Efficiency measurement for network systems: IT impact on firm performance

A recent development in DEA (data envelopment analysis) examines the internal structure of a system so that more information regarding sources that cause inefficiency can be obtained. This paper discusses a network DEA model which distributes the system inefficiency to its component processes. The model is applied to assess the impact of information technology (IT) on firm performance in a banking industry. The results show that the impact of IT on firm performance operates indirectly through fund collection. The impact increases when the IT budget is shared with the profit generation process.