Partner selection for cooperation: a novel data envelopment analysis approach integrating improvement costs

Effective partner selection is a crucial determinant of successful cooperation. This study contributes to the field by developing a comprehensive evaluation framework specifically designed for partner selection, thereby facilitating economically viable cooperation. We establish and analyse two cooperation scenarios: the first involves the reallocation of input resources, while the second extends this by incorporating both resource reallocation and technology learning. Our contribution lies in the formulation of partner selection models tailored to each scenario, which uniquely account for the improvements achieved through cooperation, as well as the associated costs. The framework introduces the definition of cooperation efficiency, along with concepts of effective and ineffective cooperation, enabling a more nuanced assessment and understanding of cooperation performance. In the presence of effective cooperation, two criteria guide partner selection: maximising cooperation profit (an absolute criterion) and maximising cooperation efficiency (a relative criterion). If no effective cooperation exists, no partner will be selected. Also, we employ the Shapley value to ensure a fair profit allocation among partners. For illustrations, we present a numerical example and an application of partner selection for steel fabrication plants, comparing the approach to previous methods and demonstrating its capacity to address the limitations inherent in existing frameworks.