Enhancing the Measurement of Firm Inefficiency Accounting for Corporate Social Responsibility : A Dynamic Data Envelopment Analysis Fuzzy Approach

This paper contributes to research on the corporate social responsibility (CSR) field and the inefficiency measurement of firms by proposing a new method for evaluating inefficiency accounting for firms’ CSR activities. The new approach considers the imprecise nature of CSR data through the fuzzy data envelopment analysis (FDEA) method and further extends it by allowing for the dynamic interdependence of firms’ production decisions through adjustment costs, related to firms investments. In addition, the new method deals with zero or negative values for inputs and/or outputs of the data. The empirical application used in this paper considers a dataset of CSR activities of European firms for three industries (capital, consumption, and other) over the period 2014–2016. Two main results are found with this data. First, the study shows that fuzzy dynamic inefficiencies tend to be lower than these obtained from the conventional crisp evaluation of inefficiency. Second, the study finds the lowest dynamic inefficiency for capital industry, followed by other, and finally consumption, which could be related to different pressures put by the firms’ stakeholders on CSR engagement within specific industries