Bridging radial and non-radial measures of efficiency in DEA

Data envelopment analysis (DEA) has been utilized worldwide for measuring efficiencies of banks, telecommunications, electric utilities and so forth. Yet, the existing models have some well-known shortcomings that limit their usefulness. In DEA we have two fundamental approaches to measuring efficiency with very different characteristics; radial and non-radial. We demonstrate a method for linking these two approaches in a unified framework called Connected-SBM (slacks-based measure). It includes two scalar parameters, and by changing the parameter values we can relocate the analysis anywhere between the radial and the non-radial models. An appropriate choice of these parameters can overcome the key shortcomings inherent in the two approaches, namely, proportionality and mixed patterns of slacks.