IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 22, Issue 10. Ser. III (October 2020), PP 40-51 www.iosrjournals.org DOI: 10.9790/487X-2210034051 www.iosrjournals.org 40 | Page A Data Envelopment Analysis Approach for Benchmarking of Manufacturing Efficiency in Nigeria. Zoakah, Dogonyaro Joy Department Of Business Administration Faculty of Management Sciences University of JOS Prof. Nmadu Teresa Mwuese Department Of Business Administration Faculty of Management Sciences University of JOS Goyit, Meshach Gomam (Phd) Department Of Business Administration Faculty of Management Sciences University of JOS Abstract This study aimed at benchmarking of manufacturing efficiency in Nigeria using Data Envelopment Analysis (DEA). This study was motivated due to the recurring challenges faced by manufacturing companies in Nigeria in terms of their efficiency. The sampled firms were 28 quoted manufacturing companies categorized under three sub sectors. Data were obtained through secondary sources from the published financial statements of the Nigerian Stock Exchange from 2015-2019 and analysed using Data Envelopment Analysis.The study revealed that only 4 companies representing just 14.29% are operating at increasing return to scale IRTS; while 2 representing about 7.14% companies are operating at constant return to scale (CRTS) and 22 companies comprising 78.57% are operating at decreasing return to scale (NIRS/DRS). This suggests that employing more inputs brings about less than proportional change in output largely due to diminishing marginal returns to scale.It was also found that, Johnholt PLC., Dangote Cement PLC. and Premier paints PLC. were leading companies with the best first three scale efficiencies of 100%, 100% and 99% respectively. The scale relative efficiencies showed that only three (3) companies are efficient in managing their assets and liabilities. While 25 companies are inefficient with respect to asset liability ratio. However, Honeywell PLC and Johnholt PLC have both exhibited 100% level of technical efficiencies over the years under study which makes them standout as the optimum benchmark target within the period under study.It is therefore recommended that, all other inefficient similar strategic companies should benchmark against these four outstanding companies. Keywords: Constant return to scale (CRS), Increasing return to scale, Variable return to scale, Data envelopment analysis (DEA), Manufacturing, Variable return to scale (VRS). --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 25-09-2020 Date of Acceptance: 08-10-2020 --------------------------------------------------------------------------------------------------------------------------------------- I. Background To The Study Efficiency assessment of companies is a major concern by managers and stakeholders in the light of present-day global challenges in both developed and developing countries. It reveals how a company’s resources are used productively and it also motivates firms to implement strategies for future improvements (Yu, Barros, Tsai & Liao, 2014). Manufacturing companies must be ready to meet and adapt to challenges emerging from these changes if they are to survive and remain in business as major players. One of the strategies is taking advantage of benchmarking and classifying the efficiency of companies in the relevant sector (Imafidon& Osamwonyi,2015). One major motivation for this study is the fact that despite the level of acceptance of benchmarking in the last years, the efficiency of manufacturing companies is experiencing uncertainties. The Nigerian economy is known to be highly dependent on oil revenues and this displays its preference in terms of managing continuous revenue sources. This reliance on the oil sector is liable to have a great negative effect on the other sectors such as manufacturing (Ku, Mustapha & Goh, 2010). Efficiency gives information about the attainment of an activity, a process or an organisation with a reasonable extension far from those directly associated with the calculated value of the parameter itself (Haziq, Mosameem, Muslim, Dost and Qani, 2019). Evaluating efficiency levels has significantly become an important issue for managers of companies in developing countries like Nigeria that is currently going through economic challenges (Fapohunda, Ogbeide, Igbinigie 2017). Data Envelopment Analysis (DEA) has been found to ascertain the efficiency of firms with more accuracy and less enormity of inefficiency than other approaches (Eriki&Osifo, 2014; Yu, Hammond, Ling,