Performance benchmarking in gas distribution industry

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Abstract:

Purpose ‐ The paper aims to research the capability of using the tools of domestic and international performance benchmarking for estimation of efficiency, determine its key factors and reveal the full reserves of inputs reduction and potential growth efficiency for gas distribution companies. Design/methodology/approach ‐ In the research, three models of data envelopment analysis (DEA) and other tools of performance benchmarking are used to analyse the efficiency of gas distribution companies. Some factors are examined for their impact on efficiency. There are the scale, regional location, property category and other endogenous and exogenous factors. The results are based on the samples of 54 Ukrainian and 20 US gas distribution companies. Findings ‐ International benchmarking vastly expand performance improvement for domestic companies. The results of analysis and tools of this research allows to widen the capability of reduced consumption of various inputs by 10 per cent and provide the general gain of Ukrainian gas distribution company's and industry efficiency two times as much. Research limitations/implications ‐ The research is limited by single industry and by relatively short data set. The former is explained by requirement of technology (product and service) homogeneity when using DEA tools. The latter is connected with specificity of the industry and generally little numbers of firms in it. Practical implication ‐ The results of researching contain the data and recommendations to optimal scale, best proprietors makeup, specific reserves of input reduction for each company that was analysed. These results can be practicable for companies' management, present and potential investors and proprietors, regulative public authority. It is possible to use results of this research to make benchmarking for the other industries. Originality/value ‐ This is the first paper that adopts the various DEA models for measuring of efficiency in gas distribution industry of Ukraine and the tools of international benchmarking for Ukrainian and US companies.

Keywords: Benchmarking; Cost effectiveness; Data analysis; Gas industry

Document Type: Research Article

DOI: http://dx.doi.org/10.1108/14635770810903141

Publication date: August 29, 2008

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