Nonprofit Public Libraries and Organizational Performance: Assessing the Impact of Intermediate Outputs on Technical Efficiency With Two-Stage DEA

Nonprofit Public Libraries and Organizational Performance: Assessing the Impact of Intermediate Outputs on Technical Efficiency With Two-Stage DEA

Salomon Alcocer Guajardo (Department of Public Management and Real Estate Development, Huizenga College of Business and Entrepreneurship, Nova Southeastern University, Fort Lauderdale, USA)
DOI: 10.4018/IJPMPA.2020010102

Abstract

This study applied a two-stage data envelopment analysis (DEA) model with variable return to scale (VRS) to assess the impact of intermediate outputs on the technical efficiency of nonprofit public libraries (NPLs) in the United States (US) with respect to attaining service and program outcomes. The findings revealed that 46% of the NPLs were technically efficiency with respect to attaining the intermediate outputs at stage one. At stage two, 7% of the libraries were efficient with respect to attaining their service and program outcomes. The findings also revealed that the libraries which were efficient at stage one had an average reciprocal inefficiency score of 0.396 at stage two. By contrast, libraries which are inefficient at stage one had higher efficiency scores at stage two. The DEA analysis also produced estimates in regard to the optimal level of performance the NPLs should attain for each intermediate output to increase the level of technical efficiency at stage two.
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1. Introduction

Over the past 25 years, the number of studies which have used data envelopment analysis (DEA) methods to assess the technical efficiency of academic and public libraries has increased greatly (e.g., Shim, 2003; Stroobants and Bouckaert, 2014). Numerous DEA-based studies have examined the technical efficiency of academic libraries with respect to book circulation, reader visits, and reference transactions (e.g., Chen, 1997; Kwack, 1993; de Carvalho, Jorge, Jorge, Russo, & de Sá, 2012; Reichman, 2004; Saunders, 2003; Shim, 2000). Other DEA-based studies have analyzed the technical efficiency of public libraries with respect to operating hours per week, the number of registered users, the number of books borrowed per reader, and total circulation (e.g., De Witte and Geys, 2011; Guajardo, 2018; Hammond, 2002; Li and Yang, 2014; Miidla and Kikas, 2009; Sharma, Leung, and Zane, 1999; Stroobants and Bouckaert, 2014; Vitaliano 1998; Vrabková 2016, 2017; Worthington 1999). While the majority of the DEA-based studies have assessed the technical efficiency of public libraries in terms of achieving specific outputs such as book circulation, reader visits, and reference transactions, Guajardo (2018), Saunders (2003), and Vitaliano (1997) examined exclusively the technical efficiency of libraries with respect to operating costs related directly to salaries and the procurement of library books and materials. Although previous DEA-based studies have evaluated the cost and technical efficiency of academic and public libraries and have contributed to understanding how inputs are converted to service and program outputs and outcomes, they have been paid little attention to how intermediate outputs such as visitors per operating hour and program attendees per full-time equivalent (FTE) effect the technical efficiency of libraries in attaining service or program outcomes such as FTE salary expenditures per visitor, FTE salary expenditure per program, and library expenditures per visitor.

Despite the growth of digital libraries, county-, municipal-, and special district-operated public libraries and nonprofit public libraries (NPLs) with physical buildings and space in the United States (US) will continue to exist and will continue to receive government- and tax-based funding into the foreseeable future. Because US public libraries receive and rely on tax-based funding to provide services and programs to children, to young adults, and to senior citizens in their service area, the financial and operations performance of US public libraries is important to a plethora of internal and external stakeholders. Simply stated, library executives and managers are responsible for ensuring that the public library which they manage and oversee is fiscally healthy and that programs and services are delivered to customers as efficiently as possible. In the case of NPLs, the financial and operations performance of the institutions is important to the board of directors, to corporate donors, and to individual donors who have a keen interest in the financial health and in the performance of the institutions. In addition, the financial and operations performance of US public libraries is important to business, community, political leaders because US public libraries with physical buildings and space produce local and regional economic benefits as measured by return on investment (ROI) and return on assets (ROA).

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