Efficiency of Malaysian public universities: A data envelopment analysis (DEA)

The importance of higher education as an engine of growth is highly recognised by the Malaysian government and thus huge amounts of money are allocated to this sector. Due to large amount of money invested, it is imperative that certain analyses are to be carried out to ascertain the impact of this investment. Efficiency analysis is
vital for higher education institutions as it measures how efficiently educational resources are being allocated and utilized. Against this backdrop, this study aims to evaluate the relative efficiency of 12 selected Malaysian public universities for the period of 2008-2012. A non-parametric method, known as the Data Envelopment
Analysis (DEA) is applied in this study. By using different combination of input and output variables, this study applies the output oriented DEA model to assess the teaching and research performances for each university. The result shows that, on average, the pure technical efficiency for teaching and research activities appear to be high. Three universities are found to be technically efficient in teaching while three other universities are technically efficient in research. The result reveals that the average pure technical efficiency score is higher for teaching as compared to research. For the scale efficiency, there are two universities that consistently operated on the optimal scale size for the whole examined period. In addition, majority of universities are operating under decreasing returns to scale in teaching
while most universities are operating under increasing returns to scale in research.