Goal congruence analysis in multi-Division Organizations with shared resources based on data envelopment analysis

Jingjing Ding, Wei Dong, Liang Liang and Joe Zhu

European Journal of Operational Research, 2017, vol. 263, issue 3, 961-973

Abstract: In multi-division organizations, goal congruence between different divisions and top management is critical to the success of management. In this paper, drawing upon a nonparametric framework to model production technology, we derive a necessary and sufficient condition for a firm with multiple divisions to be goal-congruent, and then extend it to a goal congruence testing measure, which coincides with a data envelopment analysis (DEA) model. The goal congruence measure not only shows empirically whether the firm is goal-congruent or not, but also provides a measurement for the degree of goal incongruence. To be goal-congruent, resources shared among divisions are suggested to be allocated so that the conditions for an optimizable operation are satisfied. In addition, goal-congruent firms are verified to be cost efficient. All findings in this research are examined and illustrated with a dataset of 20 bank branches with shared resources for service and sales divisions.

Keywords: Data envelopment analysis (DEA); Goal congruence; Nonparametric; Shared resource allocation; Optimizable operation (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:263:y:2017:i:3:p:961-973

DOI: 10.1016/j.ejor.2017.06.040

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