Revolutionizing municipality performance evaluation: A dynamic network fusion of BSC and DEA

This study introduces an advanced performance measurement system for 31 municipalities in Tehran and Shahriar, integrating the Balanced Scorecard (BSC) and Data Envelopment Analysis (DEA) methodologies. The combination of BSC and DEA was chosen because BSC offers a multidimensional framework for assessing performance from diverse perspectives, while DEA provides a quantitative tool for evaluating efficiency, particularly useful when dealing with multiple inputs and outputs. Together, they allow for both qualitative and quantitative evaluation of municipal performance, addressing the need for comprehensive performance assessment. However, traditional DEA models often fail to account for dynamic changes and intermediate linkages between these perspectives over time. The Dynamic Network Slacks-Based Model (DNSBM) of DEA, proposed in this study, addresses these limitations by incorporating both network interdependencies and dynamic changes in performance evaluation. Field studies and expert interviews revealed interconnections between BSC perspectives, and dynamic changes were modeled by linking networks over multiple periods. The model estimated efficiency values for each period, showing an average overall score of 0.857, with specific scores for financial (0.94), learning and growth (0.83), internal processes (0.96), and customer (0.34). Statistically significant correlations were found between most perspectives, except financial and learning/growth. The model identified dynamic performance trends, inefficiency levels, and strategies to improve underperforming DMUs, offering a comprehensive approach to enhancing municipal performance.