Using Data Envelopment Analysis to Estimate Perceived Organizational Equity

Document Type : Research Paper

Authors

1 PhD. Candidate, Department of Management, Najafabad Branch, Islamic Azad University, Najafabad, Iran.

2 Assistant Prof., Department of Management, Najafabad Branch, Islamic Azad University, Najafabad, Iran.

3 Assistant Prof., Department of Management, University of Qom, Qom, Iran.

Abstract

Objective: People give inputs to the organizations and receive outputs instead. Each individual compares his/her inputs and received outputs with others and may feel dissatisfied. This comparison forms the foundation of the equity theory introduced by Adams. Despite the widespread acceptance of Adams’ equity theory and the consensus on its ability to explain the distributive equity perceived by employees, the difficulty in quantifying the concept of equity has made its use challenging to some extent. This study seeks to propose an approach to estimate the degree of equity perceived by each employee compared to others and determine the number of changes in inputs/outputs of the employees to increase their sense of equity while causing the least dissatisfaction.

Methods: The output-oriented CCR model, as one of the Data Envelopment Analysis (DEA) methods, was used with two different scenarios of optimism and pessimism. It provided an estimate of the degree of equity perceived by each employee. DEA is a mathematical model that is conceptually similar to equity theory. This technique compares homogeneous decision-making units that consume similar inputs and produce similar outputs. It distinguishes the efficient and inefficient units. To illustrate the applicability of the proposed approach, it was used to estimate the equity perceived by the faculty members of an educational group. This example estimated the equity perceived by nine professors working in an educational institution, by considering two inputs (i.e., scores achieved for educational activities and research activities) and two outputs (i.e., financial compensation and supporting facilities).

Results: Solving the formulated models showed that optimistic and pessimistic views have different effects on the ranking of employees in terms of the degree of equity they perceive. The results also showed that the degree of equity perceived by an employee does not necessarily correspond to the degree of equity estimated using both optimistic and pessimistic views because these two perspectives measure the extreme values of these approaches. Instead, the degree of equity perceived by employees is more in line with the average of equities obtained from both optimistic and pessimistic approaches.

Conclusion: The results showed that the real equity values perceived by employees fall within the interval values obtained from the approach proposed in this study, indicating its validity. Therefore, it is possible to estimate the equity perceived by each employee as an interval value and, accordingly, prepare some facilities for employees who have the potential to feel inequity based on DEA models to reduce the intensity of this feeling. Since equity theory is a reactive theory that investigates the perceived equities in an exchange relation, it does not have the ability to predict and cannot be applied until the exchange relation is finished. DEA, the same as the equity theory, is also a reactive model. However, it can be considered a futuristic model due to its capability of estimating how the change in each person’s inputs and received outputs will affect his/her satisfaction and the satisfaction of his/her peers i.e. changing the inputs and outputs values of a person will change the degree of satisfaction perceived by others. DEA can predict such changes; it can predict the satisfaction degree of individuals in advance by considering different values for their inputs and outcomes.

