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Efficiencyanalysisaccountingforinternalandexternalnon-discretionaryfactors a,∗ b c A.S.Camanho ,M.C.Portela ,C.B.Vaz aFaculdade de Engenharia, Universidade do Porto, Rua Dr. Roberto Frias, 4200-465 Porto, Portugal b ˜ ´ Faculdade de Economia e Gestao, Universidade Catolica Portuguesa, Rua Diogo Botelho, 1327, 4169-005 Porto, Portugal c ˜ ´ ´ Escola Superior de Tecnologia e Gestao, Instituto Politecnico de Bragança, Campus Santa Apolonia, 134, 5301-857 Bragança, Portugal This paper develops a method based on data envelopment analysis (DEA) for efficiency assessments taking into account the effect of non-discretionary factors. A typology that classifies the non-discretionary factors into two groups is proposed: the factors that characterize the external conditions where the decision making units (DMUs) operate (external factors), and the factors that are internal to the production process but cannot be controlled by the decision makers (internal factors). This paper proposes an enhanced DEA model that accommodates non-discretionary inputs and outputs and treats them differently depending on their classification as internal or external to the production process. This generalized model integrates the previous approaches for dealing with non-discretionary variables described in the DEA literature. The model defines the efficient frontier based exclusively on the discretionary variables and internal non-discretionary factors, but the potential peers of each DMU Keywords: are restricted to other units facing comparable external conditions (represented by the external non- Data envelopment analysis discretionary factors). The peer selection cri