What is it about?
The article focuses on the measurement of a relevant component of the human capital, the managerial ability (MA) for Italian banks over the period 2006-2011. In particular, a new measure is proposed in order to distinguish the effect of the manager from the effect of the firm in creating firm value. The article uses the “two-stage SFA-DEA” approach, in which both Stochastic Frontier Approach (SFA) and Data Envelopment Analysis (DEA) are used to estimate the efficiency scores.
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Why is it important?
The originality of the article consists in the proposition of a new model to measure MA, which outperforms the alternative measures, simple to use as it is based on easily obtainable financial data and available for a broad cross section of firms.
Perspectives
A new perspective to measure, using a rigorous innovative “two-stage SFA-DEA” approach to measure a difficult to measure, yet relevant variable at the basis of the firm's competitive advantage: the managerial ability (MA). Thecnically speaking, the measure of MA has been obtained as a residue of the inefficiency equation of SFA and then it has been used as a new input to insert in the “second/third” DEA stage.
Professor Stefania VELTRI
university of Calabria
Read the Original
This page is a summary of: Measuring Managerial Ability Using a Two-stage SFA-DEA Approach, Knowledge and Process Management, October 2016, Wiley,
DOI: 10.1002/kpm.1528.
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