Keywords

References

Adams, J.S. & Jacobsen, P.R. (1964). Effects of wage inequities on work quality. The Journal of Abnormal and Social Psychology, 69(1), 19-25.
Adams, J.S. (1963). Toward an understanding of inequity. Journal of Abnormal and Social Psychology, 67, 422-436.
Adams, J.S. (1965). Inequity in social exchange. Advances in experimental social psychology, 2, 267-299.
Adams, J.S., Rosenbaum, W.B. (1962). The relationship of worker productivity to cognitive dissonance about wage inequities. Journal of Applied Psychology, 46(3), 161-164.
Adams, S. J., Freedman, S. (1976). Equity theory revisited: comments and annotated bibliography. Advances in Experimental Social Psychology, 9, 43-90.
Alimohammadlou M., Damankeshan A., & Motafef Z. (2017). Measurement of Relative Efficiencies of Iran’s Electricity Distribution Companies: Data Envelopment Analysis with Double Frontier. Iranian Electric Industry Journal of Quality and Productivity, 5(2), 108-117. (in Persian)
Andersen, P. & Peterson, N.C. (1993). A Procedure for Ranking Efficient Unit in DEA. Management Science, 39(10), 1261-1294.
Ansari, M., Shaemi Barzoki, A., Safari, A. (2011). Representation a Model of Organizational Culture Management with Contextual Approach (Case Study: An Industrial Company). Journal of Applied Sociology, 22(2), 121-142. (in Persian)
Azizi, H., Farzipoor Saen, R. (2016). Technology Selection in The Presence of Both Cardinal and Ordinal Data. Journal of Development & Evolution Mnagement, 1395(26), 13-23. (in Persian)
Azizi, H., Jahed, R. (2021). Supplier Selection in Volume Discount Environments in the Presence of Both Cardinal and Ordinal Data: A New Approach Based On Double Frontiers DEA. Management Research in Iran, 19(3), 191-217. (in Persian)
Azizi, H., Jahed, R., & Farrokhi, L. (2012). Worst performance data envelopment analysis models for fuzzy efficiency measurement. Journal of Industrial Management (Sanandaj), 7(21), 23-35. (in Persian)
Batamiz, A., Hossein Zadeh Saljooghi, F. & Akbar Sanavi, A. (2016). A New Method for Determining Bankruptcy Using DEA and Rough Set Theory, Journal of Advanced Mathematical Modeling, 6(1), 1-22. (in Persian)
Brockner, J. (2002). Making sense of procedural fairness: How high procedural fairness can reduce or heighten the influence of outcome favorability. Academy of Management Review, 27, 58–76.
Brockner, J., & Wiesenfeld, B. M. (1996). An integrative framework for explaining reactions to decisions: Interactive effects of outcomes and procedures. Psychological Bulletin, 120, 189–208.
Charnes, A., Cooper, W.W., Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2, 429-444.
Colquitt, J. A., & Rodell, J. B. (2015). Measuring justice and fairness. In Cropanzano, R. & Ambrose, M. L. (Eds.), Oxford handbook of justice in work organizations (pp. 187–202). Oxford, UK: Oxford University Press.
Colquitt, J. A., Greenberg, J., & Zapata-Phelan, C. P. (2005). What is organizational justice? A historical overview. In J. Greenberg & J. A. Colquitt (Eds.), Handbook of organizational justice (pp. 3–56). Mahwah, NJ: Lawrence Erlbaum Associates.
Cropanzano, R., Byrne, Z. S., Bobocel, D. R., & Rupp, D. E. (2001). Moral virtues, fairness heuristics, social entities, and other denizens of organizational justice. Journal of Vocational Behavior, 58, 164–209.
DeConinck, J. B. (2010). The effect of organizational justice, perceived organizational support, and perceived supervisor support on marketing employees' level of trust. Journal of Business Research, 63(12), 1349-1355.
Deghanian, H., Sabour, E., & Hojjati, A. (2013). Investigating the relationship between the components of organizational justice and organizational commitment in an insurance company, Iranian Journal of Insurance Research, 28(2), 153-180. (in Persian)
Entani, T., Maeda, Y., Tanaka, H. (2002). Dual models of interval DEA and its extension to interval data. European Journal of Operational Research, 136 (1), 32-45.
Folger, R. & Cropanzano, R. (1998). Organizational justice and human resource management. Beverly Hills (CA): Sage.
Ghasemi, A. (2014). Mediation Effects of Organizational Citizenship Behaviors in the Relationships between Organizational Justice and Job Performance (One of the Chain Stores in Tehran). Organizational Culture Management, 12(1), 63-82. (in Persian)
Gholipour, A. & Pirannejad, A. (2007). Explanation of Four-dimensional Model of Justice in Development of Self-efficacy in Educational Institutions, Human Sciences, 53, 43-60.
(in Persian)
Greenberg, J. (1987). A Taxonomy of Organizational Justice Theories. Academy of Management Review, 12 (1), 9-22.
Homans, G. C. (1974). Social behavior: Its elementary forms. New York: Harcourt, Brace & World.
Huseman, R.C., Hatfield, J.D., Miles, E.W. (1987). A New Perspective on Equity Theory: The Equity Sensitivity Construct. Academy of Management Review, 12(2), 222-234.
Karam, E. P, Hu, J., Davison, R. B., Juravich, M., Nahrgang , J. D., Humphrey, S. E. & DeRue D. S. (2019), Illuminating the ‘Face’ of Justice: A Meta-Analytic Examination of Leadership and Organizational Justice, Journal of Management Studies, 56(1), 134- 172.
Karriker, J. H. & Williams, M. L. (2009). Organizational justice and organizational citizenship behavior: A mediated multifoci model. Journal of Management, 35(1), 112–135.
Khodabakhsh, M. & Aryavash, K. (2012). Ranking all units in data envelopment analysis, Applied Mathematics Letters, 25, 2066-2070.
 
