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In this study, productivity growth in thirty-five Australian universities is investigated using nonparametric frontier techniques over the period 1998 to 2003. The inputs included in the analysis are full-time equivalent academic and non-academic staff, non-labour expenditure and undergraduate and postgraduate student load and the outputs are undergraduate, postgraduate and PhD completions, national competitive and industry grants and publications. Using Malmquist indices, productivity growth is decomposed into technical efficiency and technological change. The results indicate that annual productivity growth averaged 3.3 percent across all universities, with a range between -1.8 percent and 13.0 percent, and was largely attributable to technological progress. However, separate analyses of research-only and teaching-only productivity indicate that most of this gain was attributable to improvements in research-only productivity associated with pure technical and some scale efficiency improvements. While teaching-only productivity also contributed, the largest source of gain in that instance was technological progress offset by a slight fall in technical efficiency.

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a b s t r a c tThe motivation for this analysis is the recently developed Excellence in Research for Australia (ERA) program developed to assess the quality of research in Australia. The objective is to develop an appropriate empirical model that better represents the underlying production of higher education research. In general, past studies on university research performance have used standard DEA models with some quantifiable research outputs. However, these suffer from the twin maladies of an inappropriate production specification and a lack of consideration of the quality of output. By including the qualitative attributes of peer-reviewed journals, we develop a procedure that captures both quality and quantity, and apply it using a network DEA model. Our main finding is that standard DEA models tend to overstate the research efficiency of most Australian universities.