November-December 2019 ISSN: 0193-4120 Page No. 3989 - 4000 3989 Examining the Efficiency of Co-operatives in Malaysia: An Application of DEA Fatin Syazwani Safiyuddin Norazlina Abd Wahab Selamah Maamor Islamic Business School, UUM Article Info Volume 81 Page Number: 3989 - 4000 Publication Issue: November-December 2019 Article History Article Received: 5 March 2019 Revised: 18 May 2019 Accepted: 24 September 2019 Publication: 19 December 2019 Abstract: The study examines the technical efficiency, pure technical efficiency, and scale efficiency of co-operatives in Malaysia. Data of co-operatives listed in 100 best Malaysian co-operatives from 2010 to 2017 was analyzed. To construct the efficiency model for the co-operatives, this study employed Data Envelopment Analysis (DEA). In DEA, one input (total assets) and two outputs (net income and dividend) were utilized. The results indicate that Malaysian co-operatives exhibited 62.3% overall technical efficiency during the study period where scale efficiency dominated the overall technical efficiency. Hence, we can suggest that Malaysian co-operatives had been performing better because of the scale of its operation instead of good managerial performance. The result also shows that most co- operatives were operating at non-CRS so that co-operatives need to make improvement in order to recover overall efficiency if pure technical inefficiency lead to the pure technical inefficient co-operatives could be undertaken. The result also demonstrates that scale efficiency (SE) dominated pure technical efficiency (PTE), which means that the scale and size of co-operatives are significant in raising the level of scale efficiency. The management of co-operatives in Malaysia should enhance their managerial performance because the PTE was found to contribute less to overall technical efficiency (OTE). Keywords: co-operatives, data envelopment analysis, pure technical efficiency, scale efficiency, technical efficiency 1. Introduction Cooperatives as an organization formed voluntarily by members in order to fulfill the economic needs and interests of the members. Through co-operatives, individuals could also get micro-credit facilities. Co-operatives are set up primarily to help members increase their income and subsequently the nation’s total income. They also help create jobs, offer financial services to people, stimulate the growth of business, and promote community growth (Deller, Hoyt, Hueth, & Sundaram-stukel, 2009; Anania & Gikuri, 2015). In short, the philosophy of a co-operative establishment is not to maximize profit but to provide the best possible products and services to its members. To do so, a co-operative must be efficient. According to the statistics released by the Department of Statistics Malaysia, in the first quarter of 2019, the Malaysian economy recorded RM341.7 billion of the total Gross Domestic Product (GDP). The economic development in Malaysia is contributed by a wide range of activities carried out by various entrepreneurial organizations, such as co-operatives, small and medium enterprises (SMEs), franchise chains, and social enterprises, including online businesses (Ministry of Entrepreneur Development, 2019). In particular, the co-operative sector recorded growth in turnover of 0.9% to RM40 billion in 2017, and the turnover is expected to increase to RM50 billion by 2020 (The Star Online, 15th March 2018). The significance of co-operatives in the country is indisputable; they will considerably contribute to the accomplishment of the