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Efficiency Variation of Manufacturing Firms: A Case Study of Seafood Processing Firms in Bangladesh

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Author Info

  • Md. Shakil Ahmed

    ()
    (Research and Evaluation Division, BRAC, Bangladesh)

  • M. Daud Ahmed

    ()
    (Faculty of Business, Manukau Institute of Technology, New Zealand)

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    Abstract

    Manufacturing firms in developing countries experience difficulties to deploy total capacity and realize the full potential. This research uses four years? primary data collected from the seafood industry in Bangladesh and analyzes that using stochastic frontier approach and presents an estimation model of the technical efficiency of the seafood processing firms in Bangladesh. It reveals that the industry runs on an average of 80% technical efficiency and has the potentials to increase productivity efficiency. The research also finds that the firms? age and size are the main sources of inefficiency. Smaller and newer firms are comparatively efficient than the larger and older ones. In order to improve production efficiency, large firms need to devise strategies for regular modernization through technological adaptation and modularization of the production units.

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    File URL: http://www.bapress.ca/ref/v3-2/1923-7529-2013-02-45-12.pdf
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    Bibliographic Info

    Article provided by Better Advances Press, Canada in its journal Review of Economics & Finance.

    Volume (Year): 3 (2013)
    Issue (Month): (May)
    Pages: 45-56

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    Handle: RePEc:bap:journl:130204

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    Related research

    Keywords: Stochastic production function; Technical efficiency; Seafood processing firms; Production efficiency factors;

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    References

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    1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    2. Li, Hongbin & Rozelle, Scott, 2000. "Saving or stripping rural industry: an analysis of privatization and efficiency in China," Agricultural Economics, Blackwell, vol. 23(3), pages 241-252, September.
    3. Caudill, Steven B & Ford, Jon M & Gropper, Daniel M, 1995. "Frontier Estimation and Firm-Specific Inefficiency Measures in the Presence of Heteroscedasticity," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 105-11, January.
    4. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    5. Tom Kompas & Tuong Nhu Che & R. Quentin Grafton, 2003. "Technical efficiency effects of input controls: evidence from Australia's banana prawn fishery," International and Development Economics Working Papers idec03-3, International and Development Economics.
    6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
    7. Bakht, Zaid & Salimullah, Md. & Yamagata, Tatsufumi & Yunus, Mohammad, 2008. "Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition," IDE Discussion Papers 169, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Derek Jones & Panu Kalmi & Mikko Mäkinen, 2010. "The productivity effects of stock option schemes: evidence from Finnish panel data," Journal of Productivity Analysis, Springer, vol. 33(1), pages 67-80, February.
    9. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-86, July.
    10. Víctor Moreira & Boris Bravo-Ureta, 2010. "Technical efficiency and metatechnology ratios for dairy farms in three southern cone countries: a stochastic meta-frontier model," Journal of Productivity Analysis, Springer, vol. 33(1), pages 33-45, February.
    11. Anup Kumar Bhandari & Pradip Maiti, 2007. "Efficiency of Indian Manufacturing Firms: Textile Industry as a Case Study," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 6(1), pages 71-88, April.
    12. Ruhul A. Salim, 2006. "Measuring Productive Efficiency Incorporating Firms¡¯ Heterogeneity: An Empirical Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 31(1), pages 135-147, June.
    13. Li, Hongbin & Rozelle, Scott, 2000. "Saving or stripping rural industry: an analysis of privatization and efficiency in China," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 23(3), September.
    14. Chavas, Jean-Paul & Aliber, Michael, 1993. "An Analysis Of Economic Efficiency In Agriculture: A Nonparametric Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
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