Effects of the Performance-Based Research Fund and Other Factors on the Efficiency of New Zealand Universities: A Malmquist Productivity Approach

Universities and academic institutions play a very crucial role in nation development through the production of highly competent manpower. The eight universities in New Zealand have been recognized as some of the top academic institutions in the world. However, the rankings from different international organizations are declining and are hardly likely to rise. Government policies in funding allocation are being blamed for the universities’ regress as they operate with an insufficient amount of funds. This study uses the Malmquist Productivity Index model to examine the technical efficiency, technological change, and productivity performance of the eight universities. This model uses a variety of inputs (number of academic and non-academic staff and total enrolment) and outputs (number of degree and postgraduate graduates, total graduates, and total operating revenue from the Equivalent Full-Time Student (EFTS) funding system and the Performance-Based Research Fund (PBRF), etc.) obtained for the period 2013–2018. The overall results show that the average catch-up and frontier-shift efficiencies of the universities are roughly in a “no-change” scenario, meaning that the universities did not make any progress over these years. The Malmquist Productivity Index (MPI) also shows a stable result, with average final values slightly higher than 1, wherein only five universities reached an actual productivity score of 1. It is recommended that the universities improve their internal factors, including personnel, equipment, facilities, and student services, while taking accounts of external aspects, such as rapid growth in technological environments and innovations, to achieve sustainable organizational progress and improved productivity. The re-assessment of government policies for funding allocation is also suggested. This research paper offers insights into the New Zealand universities’ productivity performances for the past few years. This could be used as a reference for other purposes.