Organizational Efficiency and X-Inefficiency: Which Role of Learning Organization, Knowledge Transfer, and Innovation?

Definition of Efficiency

The notion of efficiency expresses the extent to which results is obtained by minimizing the resources used (Menard 2004, 100). Milgrom & Roberts (2003, p: 31), consider efficient “the choices or options for which there is no universally preferred alternative to serve the goals and preferences of individuals. More specifically, if individuals are sometimes indifferent concerning certain options, then a choice is efficient if there is no other option that pleasing all individuals of that group and that is strictly preferred by at least one person “. However, (Cummins, Weissa, Xie & Zie, 2010) distinguishes between three types of efficiency: technical efficiency, cost efficiency, revenue efficiency and profit efficiency.

At the organizational level, efficiency refers to “the degree to which an organization generates its products and services using minimal inputs” Ménard (2004, p 100). In other words, and in a purely allocative view, the level of the final production of a unit depends, all other things being equal, of the allocation of factors engaged and good control of his employment (Veran, 2006). The author stresses that this allocative vision gives lessons for the management that must acquire analysis tools allowing choosing the best possible allocation of resources of the firm. This is seen as a portfolio in which each subset transforms with more or less success, the resources received into products and output.