Publication: Cognitive strategic groups and long-run efficiency evaluation : the case of Spanish savings banks
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2007-03
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Abstract
In the framework of Cognitive Approach, this paper proposes a new method to identify
strategic groups (SG) using Data Envelopment Analysis (DEA) methods. Two
assumptions are maintained in the SG literature: first, firms grouped together value
inputs and outputs similarly, and, second, some degree of stability in those valuations
should be identified. Virtual weights obtained from DEA are extremely useful in the
valuation of the strategic variables, but a problem emerges when longitudinal analysis is
performed. This problem is addressed by defining a long run DEA evaluation. SGs are
determined by means of Cluster Analysis, using virtual outputs and virtual inputs as
variables and Spanish savings banks as observations. The traditional method of
determining SGs by clustering on the original variables is also applied and the results
are compared. It is shown that the long run DEA weights approach has advantages over
the traditional methodology.
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Banking, Cognitive groups, Data Envelopment Analysis, Stable strategic time periods, Strategic groups