LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK
3.1 Theoretical Review
3.1.6 Efficiency and Effectiveness
bureaucracies. Particularly, government agencies mainly concerned with goals mandated by law, maintenance and survival of the organization. Reliance on external institutions such as such as their legislative, executive, and judicial executives for essential legal and financial resources presents a major obstacle to autonomy maximization.
In sum, the creation of a public organization, under the reform policy in Thailand is clarified as a top-down approach.This reform policy has been implemented for more than a decade with the growth of new public organizations.
Thus, the keys success factors of policy implementation will be used in this study to analyze the success and failure of implementation of public organization and whether they achieved their objectives in practice.
discussed in the study, composed of benchmarking using comparisons of similar activities, customer satisfaction, number of complaints, and decreased focus on the long-term impact of programs, particularly in evaluation of such programs.
This performance-based approach propelled the public sector into a new era of public management. Nevertheless, the performance-based culture is maybe not suitable for public agencies, as the specific characteristics of public organizations, goods, and services are different from the private counterpart. The typical 3Es are still in fashion for delivering a foundation for public performance measurement.
Relationships between inputs, outputs and outcomes are the heart of efficiency and effectiveness analysis. Farrell (1957, as cited in Talasophon, 2011, p. 80) investigated how to measure efficiency and highlighted the importance for economic policy makers. Knowing the potential output increase by simple efficiency improvement and not by consumption of additional resources, is one of critical importance.
However, the measurement of efficiency and effectiveness of public spending is still difficult in concept due to public spending having multiple objectives and its outputs are not sold on the open market, thus it is impled that price data and quantity of output are not available. In 1981, Dunn (1994, as cited in Talasophon, 2011, p. 80) classifies effectiveness and efficiency as criteria for policy recommendations and described them as: Effectiveness refers to whether a given alternative results in the achievement of a valued outcome (effect) of action, that is, an objective.
Effectiveness, which is closely related to technical rationality, is often measured in terms of units of products or services or their monetary value. Efficiency refers to the amount of effort required to produce a given level of effectiveness. Efficiency, which is synonymous with economic rationality, is the relationship between effectiveness and effort, with the latter often measured in terms of monetary costs. Efficiency is often determined by calculating the cost per unit of a product or service. Policies that achieve the greatest effectiveness at the least cost are always said to be efficient.
Some criticize the separation of effectiveness and efficiency which is not a reality in practice but it is related. Mandl, Direx, and Ilzkovitz (2008, p. 3) present the relationships of input, output, and outcome in a framework of efficiency and effectiveness as revealed in figure 3.3.
Figure 3.3 The Framework of Efficiency and Effectiveness Source: Mandl, Direx, & Ilzkovitz, 2008, p. 3.
From the links, it depicts the relationship between effectiveness and efficiency. The monetary and non-monetary resources also deployed (input) produce an output. For example, public health spending (input) affects the patient attainment rates (output). The input-output ratio is the most basic measure of efficiency.
Effectiveness relates to the input or output of the outcomes, which are generally linked to welfare or growth objectives and under influence from many output ad external, environmentatl factors. Political choice also makes assessment of effectiveness more difficult than efficiency. A distinction can be made between technical and allocated efficiency as shown in figure 3.3. Technical efficiency estimates the pure relation between inputs and outputs, including production possibilities boundary. What considered Technical efficiency gains are a movement towards this production possibility boundary or, in other words, best practice.
Allocated efficiency is for technical efficiency that is incomprehensible in economic sense, and reflects the link between the optimal combination of inputs, including account costs and benefits, and the output achieved.
Furthermore, Boyne, Farrell, Law, Powell, and Walker (2003, as cited in Talasophon, 2011, p. 82) also describe the distinction between allocated efficiency and technical efficiency as. Allocative efficiency is the match between such outputs and the preferences of the public (e.g. whether the houses built meet the needs of families who lack suitable accommodation, whether the teaching reflects the demands of parents and pupils, whether priority is given to operations for the most urgent medical complaints). Technical efficiency is the ratio of service, inputs (e.g.
spending) to outputs, which are the goods or services actually produced by an organization (e.g.new houses built, teaching provided in schools, operations performed in hospitals).
According to the definition and implementation and efficiency and effectiveness, a public organization can have their efficiency conditionally measured by public services, such as number of students, number of prototypes of knowledge, number of knowledge networks or number of transection (as outputs), over the amount of the budget (monetary resources input). For instance, there is an annual increase of consumer numbers of public services, which assures the efficiency of a public organization.