A data envelopment analysis approach for assessing the efficiency of small and medium-sized wood-furniture enterprises: a case study

Department of Industrial Engineering, Diponegoro University, 50275 Semarang, Indonesia

^* Corresponding author: ulkhaq@live.undip.ac.id

Abstract

Small and medium enterprises (SMEs) are widely recognised as the key engine of economic development. As a result of this recognition, a central issue dominating policy debates around the world and Indonesia in particular, has been how to stimulate economic growth through the deve-lopment of SMEs. During and beyond the financial crisis, the SMEs in Indonesia contributed to the employment growth and gave steady decline in poverty rate. Wood-furniture industry is one of two traditional labour-intensive industries in Indonesia which plays an important role in the economic development since the country is as one of the biggest furniture exporters in the world. However, the SMEs are facing difficulties in many areas, especially in spending their scarce resources efficiently. A case study to assess the efficiency of the wood-furniture SMEs has been conducted by applying the data envelopment analysis in Kangkung Village, Demak Regency, Indonesia. The results show that from ten assigned wood-furniture SMEs, there are six SMEs that are considered efficient, while the rest are regarded as inefficient. This research is expected to give some advantages to the SMEs regarding how to use their limited resources in an efficient way.