Multi-Period efficiency and productivity changes in global Automobile: A VRS-VRM and SML productivity index approach

Abstract This study tracked the static efficiency and dynamic productivity changes of global automakers from 2005 to 2012 using the Variant of Radial Measure (VRM) model and Sequential Malmquist-Luenberger (SML) productivity index. This study attempted to highlight the operations management aspects of the automakers’ overall competitive strategies using multi-firm longitudinal data by looking at groups of automakers from different geographic regions. The analysis results provided general insights on the dynamic capabilities of global automotive industry as well as on the efficiency and productivity of individual automakers. The implications of this study are as follows. First, the annual efficiency of global automakers is sensitive to the internal capacity utilization and external macro- or microeconomic environment surrounding individual automakers. In particular, European automakers tended to show low efficiency caused by overcapacity and low capacity utilization, indicating a need for improving efficiency by adjusting production capacity. Second, this study explores that dynamic capabilities can be used successfully for improving global automaker's efficiency. Therefore, automakers need their specific and unique dynamic capabilities harmonizing internal competencies with external changes to achieving competitive advantage.

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