Socio-Economic Planning Sciences 38 (2004) 233–253 DEA evaluations of long- and short-run efficiencies of digital vs. physical product ‘‘dot com’’ companies Anitesh Barua a , P.L. Brockett a , W.W. Cooper a, *, Honghui Deng c , Barnett R. Parker b , T.W. Ruefli a , A. Whinston a a The Red McCombs School of Business, University of Texas at Austin, Austin, TX 78712-1174, USA b Pfeiffer University, Misenheimer, NC 28109, USA c University of Nevada at Las Vegas, Las Vegas, Nevada 39154-6034, USA Abstract This paper applies Data Envelopment Analysis to determine relative efficiencies between internet dot com companies that produce only physical products and those that produce only digital products. To allow for the fact that the latter are relatively inexperienced, a distinction is made between long- and short-run efficiencies and inefficiencies, with a finding of no statistically significant difference in the short run but digital product companies are significantly more efficient in the long run. A new way of distinguishing between long- and short-run performances is utilized that avoids the need for identifying the time periods associated with long-run vs. short-run efficiencies and inefficiencies. In place of ‘‘time,’’ this paper utilizes differences in the ‘‘properties’’ that economic theory associates with long- and short-run performances. r 2003 Elsevier Ltd. All rights reserved. Keywords: Internet; Long-run efficiency; Short-run efficiency; Data Envelopment Analysis 1. Introduction Barua et al. [1] initiated a new direction of research into the assessment of Information Technology (IT) productivity by investigating the relative performances of ‘‘digital’’ vs. ‘‘physical’’ ‘‘dot com’’ companies. The distinction between these two types of business is detailed ARTICLE IN PRESS *Corresponding author. Graduate School of Business, The Foster Parker Professor of Finance and Management, The University of Texas at Austin, Austin, TX 78712-1175, USA. Tel.: +1-512-471-3322; fax: +1-512-471-0587. E-mail addresses: barua@mail.utexas.edu (A. Barua), brockett@mail.utexas.edu (P.L. Brockett), cooperw@mail. utexas.edu (W.W. Cooper), honghui.deng@ccmail.nerada.edu (H. Deng), brp@pfeiffer.edu (B.R. Parker) tim.ruefli @bus.utexas.edu (T.W. Ruefli), abw@mail.utexas.edu (A. Whinston). 0038-0121/$ - see front matter r 2003 Elsevier Ltd. All rights reserved. doi:10.1016/j.seps.2003.10.002