Examining research and teaching inefficiency using the minimum non-radial distance to the frontier: An application to Australian public universities

This paper adopts a novel nonparametric frontier approach that not only provides an estimation of overall inefficiency, defined as the minimum additional cost required to reach the frontier, but also offers two distinct measures of teaching and research inefficiency. The suggested model considers the trade-off between research and teaching as the key outputs in higher education within the production possibility frontier framework. Furthermore, this paper demonstrates the advantage of using the suggested model by examining the inefficiency of Australian public universities during the period from 2017 to 2021. The results show that despite the significant financial pressures during the COVID-19 pandemic, the overall inefficiency decreased in 2020 and 2021. The results also indicate that smaller universities located in regional areas exhibited a higher level of overall inefficiency compared to other groups, despite showing significant efficiency improvements during the pandemic. The main finding suggests that enhancing the research efficiency is less costly than the teaching efficiency for the majority of universities. Finally, this study presents a benchmarking framework that enables university management teams and policy makers to improve the performance of individual universities and the industry as a whole.