Efficiency and productivity change in the English higher education sector from 1996/97 to 2002/03

This study uses data envelopment analysis (DEA) and a distance function approach to derive Malmquist productivity indexes for 113 English higher education institutions (HEIs) over the period 1996/97 to 2002/03. The analysis finds that over the period of the study HEIs have experienced an annual average increase in Malmquist productivity of 1.5%. On investigating the components of this productivity change, however, it becomes apparent that HEIs have enjoyed an annual average of 2.3% increase in technology combined with a decrease in technical efficiency of -0.8%. The finding of the importance of technology change (relative to technical efficiency change) in the Malmquist productivity indexes for HEIs is in line with previous studies (Flegg et al 2004; Worthington & Lee 2005), but the finding of negative technical efficiency change is new. Further examination of the indexes reveals differences between the subgroups of HEIs in England. Pre-1992 HEIs have experienced much lower Malmquist productivity (and technology change) than post-1992 and colleges which belong to the Standing Conference of Principals Ltd (SCOP). Further examination reveals that, for pre- and post-1992 institutions, technology change may be related positively to change in the ratio of students to staff, while technical efficiency change may be negatively related to change in the student staff ratio. Thus rapid changes in the higher education sector may have a positive effect on the technology of production but this may be achieved at the cost of lower technical efficiency.