Operating Performance by the Development of Efficiency Measurement Based on Fuzzy DEA

Multinational corporations (MNCs) have always been managed exposure to foreign exchange rate fluctuation, as it may influence both profitability and firm value of MNCs. This study adopts fuzzy data envelopment analysis (fuzzy DEA) to measure the efficiency of MNCs in face of volatile exposure to exchange rate risk, as conventional DEA approach can only assess efficiency with a crisp value and is unable to evaluate imprecise data. Information technology (IT) industry in Taiwan plays an important role in the world and provides a solid ground for our empirical study. This study uses the data of Taiwanese IT industry in 2003, and adopts the samples from IC industry. In our fuzzy DEA model, multi-inputs refer to employee, fixed assets, and R&D expenses and multi-outputs refer to market value and gross operating profit. The results show that: for IC industry in Taiwan, 10 firms are efficient, while 8 firms are inefficient. It is possible for these inefficient firms to become efficient as their low-bound efficiency is lower than 1 and their up-bound efficiency is 1. Furthermore, 30 firms in IC industry are relative inefficient, with low-bound efficiency and up-bound efficiency lower than 1.