The Use of DEA for ESG Activities and DEI Initiatives Considered as “Pillar of Sustainability” for Economic Growth Assessment in Western Balkans

Abstract

Data envelopment analysis (DEA), which is frequently used in efficiency analysis, has also been applied to the measurement of entrepreneurial efficiency for the attainment of desired values of macroeconomic indicators (such as the objectives of sustainable economic growth). For this application, DEA takes into account the economic, environmental, and social impact of entrepreneurship as the three dimensions of sustainability. This paper aimed to investigate the potential for a scalable (in diversity, equity, and inclusion dimensions) DEA application in sustainable entrepreneurship performance (SEP) assessment through three channels (assessing SEP without ESG activities; ESG→SEP; ESG (DEI)→SEP) and present an empirical study related to economic growth assessment and its environmental, social, and governance (ESG), and diversity, equity and inclusion (DEI) determinants across selected Western Balkans (WB) and European Union (EU) companies, based on the use of the proposed scalable DEA. It highlights how crucial a scalable nonparametric approach to macroeconomic efficiency analysis is and provides a more comprehensive perspective to the researchers on this issue. This study used a non-oriented DEA model with variable return-to-scale in a group of 60 WB and 60 EU companies, all of which adopted ICT/Blockchain (BC) technologies (the 11 ESG metrics). The annual corporate data was collected for seven years from 2017 until 2023. We projected the selected data to three country particularities (mass acceptance, adoption, and implementation of ICT/BC; mass labor force return from overseas; and ethnic, cultural, and religious particularities) and performed statistical analysis. Our findings estimate the influence of these three particularities on economic growth potential. In all countries’ cases, we found a statistically sound (significant, positive) correlation between ESG and SEP’s economic growth quality performance. Particularly, when corporate social and DEI initiatives mediate (channel III), SEP’s economic growth gains the best performance (+18%) in countries with ethnic, cultural, and religious particularities (BiH, NM), a +17% in countries enjoying massive labor force return from overseas (AL) and performs well in quality (particularly in the innovation and integrity) SEP performance success dimensions (all WB and EU countries). The proposed scalable DEA shows clearly, by performing an empirical analysis, which modern business (adopting ICT/BC) is the most effective in achieving sustainability projected to country particularities, helping corporate management to improve economic growth efficiency.