Original performance measures for efficiency analysis and essential assumptions for benchmarking when applying the DEA methodology

Abstract The following questions, which are of fundamental importance for data envelopment analysis (DEA) and, to some extent, for efficiency measurement in general, are examined: Is DEA a general “multiple-criteria evaluation methodology” or a specific methodology for analysing the efficiency of production processes? What performance measures are original to any efficiency analysis? What assumptions are essential for a reasonable benchmarking when applying the DEA methodology? These questions have not yet been answered conclusively. The article provides some answers by systematically examining DEA’s foundations as a kind of multidimensional cost-benefit analysis within a general framework of decision and production theory. The findings enable propositions to be derived that contribute to advancing the DEA methodology and to its meaningful and useful empirical and practical application. For instance, it justifies how pollutants and disposability properties can be treated in DEA.