Efficiency-based Resource Allocation in Higher Education Units: Requirements, Outcomes and Prospects

With regard to the role of resource allocation mechanisms on improving performance and the fact that the resource allocation conventional mechanisms are not effective, this article aims at developing a multi-stage process to explore the appropriateness of the mechanism through conducting statistical simulations. For that purpose, we use five sets of data on the performance of higher education units (HEUs) and conduct statistical simulation employing data envelopment analysis (DEA) and the Malmquistindex. First, efficiency scores of HEUs have been measured, then, resources have been reallocated based on the efficient situation of the units, and finally the effects of reallocation of resources on productivity changes have been evaluated using the Malmquist index. Findings show that inefficiency is a dominant phenomenon across the higher education units. Reallocation of resources affects the performance of the units substantially depending on the type of mechanism implemented. Efficiency-based allocation mechanism is found to be the most appropriate mechanism which simultaneously increases efficiency and productivity. As a result, the simultaneous improvement of efficiency and productivity is recommended as a crucial criterion to evaluate the appropriateness of resource allocation mechanisms employing statistical simulation based on DEA and Malmquist index.