Internal resource waste and centralization degree in two-stage systems: An efficiency analysis

Qingxian An, Hong Yan, Jie Wu, Liang Liang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

51 Citations (Scopus)


Internal resource waste refers to the waste in the intermediate resources between the upstream stage and downstream stage in a production or service system. This study examines a system with a two-stage structure, in which the outputs from the first stage are taken as the inputs for the second stage. Two-stage systems can exist in centralized, decentralized, or mixed organizational modes. In this paper, we propose two-stage DEA models considering a degree of centralization that makes it possible to measure internal resource waste in different system modes. Some managerial insights are tested and verified from the perspective of efficiency analysis. We find that: 1) when there is only one intermediate measure in a centralized two-stage system, internal resource waste can be eliminated completely, and 2) a higher degree of centralization in a two-stage system can lead to less internal resource waste and more expected outputs. Finally, we present a numerical example and two practical real-world examples that illustrate our approach and findings.
Original languageEnglish
Pages (from-to)89-99
Number of pages11
JournalOmega (United Kingdom)
Publication statusPublished - 1 Jun 2016


  • Centralization degree
  • Data envelopment analysis
  • Internal resource waste
  • Two-stage structure

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Information Systems and Management


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