Evaluation of market transformation efficiency of urban investment and development companies based on the three-stage DEA model

Purpose This study aims to explain the market-oriented transformation dilemma of Chinese urban investment and development companies (UIDCs; also known as local government investment and financing companies) and objectively evaluate their transformation efficiency from both static and dynamic perspectives. The results of the research provide methodological bases for improving the transformation efficiency of UIDCs, thus pointing out the direction for the rational planning of their transformation path. Design/methodology/approach This study takes Chinese UIDCs in market transformation during 2015–2019 as the research object and uses principal component analysis to screen the index system for measuring the efficiency of market transformation. It then uses a three-stage data envelopment analysis model and the Malmquist productivity index to evaluate the market transformation efficiency of these companies during 2015–2019 and comprehensively analyzes the influence of external environmental factors on the market transformation of Chinese UIDCs. Findings Research results show that the transformation efficiency of Chinese UIDCs is low and slow overall and that large spatial and temporal differences exist. The transformation efficiency of UIDCs located in eastern China is higher than that of UIDCs in central and western China. The higher the external environmental factors of regional GDP, local debt service pressure and credit rating, the more likely they are to cause input redundancy in the transformation process of Chinese UIDCs, which is not conducive to their market-oriented transformation. In addition, the higher the urbanization rate, the more effective it is to improve the efficiency of market-oriented transformation of UIDCs. If the influence of environmental factors is stripped away, both the overall efficiency value and pure technical efficiency value of market-oriented transformation of Chinese UIDCs will increase while the scale efficiency value becomes smaller. Originality/value This research measures the transformation efficiency of Chinese UIDCs and comprehensively analyzes the influence of external environmental factors on their market-oriented transformation. The goal is to enrich the study of the market-oriented transformation efficiency evaluation index system of Chinese UIDCs at the theoretical level and provide important reference values for improving the efficiency of market-oriented transformation of Chinese UIDCs at the practical level.