Yampolskiy computer engineering and computer science university of louisville, usa roman. Leibenstein insisted that absent strong competitive pressure, firms are unlikely to use their resources efficiently, and he suggested that xefficiency is pervasive. Empirical analysis of efficiency of community banks in tanzania. The concept of xinefficiency was introduced by harvey leibenstein. He faces losing his home and has decided that now may be the best time for him to go back to school and work towards his masters degree. The xefficiency theory is a theory developed by harvey leibenstein 1994. This paper deals with the xefficiency theory and its influence on organizations. The concepts of xinefficiency were introduced by harvey leibenstein. The fundamental proposition of leibensteins xefficiency theory is maximisingnon. The xefficiency theory originated from a series of leibensteins papers of 1966, 1975. Publication date 1960 topics economics, industrial organization. Leibensteins xefficiency theory offers a view of productivity that differs from traditional. In the then conventional wisdom the only form of inefficiency was allocative.
It occurs when technicalefficiency is not being achieved due to a lack of competitive pressure. Thus what appears as inefficiency to leibenstein is evidence of an. According to the neoclassical theory of economics, under perfect. Rather than taking sides with a certain type of entrepreneurial activity, leibenstein considers two sides, what he calls routine entrepreneurship welldefined. Xinefficiency is the difference between efficient behavior of firms assumed or implied by economic theory and their observed behavior in practice. Xefficiency society for the advancement of behavioral economics. Leibenstein proposed the concept of xefficiency in a 1966 paper titled. Each of these hypotheses is suggested by economic theory, and may or may not be refuted. Xinefficiency is the divergence of a firms observed behavior in practice, influenced by a lack of competitive pressure, from efficient behavior assumed or implied by economic theory. X efficiency theory entrepreneurship economics scribd.
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