Measuring comparative efficiencies and merger impacts of wireless communication companies
Department or Administrative Unit
The purpose of this study is to benchmark the wireless mobile communication service providers in the USA for the relative efficiencies of assets and expenses in conjunction with revenues. In addition, the impact of merger activities on the efficiencies will be investigated.
The authors use data envelopment analysis (DEA) to measure comparative efficiencies of wireless mobile communication companies. Data include annual reports showing assets, expenses, and revenues.
For the relative efficiencies of total asset utilization, eight decision‐making units (DMU) out of 16 are 100 percent efficient. Likewise, seven DMU's are 100 percent efficient in the current asset model. However, only five DMU's are 100 percent efficient in the expense model. Accordingly, the companies maintain relatively higher efficiencies for asset management than those for expense management. Merger activities adversely affect the efficiencies of the companies in the models. Thus, the companies need to make stronger efforts to improve their efficiencies after consolidation.
This study is subject to the limitations of financial data and DEA that measures relative technical efficiencies of DMU. Results will vary according to data and DMU included in the model.
The major contributions of this study are that this is the first attempt of benchmarking using DEA in the wireless telecommunication industry in the USA and its investigation of the impact of merger and acquisition activities on efficiencies.
Kwon, H., Stoeberl, P. A., & Joo, S. (2008). Measuring comparative efficiencies and merger impacts of wireless communication companies. Benchmarking: An International Journal, 15(3), 212–224. https://doi.org/10.1108/14635770810876566
Benchmarking: An International Journal
Copyright © 2008, Emerald Group Publishing Limited