BENCHMARKING FRAMEWORK FOR PRODUCTIVITY FRONTIER FIRMS IN THE MALAYSIAN ELECTRICAL AND ELECTRONICS INDUSTRY

Abstract

The objective of this study is to develop a benchmarking framework using Data Envelopment Analysis (DEA) to measure and identify frontier firms in Malaysia’s Electrical and Electronics (E&E) industry. This framework equips policymakers and business leaders with a decision-making tool to allocate resources efficiently and promote productivity improvements. The study assesses the relative efficiency of 21 Bursa Malaysia-listed E&E firms using firm-level productivity data from 2017 to 2019, identifies frontier firms as benchmarks, and quantifies inefficiencies for non-frontier firms. The Malmquist Productivity Index is then applied to analyse productivity growth, decomposing technical change, pure efficiency change, and scale efficiency change. Findings reveal fluctuating frontier firm compositions, with few consistently efficient firms and significant sectoral productivity contributions from frontier firms. Non-frontier firms can improve by aligning with benchmarks, although productivity trends vary across the subsector. The analysis combines quantitative DEA with a qualitative case study to provide a holistic assessment of productivity, capturing organizational and managerial factors beyond numerical data. This comprehensive approach supports targeted productivity-enhancement policies and strategic resource allocation at the enterprise level, providing valuable insights into firm-level performance dynamics in the Malaysian Electrical and Electronics industry.