Cross Firm Bank Branch Benchmarking Using "Handicapped" Data Envelopment Analysis to Adjust for Corporate Strategic Effects

In today’s economy and society, performance analyses in the services industries attract more and more attention. However, the traditional Data Envelopment Analysis (DEA) approach requires a consistent operating environment that one may deem as the "culture". In reality, there is an especially important situation when the units belong to different organizations and the groups of units can not have the same culture. This reality challenges the traditional methods of applying DEA theory to real-world cases. A new technology was developed that allows efficiency evaluation by benchmarking three different banks’ branches in the city of Mississauga, Canada, using DEA. This new approach overcomes the above limitation by introducing a mathematically handicapped DEA model. Using this development, cultural differences due to corporate management\´s policies can be adjusted for. Finding a handicapping function which can fairly assess the large Canadian banks’ managerial and business strategy differences was another contribution of this work.