How Do the Characteristics of the Environment Influence University Efficiency? Evidence from a Conditional Efficiency Approach

Abstract

This paper explores the black box behind efficiency measurements in higher education and define the determinants of university efficiency. Particularly, it investigates how the efficiency of universities is affected by the characteristics of the territory in which they operate. We propose an analysis that combines two perspectives: 1) the resource dependence theory, suggesting that the location of university can determine the amount of resources available to it; 2) institutional isomorphism, according to which the characteristics of other higher education institutions located in the same area may shape the university production function and the efficiency of its operations.In order to test this framework we use the data on Russian universities and non-parametric conditional order-m efficiency estimator with two categories of exogenous variables. The first group includes the social, economic and cultural characteristics of the region where the university is located. The second set includes the characteristics of other higher education institutions located in the same region. Our findings highlight that the managerial efficiency of universities is strongly associated with the characteristics of the environment in which they operate.