Investigating the research and development performance of Chinese industry: A two-stage prospect data envelopment analysis approach

Abstract

With growing investments inindustry research and development (R&D) innovation in China, evaluating whether R&D resources assigned to industries areeffectively used is essential. However, limited research has been conducted on the assessment of R&D effectiveness in Chinese industries that encompasses both the internal process of R&D production and the psychological risks encountered by decision-makers (DMs).Hence, this study puts forward a two-stage prospect data envelopment analysis approach that can characterise the risk attitude of DM in evaluation. By employing this approach, we assess the R&D activities of 28 industries in China from an overall perspective and explore the actual influence of DMs’ risk psychology on the evaluation results through sensitivity and comparative analyses. Furthermore, we categorise the R&D performance of 28 Chinese industries into four quadrants for analysis and focus on the R&D performance of key industries such as extraction of petroleum and natural gas, mining of ferrous metal ores and manufacture of tobacco. Based on the findings, we provide a range of policy recommendations regarding the R&D activities of Chinese industries.