Assessing performance of management institutions : An application of data envelopment analysis

Purpose – Utilizing data envelopment analysis (DEA), this paper seeks to examine the performance of 20 Indian B‐Schools, separating their profitability and marketability. The technique allows one to identify those management institutions which are able to utilize their resources in a most efficient way such that the overall goals of the organization are satisfied and total outcome maximized. If a management institution means to be effective in developing professionals who are going to be competent leaders and managers, then it would be useful to know the performance of the management institutes. However, measuring the performance of management institutes has received very little attention compared with other industries because it is difficult to measure its output. Design/methodology/approach – A DEA model is used to evaluate the relative efficiency of a group of decision‐making units (DMUs) in their use of multiple inputs to produce multiple outputs where the form of production is neither known nor specified as in the case of parametric approach. Findings – The paper ranks management institutes from various points of stakeholders. The main findings are how much of the benefit from ranking of the B‐Schools is credited because of its efficiency in converting the inputs to outputs. Does the ranking of any institution depend on scale of operations (scale efficiency) or is it only based on technical efficiency? Technical efficiencies are identified with failures to achieve best possible output levels and/or usage of excessive amounts of inputs. Practical implications – As Indian management schools widely publicize job offers with six figure salaries, managerial value addition, national ranking etc. provide an important impression about the management institutions. However, the reported results of experiments on input and output measures do not seem to differ between the ten best run institutes and the next ten institutes in terms of scale efficiency. Originality/value – The paper is one of the few written from the Indian perspective.