Administrative scale economies in public organisations: evidence from Australian public universities

The Influence of Administrative Intensity on Efficiency: An Empirical Analysis of Australian Universities

“…Our findings are in line with the literature in that there is a significant relationship between AI and university efficiency (H1 is rejected) and that this relationship is positive and takes an inverted U‐shape for the whole sample, implying that the efficiency of Australian universities increases when AI rises. These results support the structural contingency theory prediction that organisations with a high degree of administrative intensity can more effectively coordinate and synchronise organisational activities and thereby improve organisational performance (Walker, 2013; Van Helden & Huijben, 2014; Tran & Dollery, 2022). However, the curvilinear relationship between administrative intensity and university efficiency indicates that when the aggregate demand for academic services rises in proportion to student size, a decrease in administrative intensity would be necessary to maintain the operational efficiency of universities.…”

“…This is primarily because each university group has its own research and development objectives that would affects its ability efficiently deploy financial resources to administrative activities. In addition, the operational efficiency of different types of university varies due to differences in non‐discretionary environmental characteristics that generally fall outside the control of university management (Carrington et al ., 2005; Tran & Villano, 2021; Tran & Dollery, 2022).…”

“…Following related empirical studies in public sector management, we apply structural contingency theory to the relationship between administrative intensity and efficiency in the Australian university system. Structural contingency theory contends that public sector organisations that allocate more resources to administrative support functions can more effectively coordinate and synchronise organisational processes and thereby improve their efficiency (see for instance, Tran and Dollery (2022), Van Helden and Huijben (2014) and Walker (2014)). We thus hypothesise that the efficiency of higher educational institutions is positively related to the administrative intensity of these entities.Hypothesis 1 There is a positive relationship between administrative intensity and operational efficiency in Australian universities.…”

“…Although a substantial empirical literature has investigated cost efficiency, operational efficiency and productivity in Australian public universities, little research has been directed at administrative intensity in the university sector, with the exception of the Tran and Dollery (2022) study on economies of scale in administrative intensity at Australian universities. While Tran and Dollery (2022) investigated the influence of university size by students, staff size and task intensity on administrative intensity as the dependent variable, our article aims to examine further whether administrative intensity as an explanatory variable can explain variation in the operational efficiency of universities. The findings of our article are expected to generate information to assist educational managers and policymakers in designing more appropriate strategies to improve university performance through modifying the degree of administrative intensity in their organisations.…”

“…While some empirical effort has been directed at administrative intensity in the Australian university system, especially on the question of administrative scale economies (Tran & Dollery, 2022), much remains to be done. In particular, to date there has been no empirical examination of the impact of administrative intensity on the operational efficiency of the Australian university system.…”