"http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> Robust approach for efficiency measurement of employee performance under profit sharing system | Mahmudah | Economic Journal of Emerging Markets

Robust approach for efficiency measurement of employee performance under profit sharing system

Umi Mahmudah(1), Muhamad Safiih Lola(2),
(1) Universiti Malaysia Terengganu
(2) Universiti Malaysia Terengganu


This study investigates the efficiency of employees’ performances under profit-sharing system by using data envelopment analysis (DEA) method, which is the most popular approach for efficiency measurement. However, a robust approach is used to deal with the complexity of the traditional DEA estimators. Besides, robust Data Envelopment Analysis (RDEA) is very useful when the data is contaminated by outliers. The sample includes five divisions which cover as many as 102 employees of the shipping company in Malaysia are analyzed by using R program. The results reveal that the initial DEA efficiency is an over-estimate of the true efficiency. Meanwhile, RDEA provides better accuracy of the results. Further, robust approach is appropriate to be used in the measurement of the efficiency of company divisions under profit sharing program.


DEA, Profit Sharing, Robust


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Bhargava, S., & Jenkinson, T. (1995). Explicit versus implicit profit-sharing and the determination of wages: microeconomic evidence from the U.K. Labour, 9, 73-95.

Blasi, J. (2013). The evidence on employee stock ownership and profit sharing: The citizen’s share. Forthcoming from Yale University Press in August of 2013.

Cahuc, P., & Dormont, B. (1997). Profit Sharing: Does It Increase Productivity and Employment? A theoretical model and empirical evidence on French micro data. Labour Economics, 4, 293-319.


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Economic Journal of Emerging Markets (EJEM)
ISSN 2086-3128 (print), ISSN 2502-180X (online)
Published by:
Center for Economic Studies, Department of Economics,
Universitas Islam Indonesia, Indonesia.

Creative Commons License
EJEM by http://journal.uii.ac.id/index.php/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.