Measuring performance heterogeneity within groups – a two-dimensional approach

Abstract

We introduce a two-dimensional measure for the heterogeneity of performance within groups. It leads to a much more differentiated description of heterogeneity than alternative measures and it is relatively robust with regard to extreme values of small units (‘outliers’).

Notes

¹ This exposition is inspired by diagrams in Salter (1969). Salter displayed productivity levels of firms in ascending order, starting with the least efficient firm.

² In an empirical analysis for German manufacturing industries during the period from 1992 to 2001, we find that the median efficient production unit is about 59% of the maximum efficiency level and that the minimum efficiency level is, on average, about 38.5%. There are, however, large differences between the various industries with regard to these figures. See Fritsch and Stephan (2003) for details.

³ For an analysis of technical efficiency within industries on the basis of this measure, see Fritsch and Stephan (2003).