3.2 Return to scale analysis in each stage
Return to scale (RTS) measurement is very useful in DEA application. In a view of production theory, it
gives the insights on how scale affects operations efficiency. Input oriented RTS analysis is done to find how to
improve operations efficiency by resizing a DMU’s scale in each sub-production stage and the whole stage.
The results in table3 show that most inefficient DMUs present decreasing return to scale in the first stage.
Namely, the proportionate rise in the inputs overpasses that in the outputs. Accordingly, in the first stage, the
initial inputs should be reduced, while the websites’ functions (outputs in the first stage) such as attracting
visitors, online advertising and marketing, interactive service with consumers etc., need to be improved.
Interestingly, in the second stage, all inefficient DMUs show increasing return to scale. It means that the
proportional rise of inputs in website quality is less than that in profitability, so it needs to improve website
quality to achieve constant return to scale. The results in both the first stage and the second stage emphasize the
importance of website quality improvement.
Return to scale in the overall efficiency without intermediate factors indicates that most inefficient
DMUs exhibit decreasing return to scale, which means there is a shortage of profitability improvement in the
conversion from the initial inputs to the final outputs. Therefore, it is necessary to enhance the profitability in
the overall production process.