Returns to scale of Business Administration research in Germany

Abstract

In order to efficiently allocate academic resources, an awareness of the properties of the underlying production function's returns to scale is of crucial importance. For instance, the question arises as to what extent an expansion of a university department's academic staff would be advisable in order to utilize increasing marginal gains of research production. On the other hand, it is disputable whether an optimal university department size exists. Empirical studies covering these questions render various answers. In this paper, we analyse which properties of returns to scale the Business Administration research of universities in Germany exhibits. On the basis of research data from 2001 until 2009 provided by the Centre for Higher Education, and using Data Envelopment Analysis, we demonstrate that typically sized business schools show nearly constant returns to scale. Furthermore, we observe tendencies of decreasing returns to scale for large-sized business schools. Diverse robustness and sensitivity analyses confirm the validity of our inferred empirical findings.