEA to construct a Malmquist index of productivity change, and we provide a new decomposition of the Malmquist productivity index. Our new decomposition allocates productivity change to change in productive efficiency, the magnitude of technical change, and the bias of technical change. We then propose an evaluation of managerial performance, not on the usual basis of static efficiency, but on the intertemporal basis of change in efficiency and adaptation to the bias of technical change. We illustrate our approach with an examination of the recent productivity change experience in Spanish savings banks.