Solving the puzzles of structural efficiency

Li, Sung Ko; Cheng, Yuk Shing

doi:10.1016/j.ejor.2006.05.010

Cited by 41 publications

(14 citation statements)

References 7 publications

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“…The estimates of technical efficiency are weighted by the share of the individual output (sales in our case) of total output in the group of foreign and domestic firms (see Li and Cheng (2007) for further details on the interpretation of weighted means). Column (5) in Table 3 shows that domestic firms in the sample obtain higher efficiency scores than their foreign counterparts in six out of 10 industries.…”

Section: First Stage: Efficiency Resultsmentioning

confidence: 99%

Foreign presence and efficiency in transition economies

Kravtsova

2007

J Prod Anal

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This paper presents empirical evidence on the role of foreign presence in the performance of domestic manufacturing firms in five Central and Eastern European countries. Data Envelopment Analysis (DEA) was used to estimate a frontier for each sector with similar technology common for five transition countries in the sampleBulgaria, Estonia, Hungary, Poland and Romania. Following Simar and Wilson (J Econom 136(1): 2007), this study applies a truncated regression and bootstrap technique in a second stage post-DEA analysis. Some evidence is found to support the hypothesis that foreign presence has an overall positive spillover effects on the performance of domestic firms.At the outset of the transition from the planned to the market economy the hope was that foreign direct investment (FDI) would improve economic outcomes in Central and Eastern Europe both directly and indirectly. Given the relatively low levels of domestic investment and weak marketing capabilities of most transition economies, FDI was expected to boost economic growth and employment by accelerating investment, transferring new technologies and bringing up-to-date organizational and marketing skills to the host economies. It has been difficult, however, for researchers to evaluate whether such expectations have been borne out by experience. Studies on the impact of FDI have employed various econometric techniques and yielded mixed results.Following Hirschberg and Lloyd's (2002) criticisms of the parametric methods traditionally used to measure the indirect impact of FDI empirically, a non-parametric technique, Data Envelopment Analysis (DEA), is used in this paper to compute a single efficiency score for each observation. Additionally, we apply a methodological alternative in the post-DEA analysis developed by Simar and Wilson (2007). Truncated regression is used in combination with a bootstrap procedure to estimate confidence intervals in a test for various intra-industry spillover effects in this study.Foreign firms are found to be more scale efficient than domestic firms, but there is no strong evidence that foreign firms are more technically efficient than their domestic counterparts. Thus, the average technical efficiency of foreign firms is found to be higher than the average efficiency of their domestic counterparts only in four out of ten sectors. This fact provides some support to the existing argument that foreign firms are not automatically more efficient than domestic firms but that they are guided by the economic environment in which they operate. Therefore, in the second stage of the analysis some environmental characteristics have been identified.In this study, foreign firms are found to be more efficient than domestic counterparts in Hungary and Poland and less efficient in Bulgaria, Romania and Estonia. These findings arguably reflect some differences in local economic conditions. Furthermore, the results of post-DEA analysis 123J Prod Anal (2008) 29:91-102 DOI 10.1007 suggest an overall positive effect from foreign pre...

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Section: First Stage: Efficiency Resultsmentioning

confidence: 99%

Foreign presence and efficiency in transition economies

Kravtsova

2007

J Prod Anal

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“…We therefore propose to operationalize the efficiency prices by resorting to the shadow prices, applying the insights of Sections 2.3-2.5. Li and Ng (1995), Ylvinger (2000), Kuosmanen et al (2006) and Li and Cheng (2007) have shown how cost and revenue efficiency of the industry can be measured by means of shadow prices. Briec et al (2003) consider a similar approach to construct a lower bound for industry's allocative inefficiency based on quantity data.…”

Section: Generalmentioning

confidence: 99%

Firm and industry level profit efficiency analysis using absolute and uniform shadow prices

Kuosmanen

Kortelainen

Sipiläinen

et al. 2010

European Journal of Operational Research

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“…APU was defined by F. R. Førsund and L. Hjalmarsson (1974) as a decision making unit (DMU) possessing average input/output quantities over a certain group of DMUs. Accordingly, S. K. Li and Y. S. Cheng (2007) addressed the issues of the meaning of structural efficiency, efficiency of the APU, and differences between average efficiency and efficiency of the APU. In addition, R. Färe and V. Zelenyuk (2003) discussed calculation of the aggregate efficiency.…”

Section: Introductionmentioning

confidence: 99%

Structural efficiency in Lithuanian family farms

Baležentis¹

2015

Management Theory and Studies for Rural Business and Infrastructure Development

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Along with firm-specific technical inefficiency, sector-specific structural inefficiency might induce losses in productivity. This paper therefore aims to identify the trends in structural efficiency in Lithuanian family farms. Specifically, the four farming types are considered, namely cereal farming, field cropping, dairying, and mixed farming. Farm-level data from Farm Accountancy Data Network are used for the analysis. The research period spans over the years 2004–2011. The trends in technical and scale efficiency are presented. Furthermore, the prevailing returns to scale are discussed thus offering insights into the most productive scale size and deviations from it in Lithuanian family farms. Finally, the dynamics in structural efficiency are discussed. The results indicate that the aggregate output of certain farming types could be augmented by some 20–25% due to reallocation of inputs among farms. Anyway, technical inefficiency remains the major driver of structural inefficiency.

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Solving the puzzles of structural efficiency

Cited by 41 publications

References 7 publications

Foreign presence and efficiency in transition economies

Foreign presence and efficiency in transition economies

Firm and industry level profit efficiency analysis using absolute and uniform shadow prices

Structural efficiency in Lithuanian family farms

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