Environmental Assessment on Energy and Sustainability by Data Envelopment Analysis
by Toshiyuki Sueyoshi, Mika Goto
27HANDLING ZERO AND NEGATIVE VALUES IN RADIAL MEASUREMENT
27.1 INTRODUCTION
As first discussed in Chapter 2, DEA has a computational difficulty when handling a data set that contains zero and negative values. See Wang et al. (2014) for a description of such a difficulty in DEA environmental assessment. The purpose of this chapter1 is to develop a new approach by which we can measure the level of corporate sustainability even if a data set contains many zero and negative values2. Thus, the proposed approach can improve the analytical capability of DEA environmental assessment that has been never explored by the previous chapters.
Here, it is necessary for us to note that Chapter 26 has already discussed how to handle zero and negative values by the property of translation invariance in non‐radial measurement. Unfortunately, the proposed approach does not work for radial measurement. Therefore, this chapter develops an extended approach to handle zero and negative values for both radial and non‐radial measurements. The proposed approach, not depending upon such a desirable property, can handle zero and negative values in production factors. It is easily envisioned that the proposed approach will be able to enhance the quality of strategic implications derived by DEA because the analytical capability to handle zero and negative values is a necessity for environmental assessment in modern business. For example, negative values often exist in financial performance measures (e.g., return ...