Technical efficiency and its determinants factors in Spanish textiles industry (2002-2009)

Abstract

Purpose – The purpose of this paper is to provide new evidence about the technical efficiency and its determinants in Spanish textile sector during the period 2002-2009. The empirical results suggest that the effects of trade liberalization have led to higher levels of inefficiency in the Spanish sector, due to the lack of flexibility of firms to adjust to the environment, and perhaps to aggressive competition with fuzzy rules of the game. Controlling for specific factor like age, intensity of capital, salary by worker, regions and market share, the authors have obtained that the interaction between market share and size indicates that as firms have more size are also more inefficient. Design/methodology/approach – In this paper, the stochastic frontier production function is considered, specifically, a panel data version of Battese and Coelli (1995), in which the technical inefficiency is estimated from the stochastic frontier and simultaneously explained by a set of variables. This approach avoids the inconsistency problems of the two-stage approach used in other empirical works when analyzing the inefficiency determinants. Findings – This work provides new evidence about the technical efficiency and its determinants can be due to environmental or firm-specific factors in Spanish textile sector during the period 2002-2009. The authors have estimated the Cobb-Douglass stochastic production frontier following Battese and Coelli (1995) model to analyze an unbalanced panel. Originality/value – The empirical results suggest that the trend of the inefficiency shows a curvilinear behavior in the form of U (turning point third-quarter of 2004). This result is related to the efficiency analysis through Kernel distributions (in static and dynamic form) confirmed a clear process of divergence. In the period 2002-2005 the efficiency of the firms analyzed maintained higher levels than the 2005-2009 period where there is deterioration. This may be related to the increased competition due to the end of the Multi-Fiber Arrangement in January 2005 and the entry of Chinese products in 2004.

Moderation of directors' education on board busyness-firm efficiency

“…The technical efficiency (TE) of a firm is typically decomposed into two components: pure technical efficiency (PTE) and scale efficiency (SE) (Coelli et al , 1998). Throughout the years, a stream of literature has examined firm efficiency based on the TE concept by employing parametric and non-parametric methods, but mostly in the single nation context [see, for instance Mandal and Ghosh Dastidar (2014); De Jorge-Moreno and Rojas Carrasco (2015); Demirbag et al (2016)]. Meanwhile, very few studies including Jarboui et al (2013); Jarboui et al (2014); Kinda et al (2014) and Tan et al (2019) have investigated firm efficiency in a cross-country context by documenting the findings of the different levels of firm efficiency between developed and developing countries.…”

Intra-industry efficiency analysis of Indian textile industry: a meta-frontier DEA approach

“…Notwithstanding, a substantial body of literature has analysed and studied the technical efficiencies of diverse range of industries all over the world using either DEA or SFA. For instance Pitt and Lee (1981); Goldar (1985); Neogi and Ghosh (1994); Ramaswamy (1994); Chandra et al (1998); Sahoo et al (1999); Jaforullah (1999); Lall and Rodrigo (2001); Sahoo and Mohapatra (2001); Rao et al (2003); Krishna (2004); Sahoo (2004); Nikaido (2004); Mukherjee and Ray (2005); Tone and Sahoo (2005); Sengupta and Sahoo (2006); Bhandari and Maiti (2007); Sahoo and Acharya (2007); Sahoo (2007, 2008); Das et al (2009); Mulwa et al (2009); Sahoo and Tone (2009a, 2009b); Bhandari and Ray (2012); Sahoo et al (2012); Mehdiloozad et al (2014); Sahoo et al (2014); Jorge-Moreno and Carrasco (2015); Goyal et al (2017) are some of the studies that have examined the technical efficiencies using DEA or SFA in various industries.…”

“…They also highlighted that newer firms were much more efficient as compared to their older counterparts. Recently Jorge-Moreno and Carrasco (2015) undertook a study on the technical efficiency in the Spanish textile industry during 2002-2009. Here also the researchers used Cobb-Douglas functional form of SFA and highlighted that the firms in the industry were becoming inefficient due to inflexibility on the part of the firms to cope up with the dynamic global environment.…”

Credit constraint and intra-country production reorganization – Evidence from the unorganized textile industry in Maharashtra

“…2. In a different context, a study of the Spanish textile sector suggested that the effects of trade liberalization have led to higher levels of inefficiency in the Spanish sector, due to the lack of flexibility of firms and perhaps to aggressive competition (Jorge-Moreno and Carrasco, 2015).…”