Abstract
This article utilises three different perspectives to evaluate the uses of performance indicators in Australian higher education: federalism, neoclassical economics and X‐efficiency theory. The introduction of performance indicators by the Commonwealth government is associated with providing the most efficient path for the allocation and distribution of scarce resources in higher education (neoclassical economics), increasing its control over the universities (federalism theory), and applying pressure to them and in turn their academic members to increase their effort levels (X‐efficiency theory). X‐efficiency theory is proposed as a possible model to support and inform efforts to better understand and improve the operation of performance indicators.
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