Knowledge Center

Summary, forum, best practices, expert tips and information sources.

12 items • 37.251 visits



What is X-Efficiency? Meaning.

X-Efficiency is an economic expression for the effectiveness with which an organization uses its given set of inputs to produce outputs. In a theoretical market with perfect competition, there will in general be no X-Inefficiency because if any firm is less efficient than the others it will not make sufficient profits to stay in business in the long term.

X-inefficiency is not the only type of inefficiency in economics. X-inefficiency only looks at the outputs that are produced with given inputs. It does not take account of whether the inputs are the best ones to be using, or whether the outputs are the best ones to be producing. This other last form is referred to as Allocative (Economic) Efficiency.

If a company is producing the maximum output it can given the resources it employs, such as men and machinery, and the best technology available, it is said to be X-Efficient. X-Inefficiency occurs when X-Efficiency is not achieved.

Economic theory assumes that the management of firms act to maximize owners' wealth by minimizing risk and maximizing economic profits -- which is accomplished by simultaneously maximizing revenues and minimizing costs, usually through the adjustment of output. In perfect competition, the free entry and exit of firms tends toward firms producing at the point where price equals long run average costs and long run average costs are minimized.

Special Interest Group

X-Efficiency Special Interest Group.

Special Interest Group (63 members)


Forum about X-Efficiency. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.

Start a new topic about X-Efficiency


🔥 NEW How X-Efficiency Works and an Example
X-Efficiency is an economic expression for the effectiveness of the effort of firms to produce the same output at a lower average cost. It is a form of technical efficiency achieved when less inputs a...
X-Efficiency versus Operational, Economic and Cost Efficiency
What are the differences between X-Efficiency and Operational Efficiency, Economic Efficiency and cost Efficiency?...
History of Efficiency
The principles of efficiency date back to 1776, when Adam Smith wrote his influential book 'An inquiry into the nature and causes of the wealth of nations'. In this book, Smith writes that productive ...
Efficiency or Effectiveness
Efficiency is more important than effectiveness because without efficiency you cannot be effective....

Best Practices

The best, top-rated topics about X-Efficiency. Here you will find the most valuable ideas and practical suggestions.

Expert Tips

Advanced insights about X-Efficiency. Here you will find professional advices by experts.

Information Sources

Various sources of information regarding X-Efficiency. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

Research Links

Jump to further research sources regarding X-Efficiency.








Compare with: Value for Money Audit  |  Scientific Management (Taylorism)

Special Interest Group

Do you know a lot about X-Efficiency? Become our SIG Leader and gain worldwide recognition as an expert.


Return to Management Hub: Finance & Investing  |  Strategy & Innovation  |  Supply Chain & Quality

More on Management  |  Return to Management Dictionary


This ends our X-Efficiency summary and forum.

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2023 12manage - The Executive Fast Track. V16.1 - Last updated: 6-6-2023. All names of their owners.