Benchmarking the Efficiency of Indonesian Cooperatives

This paper aims to introduce an alternative way to benchmark the efficiency of 30 Indonesian cooperatives at the provincial level from 2000 to 2007. A balanced panel data was used to determine the total factor productivity (TFP) and identify the main drivers to technical efficiency. A stochastic frontier analysis (SFA) was used to determine the influence of environmental variable such locations to technical efficiency of the cooperatives. Furthermore, based on this specification the efficiency frontiers are computed using data envelopment analysis (DEA). The efficiency of each cooperative was then ranked and compared to check for consistency. The study found that on average, cooperatives are 19.4 percent away from the production frontier. The panel data allows for the calculation of productivity change based on Malmquist index. Results found that on average, TFP increased by 8 percent during the observation periods which driven much by 13.6 percent increased in innovation