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Microenterprise Origins and Efficiency in Mexico

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Author Info

  • Rafael Otero

    (Department of Finance and Economics, The University of Texas at Brownsville, U.S.A.)

  • José Pagán

    (Center for Health Innovation, The New York Academy of Medicine, U.S.A.)

  • Steve Lovett

    (Department of Management and Marketing, The University of Texas at Brownsville, U.S.A.)

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    Abstract

    This study focuses on the technical efficiency of microenterprises. We use data from Mexico’s National Survey of Microenterprises to estimate a stochastic frontier production model, and we find that the reason the owner started the business is significant in explaining variations in the levels of technical efficiency. Those who inherited the business or started it because of family tradition initially ran more efficient operations. These owners may have benefited from better knowledge and contacts. Over time, however, those who started their businesses to increased their income or, because they could not find a job, became more efficient. We argue that these owners benefited from greater motivation to be successful.

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    Bibliographic Info

    Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

    Volume (Year): 12 (2013)
    Issue (Month): 1 (June)
    Pages: 73-83

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    Handle: RePEc:ijb:journl:v:12:y:2013:i:1:p:73-83

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    Postal: 100 Wenhwa Road, Seatwen, Taichung
    Web page: http://www.ijbe.org/
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    Related research

    Keywords: microenterprises; technical efficiency; ENAMIN; Mexico;

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    References

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    1. Mixon, Franklin G, Jr, 1993. "Estimating Learning Curves in Economics: Evidence from Aerial Combat over the Third Reich," Kyklos, Wiley Blackwell, vol. 46(3), pages 411-19.
    2. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    4. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
    5. 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.
    6. 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.
    7. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 2000. "Working hard for the money? Efficiency wages and worker effort," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 351-385, August.
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