5. Extensions of the Multifactor Productivity: Benchmarking IESEG SCHOOL OF MANAGEMENT PRODUCTIVITY AND PROFITABILITY ASSESSMENT USING FINANCIAL STATEMENTS 5. Extensions of the Multifactor Productivity: Benchmarking Dr. Diego Prior Business Economics Department Universitat Autònoma de Barcelona and IESEG School of Management E-mail: diego.prior@uab.cat

Efficiency vs. productivity Output c b d a input

An example y y d d c c b b a a x x a) Outputs orientation b) Inputs orientation

Technological assumptions y d a Constant returns to scale b Variable returns c to scale x

FDH models j efficient under FDH, but inefficient under DEA y x y Outputs orientation Inputs orientation j efficient under FDH, but inefficient under DEA DMUj

L(y) x2 x1 IsoqL(y) xc xa xb xd axa bxb Inputs orientation

Another easy example Unit Isoquant C A A’ B D E (Trucks/tm)*1000 Potential contraction A’ B D E (employees/tm)*1000 Potential contraction

Outputs orientation y2 P(x) y1 ya yb yc yd a ya b yb Isop P(x)