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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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Handle: RePEc:eee:ejores:v:263:y:2017:i:3:p:961-973