Determination of control efficiency in electronic data interchange: A data envelopment analysis approach

Electronic Data Interchange (EDI) has a significant impact on business practices by eliminating paper related audit trails and enabling transactions to be processed at high speed without human intervention. Major advantages and benefits derived from EDI, however, depend upon the usage of EDI controls. Management must determine whether their investment on EDI controls is appropriate, as the establishment of EDI controls demands many resources and high skills. This study proposes data envelopment analysis model to identify efficient and inefficient EDI control systems in various context of input (formal and automated EDI controls) and output (EDI implementation and performance). DEA can also determine the factors that are significantly different between efficient and inefficient groups. The model is tested using data collected from EDI adopters.