engleski

European energy industry: managing operations on the edge of efficiency

The European energy industry has undergone major transformations over the last twenty years. To grow under new and changing business conditions, it has to reformulate its business strategy and redesign its business model taking into account technical efficiency. The main aim of this paper is to explore technical efficiency and its determinants in the European energy industry in a comparative setting for the period 2005-2016. To that end, a two-stage bootstrap data envelopment analysis (DEA) was employed. In the first stage, the bias-corrected DEA efficiency scores were calculated. Then, in the second stage, they were regressed on selected factors in bootstrap truncated regression to determine the sources of energy company technical efficiency. The results indicate considerable variability in efficiency scores between companies and generally large room for efficiency improvement. The differences in efficiency may be explained by the company-specific characteristics and environmental factors. Particularly, technical efficiency of energy companies may be improved having more educated employees, being agile and prone to the internalization of business and open to competition, as well as less relying on state financial assistance and being more resilient to its pressures.

energy industry ; business model ; technical efficiency ; soft budget constraints ; bootstrap data envelopment analysis ; European Union

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