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Data envelopment analysis (DEA) and window analysis are used to follow the changes in Australian trading banks' pure technical efficiency, scale efficiency, and the nature of returns to scale. The main findings indicate declining average efficiency scores until 1991, followed by a steady rise thereafter. Pure technical inefficiency emerges as a greater source of inefficiency than scale inefficiency. Overall, regional banks exhibit increasing returns to scale and major trading banks exhibit decreasing returns to scale. Also worthy of note is the mixed size of banks operating at optimal returns to scale.

Demonstrates the application of data envelopment analysis (DEA) in examining the efficiency of bank branches relative to other branches. Shows that accounting variables can be complemented by non‐accounting variables controllable by management. The process of generating and interpreting relative efficiency scores and potential improvements is discussed in a language that will be particularly appreciated by managers, consultants and novice researchers. The theory needed to use DEA and the key model design considerations are addressed. The discussion includes such issues as appropriate sample size, strengths and weaknesses of DEA, analysis options, and an application checklist. DEA can be applied to benchmarking best practice branches. Management can use DEA to test the established knowledge of branches and initiate investigations when contradictions arise.

Investigates the interrelationships between the factors comprising the bank customer service quality construct through path analysis. Credibility is modelled as an outcome of the causal variables staff conduct, access to teller services and communication. Staff conduct emerges as the key variable explaining the direct and indirect linkages between the causal variables and the outcome variable. Those advocating high‐technology solutions as substitutes for branch staff may be ignoring the essence of high customer service quality which involves staff‐customer contact. It is necessary to provide adequate staff numbers to serve customers and train staff to be responsive and professional in their conduct. Structural equations and OLS regression were used to decompose zero‐order bivariate correlations into direct, indirect and spurious effects in the path model. Internal reliability coefficients for the four factors and instrument reliability are also calculated with gratifying results.

Details the process whereby multivariate interdisciplinary measures of potential to perform are integrated with performance measures to develop models of retail performance for bank branches. The predictive models use the key business drivers of a major trading bank as dependent variables. Independent variables explaining business drivers are the theorized potential variables that measure the capacity to generate retail business. The models allow a comparison between the predicted and actual levels of key business diverts, thus measuring unrealized performance. Findings can assist decision making during restructuring, branch closures or downsizing. The variables presented should be regarded as examples rather than universally accepted measures of branch performance.

In investigating the performance of multidivisional organizations, ability to account for each division's importance and contribution enhances the deftness of resource allocation and targeting desired outcomes. With this motivation, the author aims to introduce network data envelopment analysis (NDEA) from operations research in this conceptual article and discuss how two articles from this journal can be extended using this approach.

NDEA was first developed to deliver a more in-depth understanding of underlying sources of operational inefficiency. Thus, NDEA can be viewed as a peer benchmarking method useful in comparing performance of organizations and identifying divisional inefficiencies that may detract from overall performance. NDEA's ability to capture interactions among multiple variables in an objective manner based on actual observed data rather than sample averages is one of its key advantages.

The author discusses how NDEA can be applied in organisational analysis by examining two articles from this journal. Briefly commenting on one of the cases here, the author shows that a network can be defined as the interacting divisions of cultural norms and structural forms. The potential improvements (i.e. horizontal re-alignment) indicated by NDEA can guide management on the extent organisational alignment that could be changed in reaching strategic aims. The author's theoretical model is conducive to assessing the amount and direction of change from the proposed alignment model in a multi-criteria framework – characteristics embraced by NDEA.

Given the hierarchical nature of organizations where employees are nested in work groups or teams, groups nested in departments or divisions, and divisions nested in organizations, application of NDEA at various levels of analysis is feasible.

NDEA's ability to account for each division's importance or assign desired weights in what-if analyses adds to flexibility in managerial decision-making regarding allocation of resources, or re-alignment of processes and targeting of desired outcomes. Such a method that does not assume independence among multiple performance measures provides additional assurance to those concerned about shortcomings of additive scales in complex organizations.

Results of this study highlight the importance of human resource managers and trainers assessing the interpersonal skills and emotional maturity of new recruits and enhancing the interpersonal skills of the existing managerial workforce. The entrepreneurial style of the branch manager is projected to play an increasingly important role in the deregulated finance sector. Currently, the branch manager, who can best be described as a corporate entrepreneur, could well evolve into an independent entrepreneur under a franchise banking system. Path analysis was used to investigate the interrelationships among the three competency factors for a bank branch manager. Emotional maturity and interpersonal skills are modelled as impacting on entrepreneurial style. All the hypothesised effects were supported by decomposition of the zero‐order correlations.

A 17‐item scale emerges following the study to develop an instrument for measuring customer service quality at trading bank branches, with a focus on retail banking. The conceptual framework addresses the psychometric shortcomings of the existing work in service quality research. A robust research design takes the study through multiple stages of development where the construct is pretested and piloted; in the main survey stage, data collection methods are triangulated, returning 791 completed questionnaires. Analysis of instrument reliability, dimensionality and validity present gratifying results; for example, scale alpha is recorded at 0.9249. The instrument can be applied as part of branch performance measurement, as well as help diagnose problems in delivery of service, and segment the bank′s customer base for healthier decision making in marketing.

This paper studies the profit efficiency of a sample of large U.S. commercial banks and explores how this performance varies with selected measures of bank risk reflecting aspects of credit risk, liquidity risk, and insolvency risk. We use a standard profit function and the stochastic frontier approach, and compare two standard functional forms – Cobb‐Douglas and translog – to assess the tradeoff between precision and parsimony. We find that profit efficiency is sensitive to credit risk and insolvency risk but not to liquidity risk or to the mix of loan products.