Technical Efficiency of Consumer Goods Manufacturing Industry in Indonesia during the Pandemic: Application of DEA Model

Abstract

This study aims to analyze the efficiency level of manufacturing companies in Indonesia, especially in the consumer goods sector in 2018 to 2020. Using a two-stage DEA approach, the result of the study shows that the efficiency level of manufacturing companies in Indonesia is still fully efficient. The results of DEAP data processing indicates that manufacturing companies tend to have a pattern of Increasing Return to Scale (IRS). In addition, the estimation results from the Tobit regression model indicates that the number of employees, income, and Return on Equity (ROE) has a positive impact on the company's efficiency. However, the expenditure of the company's salary/wages has a negative impact on the company's efficiency, indicating the need for revaluation and reconstruction of cost budgeting incurred by the company, especially on the salary/wages expense.