A critical investigation of technical efficiency, pure technical efficiency and scale efficiency of business departments within Australian universities using data envelopment analysis

The three main objectives of this DEA research study were to assess whether business departments within Australian universities are operating at relatively high levels of efficiency (technical, pure technical and scale); the relative efficiencies of departments in 'old' and 'new' universities; and finally those of 'city' and 'regional' university departments. To ensure relatively homogeneous decision making units (DMU's) for DEA analysis, twenty-five business departments from thirty-seven publicly funded Australian universities were assessed using two varying input-output specification performance models. The DEA efficiency outcomes of the twenty-five designated departments were also segregated into 'old' and 'new' categories as well as 'city' and 'regional' categories so as to discern particular efficiency characteristics relevant to each category.

The DEA results for the two varying performance models found only a minimal number of departments deemed as technically efficient and a relatively low level of technical efficiency in many departmental observations due primarily to scale inefficiency practice rather than pure technical inefficiency. The categorisation of the departmental population into 'old' and 'new' categories revealed marginally higher levels of efficiency (technical, pure technical and scale) in the 'old' category though there was scope within both categories to enhance future efficiencies. In the analysis of 'city' and 'regional' categories, DEA found the 'regional' university departments to be better performers with respect to all three efficiency types. Additionally, the predominant scale direction of decreasing returns to scale was found for realising optimal scale efficiency and also found not to be dependent upon departmental category.