Goal congruence analysis in multi-Division Organizations with shared resources based on data envelopment analysis

In multi-division organizations, goal congruence between different divisions and top management is critical to the success of management. In this paper, drawing upon a nonparametric framework to model production technology, we derive a necessary and sufficient condition for a firm with multiple divisions to be goal-congruent, and then extend it to a goal congruence testing measure, which coincides with a data envelopment analysis (DEA) model. The goal congruence measure not only shows empirically whether the firm is goal-congruent or not, but also provides a measurement for the degree of goal incongruence. To be goal-congruent, resources shared among divisions are suggested to be allocated so that the conditions for an optimizable operation are satisfied. In addition, goal-congruent firms are verified to be cost efficient. All findings in this research are examined and illustrated with a dataset of 20 bank branches with shared resources for service and sales divisions.

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