Does capacity utilisation influence financial performance? A study of Indian public bus transport companies
Benchmarking: An International Journal
ISSN: 1463-5771
Article publication date: 29 July 2021
Issue publication date: 29 March 2022
Abstract
Purpose
The objective of the paper is to get a better understanding of capacity utilisation (CU) in Indian public bus companies. More specifically, this paper would be measuring CU and identifying the drivers of the same. Finally, the influence of CU on the financial performance of Indian bus companies is examined.
Design/methodology/approach
The study adopted data envelopment analysis (DEA) to measure the CU in Indian public bus companies. Truncated regression was used to identify the drivers of CU. Subsequently, the ordinary least squares (OLS) regression was used to analyse the influence of CU on Indian bus companies' financial performance. The period of study was from 2013 to 17.
Findings
The significant drivers of CU were fleet age, passenger lead and fleet utilisation. Additionally, it was found that CU had a significant positive influence on the financial performance of Indian public bus companies and a unit increase in unused capacity has led to an increase of 7% in the operating ratio of the bus companies.
Practical implications
Getting insights into CU, apart from technical efficiency, is of immense use to both public transport researchers and practitioners. Managers of public bus companies should be mindful of CU as it has a significant bearing on their financial performance.
Originality/value
This is the first study in public transport, which establishes the linkage between CU and financial performance. Besides, a modified measure of cost-efficiency has also been conceptualised in this study.
Keywords
Citation
Kushwaha, S., Prawesh, S. and Venkatesh, A. (2022), "Does capacity utilisation influence financial performance? A study of Indian public bus transport companies", Benchmarking: An International Journal, Vol. 29 No. 4, pp. 1241-1263. https://doi.org/10.1108/BIJ-01-2021-0039
Publisher
:Emerald Publishing Limited
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