Keywords: technical efficiency, knowledge, learning, benchmarking, inefficiency
Efficiency improvement through learning
During the last decade, the measurement of technical efficiency indexes has become a very popular field of research. Recent refinements in estimation tools and techniques have contributed to increase the interest on efficiency analyses. The empirical success of the efficiency literature has been obscured by the lack of a rigorous theory explaining the sources of inefficiency. This paper points to three components of the efficiency indexes as currently estimated: motivation, knowledge, and measurement error. We focus on the knowledge component to propose learning strategies that are based on the similarity between the inefficient firm and the benchmark firm.