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This paper estimates profit efficiency and its determinants in small and medium-sized manufacturing enterprises in Spain. The stochastic frontier methodology and the model proposed by Battese and Coelli (1995) were used to determine the impact of the technological and environmental differences between these companies on their efficiency. The results indicate that the average profit efficiency of food SMEs is 49.37%. The results also reveal that company size, export orientation, government assistance and labour productivity are all positively related to the efficiency of food SMEs; age, however, is negatively related. Finally, the strategic implications of these findings are discussed.

The present study measured profit efficiency and its determinants in the hotel sector in Spain from 2010 to 2014, using a Bayesian stochastic frontier approach. This model provides estimates of efficiency and more accurate confidence intervals than the traditional frequentist approach. The results revealed that the hotels are operating with significant profit inefficiencies. These inefficiencies are significantly affected by size, location, occupancy rate by region, customer satisfaction, and whether the hotel is affiliated or independent. Finally, the study points out the strategic implications of these findings, to improve the efficiency of the hotels.

This article focuses on estimating and discussing cost and profit efficiencies related with the Spanish hotel sector. Managers have a special interest in controlling costs as a source of competitive advantage, which may enable companies to improve their results in a continuous manner. However, they usually do not attribute much importance to the improvement of profit efficiency, which is generally much lower than cost efficiency and as a result vital for achieving competitive advantage. In this article, cost and profit efficiencies are estimated in the Spanish hotel sector using a data panel for the years 2007 to 2011 and using distribution free approach methodology. The results show profit efficiency levels significantly lower than levels of cost efficiency, thereby confirming our working hypothesis.

This study employs a stochastic frontier model to estimate cost efficiency and its determinants in the hotel industry in Spain between 2008 and 2012. Measuring cost efficiency provides useful information on the performance of hotels to management, shareholders and, in general, to all stakeholders. Cost control is an issue managers are particularly concerned about, as it gives a competitive advantage that allows hotels to perform better. The results indicate that the inefficiency in average costs for the sample considered is 32.44% and is time invariant. The results also show that labour productivity, the accumulation of knowledge and location are factors that largely determine the differences in efficiency between hotels. These findings have important implications for public policymakers and hotel management, specifically, policies aimed at improving the skills of hotels’ human resources should be encouraged. Likewise, both location and the accumulation of knowledge are strategic resources that hotel management must include in their competitive strategies to increase efficiency.