Software Company, Operational Efficiency, Organizational Characteristics And Market Value

Software industry is one of important development industry in China. China will be the second biggest software market of the world, because of fast development in software industry, and increased growth rate, 30%, of software industry in China. In addition, software industry is high density of knowledge. Training new staffs, developing new products, and building worldwide market channel are important factors to decide the development of software industry. According to competitiveness of globalization, software companies will focus on competitiveness and quality. Recently, Mainland China and Taiwan interact closely. The software companies form Mainland China and Taiwan not only need to compare, but also compare with software companies from worldwide. Therefore, the key issue of software companies is how to improve their operational efficiency.This paper tries to analysis and solve the issues as follows : 1. evaluate the difference between heterogeneous system and homogeneous system in the software companies form Mainland China and Taiwan; 2. use Data Envelopment Analysis(DEA) to evaluate the operating efficiency of all software companies form Mainland China and Taiwan and to understand the differences; 3. use time series from 2001 to 2002 to analyze the trend of operating efficiency; 4. understand the relationship between operating efficiency and market value; 5. analyze the association with operating efficiency and organizational characteristics; 6. find excellent software companies, which have characteristics, to go public by local stock exchange market.This paper adopts DEA, which was provided by Charnes, Cooper and Rhodes(1978) as well as Charnes and Cooper (1984) , to measure and compare the operating efficiency of software companies from Mainland China and Taiwan as well as to analyze the trend of operating efficiency from 2001 to 2002. In addition, to further analysis, this paper will find the relationship between operating efficiency and organizational characteristics, and the relationship between operating efficiency and market value. The results of this paper are as below:1. There is no difference between heterogeneous system of DEA and homogeneous system of DEA in the software companies form Mainland China and Taiwan. This paper adopts Mann-Whitney and Wilcoxon W test and finds that the p value is insignificant. Therefore, the environment and management system between Mainland China and Taiwan are same. This is because Taiwan investors invest Mainland China to change the difference.2. The trend of operating efficiency shows that the difference of software companies between Taiwan and Mainland China is decreased, even the average operating efficiency in Taiwan is better than that in mainland China. Thus, this implies that the operating efficiency of software companies from Mainland China is better than that in Taiwan in the future.3 The relation between the time of established and operating efficiency of software companies is significantly positive. In addition, the diversification degree is positively correlated with operating efficiency of software companies. Meanwhile, the scale is negatively associated with operating efficiency of software companies. The price/ earning ratio is positively related to operating efficiency of software companies4. The characteristics of excellent software companies are high diversification, small scale, high P/E ratio and short established time. The local stock exchange market shall attract excellent software companies to go public.The contributions of this paper are as below:1. In theory, this paper finds that there is no difference between heterogeneous system of DEA and homogeneous system of DEA in the software companies form Mainland China and Taiwan.2. In practice, the operating efficiency of software companies from Mainland China is better than that in Taiwan in the future. This trend can provide the reference for management team, investors, and governments. In addition, investors and governors of local stock exchange can refer the excellent software companies,.which are high diversification, small scale, high P/E ratio and short established time, to invest them or to attract them going public.