Work Climate and Organizational Effectiveness: The Application of Data Envelopment Analysis in Organizational Research

Abstract

Previous research examining the climate-effectiveness relationship in organizations has largely failed to take due note of the complex multidimensional nature of organizational effectiveness. This article describes the data envelopment analysis (DEA)technique for evaluating the relative efficiencies of organizations that consume multiple inputs and produce multiple outputs and demonstrates its application to organizational research. The use of DEA is illustrated by calculating the relative efficiencies of the branch offices in a retail banking network, and it is shown that measures of efficiency calculated using the DEA method correlate significantly with organizational climate as measured by employee's perceptions of operational and management practices. It is suggested that researchers studying the relationship between organizational effectiveness and the psychology of the workplace should consider using DEA, especially when multiple dimensions of effectiveness are involved.