Measuring efficiency of Vietnamese public colleges: an application of the DEA‐based dynamic network approach

• DOI: http://doi.org/10.1111/itor.12212
• Date: 01 March 2018
• Published date: 01 March 2018
• Author: Renato A. Villano,Carolyn‐Dung T. T. Tran

Intl. Trans. in Op. Res. 25 (2018) 683–703

DOI: 10.1111/itor.12212

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Measuring efficiency of Vietnamese public colleges: an

application of the DEA-based dynamic network approach

Carolyn-Dung T. T. Tran and Renato A. Villano

UNE Business School, University of New England,Armidale, NSW, Australia

E-mail: ttran41@une.edu.au [Tran];rvillan2@une.edu.au [Villano]

Received 13 February2015; received in revised form 7 September 2015; accepted 9 September 2015

Abstract

In Vietnam, public colleges play a crucial role in shaping the socioeconomic and educational development

strategies and providing a skilled labor force needed for the country’s market-oriented economy. Using

balanced panel data for 2011–2013, we use the integrated data envelopment analysis based dynamicnetwork

model to examine dynamic changes in efficiencies of publiccolleges in the education sector. This model allows

simultaneously estimating efficiencies of financial and academic operations and the overall dynamic changes

of colleges in a network structure.Our findings indicate that the overall efficiencies of colleges are,on average,

0.741 while the average efficiencies of the financial and academic operations are 0.722 and 0.760, respectively.

Furthermore, the in-city colleges are more efficient than others, 0.776 and 0.728, respectively.

Keywords:data envelopment analysis; dynamic network efficiency; public colleges; Vietnam

1. Introduction

Higher education is considered as one of the crucial parts of a nation’s socioeconomic system as

it plays an important role in the development of human resources and is an efficiency enhancer

of national competitiveness beyond simple production processes (Schwab, 2013). In today’s global

trends, financial challenges and the demands for more efficiently using the scarce resources of

higher education institutions (HEIs) have made the efficiency assessment of HEIs crucial, for the

government and educational leaders, to better understand the performance of HEIs. Thereby, more

appropriate polices can be designed to enhance the operations of HEIs.

Public higher education plays a dominant role in the Vietnamese higher education system. Ac-

cording to the Ministry of Education and Training (MOET, 2013), the number of public HEIs

including universities and colleges is 338, accounting for 80% of the total HEIs in Vietnam. Of the

338 public institutions, 185 are colleges and 153 are universities. During 2005–2012, the numbers

of college enrollments and graduates increased, respectively, by 142% and 160%, while univer-

sity enrollments and graduates increased by only 42% and 74%, respectively (MOET, 2013). This

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684 C. D. T. T.Tran and R. A. Villano / Intl. Trans. in Op. Res. 25 (2018) 683–703

illustrates a significant role of colleges in providing a labor force for the national economy.However,

the importance of colleges has not received as much attention as universities. Perhaps policymakers

and researchers are inclined to emphasize the performance of universities in order to get at least

one university among the world’s top 200 by 2020, as planned by the government.1Previous studies

mainly focused on exploring and analyzing impacts of government policies on universities instead

of colleges (Hayden and Lam, 2007; Vallely and Wilkinson, 2008; Postiglione, 2011; Hayden, 2012;

Pham, 2012).

Our study examines the performance of public colleges in Vietnam for two main reasons. First,

public colleges play an important rolein the national education system via the number of institutions

and their enrollments. Currently, 86.5% of all colleges in Vietnam are publicly owned and their

enrollments account for 81.3% of total college enrollments in 2012/2013 (MOET, 2013). Second,

regardless of revenues from tuition fees, the operations of public colleges mainly rely on public

funding and its distribution has been based on the difference between the budgetestimates approved

for their annual operations and revenues from tuition fees. Duong (2013) argued that with such

a top-down budget distribution mechanism, public HEIs seem to lack self-motivation to improve

their performance with respect to financial and academic operations. In this sense, it is imperative

to examine whether public colleges are operating efficiently in the current financial mechanism

and whether the financial operations are favoring the academic operations and the performance of

public colleges as a whole.

Using the advanced dynamic network data envelopment analysis (DEA) model, we measure

dynamic change in efficiencies of public colleges in a network structure for 2011–2013. This method

allows capture of the dynamic changes of multiple activities via different divisions, for example,

finance and teaching, over multiple terms and to examine the correlation in efficiencies of financial

operations with those of the overall operations of public colleges. We expect results of our study

to provide a better understanding of the performance of public colleges to policymakers and

educational leaders for seeking possible ways to move Vietnamese higher education forward.

The structure of the paper consists of the following sections. Section 2 presents the general

context of higher education in Vietnam. Section 3 presents a brief review of the DEA studies

in higher education. Section 4 illustrates the theoretical method of dynamic network DEA. The

empirical model applied to Vietnamese public colleges is presented in Section 5. Section 6 provides

the empirical results of efficiencies of public colleges in a network structure before presenting

conclusions in Section 7.

2. The general context of higher education in Vietnam

The economic reform of Vietnam known as “Doi Moi” (renovation) policy, which started in 1986,

is strongly linked to education reform. However, not until 1995 did the Vietnamese economy

really permit foreign direct investment to enhance its economic growth. Subsequently, Vietnam

became one of the fastest growing economies in the world with its GDP growing by an average

7% per annum during the period 1989–2010 (World Bank, 2011). This created a strong impetus for

Vietnam to reform its higher education system. The year 1997 was a turning point for Vietnamese

1Decision 37/2013/QD-TTg was issued by the government on adjusting the higher educationnetwork for 2006–2020.

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2015 The Authors.

International Transactionsin Operational Research C

2015 International Federation of OperationalResearch Societies