The integrated application of the AHP and the DEA methods in evaluating the performances of higher education institutions in the Republic of Serbia

Abstract

The measurement and evaluation of performance are critical for the efficient and effective functioning of the economic system, because this allows for the analysis of the extent to which the defined objectives are achieved. Organizational performance is measured by different methods, both quantitative and qualitative. Many of the known methods for the evaluation and measurement of organizational performance take into account only financial indicators, while ignoring the non-financial ones. The integration of both indicators, through the combined application of multiple methods and the comparison of their results, should provide a more complete and objective picture of organizational performance. The Analytic Hierarchy Process (AHP) is a formal framework for solving complex decision-making problems, as well as a systemic procedure for the hierarchical presentation of the problem elements. The Data Envelopment Analysis (DEA) is a non- parametric approach based on linear programming, which allows for the calculation of the efficiency of decision-making units within a group of organizations. The work is an illustration of the method and framework of the combined use of the multi-criteria analysis methods for the measurement and evaluation of the performance of higher education institutions in the Republic of Serbia. The advantages of this approach are reflected in overcoming the shortcomings of a partial application of the AHP and the DEA methods by utilizing a new, hybrid, DEAHP (Data Envelopment Analytic Hierarchy Process) method. Performance evaluation through an integrated application of the AHP and the DEA methods provides more objective results and more reliable solutions to the observed problem, thus creating a valuable information base for high-quality strategic decision making in higher education institutions, both at the national level and at the level of individual institutions.