Khodabakhsh, M. & Aryavash, K. (2014b). The fair allocation of common fixed cost or revenue using DEA concept, Annals of Operations Resaerch, 214, 187-194.
Khodabakhsh, M. & Aryavash, K. (2015a). Aggregating preference rankings using an optimistic-pessimistic approach, Computers and Industrial Engineering, 85, 13-16.
Khodabakhsh, M. & Aryavash, K. (2015b) The optimistic-pessimistic ranking in the chance constrained DEA, International Journal of Operations Research, 12,1-6.
Khodabakhsh, M., Hosseinzadeh-Lotfi, F. & Aryavash, K., (2014a). Review of input congestion estimating methods in DEA, Journal of Applied Mathematics, 2014, 1-10.
Krishnan, R., Loon, K.W., Ahmad, N.A., & Yunus, N.A. (2018). Examining the Relationship between Organizational Justice and Job Performance. The International Journal of Academic Research in Business and Social Sciences, 8, 466-477.
Parker, R. J. & Kohlmeyer, J. M. (2005). Organizational Justice and Turnover in Public Accounting Firms: A Research Note. Accounting, organizations and Society, 30(4): 357-369.
Pritchard, R.D. (1969). Equity theory: A review and critique. Organizational Behavior and Human Performance, 4, 176-211.
Rostami, M., Ghasemi, J., & Eskandari, F. (2011). Evaluating the financial performance of banking industry in TSE: applying TOPSIS logic in Data Envelopment Analysis (DEA). Management Accounting, 4(8), 19-30. (in Persian)
Seyyed Javadein, S., Abedi, E., Yazdani, H., & Porvali, B. (2013). Reviewing the Mediating Role of Organizational Trust and Commitment on the Relationship between Organizational Justice and Organizational Citizenship Behaviors. Journal of Business Management, 5(1), 105-118. (in Persian)
Shao, Z., Zhang, L., Li, X., Zhang, R. (2022). Understanding the role of justice perceptions in promoting trust and behavioral intention towards ride-sharing. Electronic Commerce Research and Applications, 51. https://doi.org/10.1016/j.elerap.2022.101119
Soyer, C. R., Balkin, D. B., Fall, A. (2021). Unpacking the effect of autonomous motivation on workplace performance: Engagement and distributive justice matter! European Management Review, 19(1), 138-153.
Thompson, G., Buch, R., Thompson, P.-M. M., Glasø, L. (2021). The impact of transformational leadership and interactional justice on follower performance and organizational commitment in a business context. Journal of General Management, 46(4), 274–283.
Tjahjono, H. K., Fachrunnisa, O., Palupi, M. (2019). Configuration of organisational justice and social capital: Their impact on satisfaction and commitment. International Journal of Business Excellence, 17(3), 336–360.
Törnblom, K., & Kazemi, A. (2015). Distributive justice: Revising past statements and reflecting on future prospects. In Cropanzano, R. & Ambrose, M. L. (Eds.), Oxford handbook of justice in work organizations (pp. 15–50). UK: Oxford University Press.
Walster, E., Walster, G., & Berscheid, E. (1978) Equity: Theory and research. Boston: Allyn & Bacon.
Wang, Y. M., Chin, K. S. (2009). A new approach for the selection of advanced manufacturing technologies: DEA with double frontiers. International Journal of Production Research, 47 (23), 6663-6679.
Wang, Y. M., Luo, Y. (2006). DEA efficiency assessment using ideal and anti-ideal decision making units. Applied Mathematics and Computation, 173 (2), 902-915.
Wang, Y. M., Yang, J. B. (2007). Measuring the performance of decision making units using interval efficiencies. Journal of Computational and Applied Mathematics, 198(1), 253-267.
Weick, K.E. (1966). The concept of equity in the perception of pay. Administrative Science Quarterly, 11,414-439.
Industrial Management Journal
Volume 14, Issue 3
2022
Pages 337-358

Files

Share

How to cite

Statistics