Marrying frontier analysis-based benchmarking and user-tailored decision support

Benchmarking allows firms to identify possible sources of improvement in order to increase their performance. Production-theory based frontier methods support advanced benchmarking. While frontier analysis literature abounds, there are relatively few papers on the use of frontier methods in benchmarking efforts by managers. It seems that the enormous amount of frontier analysis knowledge insufficiently reaches its primarily intended beneficiaries, being actual decision makers. The objective of this paper is to investigate why frontier-analysis-based benchmarking techniques may insufficiently find their way into practice and to explore what can be done in order to make them being used by decision makers. We find that benchmarking and frontier analysis literature have mainly evolved as two separate streams. Benchmarking literature defines key issues that determine the willingness of managers to benchmark, including benchmarking relevance, required managerial skills, and required resources and time. We link these issues to the use of frontier analysis in benchmarking efforts by managers. Existing studies that consider this link mainly focus on increasing the relevance of frontier analysis for managers, by incorporating individual preference information in the identification of relevant targets. Although benchmarking literature mentions the necessity of deriving actual improvement actions for the relevance of benchmarking, we find only few studies that link the identification of actions to the mere frontier-analysis-based performance measurement. Combining frontier analysis with interactive decision procedures may be useful in this respect. Managerial skills are another key issue as managers must be able to provide the necessary preference information for target selection and detect actual improvement actions given the firm-specific decision environment. Required skills depend on the user-friendliness of the frontier analysis software, which is determined by its complexity and the language used. Required resources and time relate to the data of multiple firms needed to apply frontier analysis. It may be interesting to involve intermediaries in frontier-analysis-based benchmarking efforts, as it may be easier for them to gather data of multiple firms, to obtain the required skills and to identify improvement actions based on their experience with multiple firms.