This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

What Determines the Technical Efficiency of a Firm? The Importance of Industry, Location, and Size

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Oleg Badunenko () (European University Viadrina Frankfurt (Oder), Germany)
Michael Fritsch () (University of Jena, Faculty of Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin))
Andreas Stephan (European University Viadrina Frankfurt (Oder) and the German Institute for Economic Research (DIW Berlin))

Additional information is available for the following registered author(s):

Abstract

This paper investigates the factors that explain the level of technical efficiency of a firm. In our empirical analysis, we use a unique sample of about 35,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2004. We estimate the technical efficiency of the firms and relate it to firm- and industry-specific characteristics. One third of the explanatory power is due to industry effects. Size accounts for another 25 percent and the headquarters? location explains ten percent of the variation in efficiency. Most other firm characteristics such as ownership structure, legal form, age of the firm and outsourcing activities have an extremely small explanatory power. R&D activity does not exert any positive influence on technical efficiency.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.wiwi.uni-jena.de/Papers/wp-sw3306.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät in its series Jenaer Schriften zur Wirtschaftswissenschaft with number 33/2006.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 06 Nov 2006
Date of revision:
Handle: RePEc:jen:jenasw:2006-33

Contact details of provider:
Web page: http://www.wiwi.uni-jena.de/

Order Information:
Postal: If a paper is not downloadable, please contact the author(s) or the library of University of Jena, not the archive maintainer.

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords: Frontier analysis; determinants of technical efficiency; firm performance; industry effects; regional effects.;

Other versions of this item:

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March. [Downloadable!] (restricted)
  2. Albach, Horst, 1980. "Average and Best-Practice Production Functions in German Industry," Journal of Industrial Economics, Blackwell Publishing, vol. 29(1), pages 55-70, September. [Downloadable!] (restricted)
  3. Michael Funke & Joerg Rahn, 2000. "How Efficient is the East German Economy? An Exploration With Micro Data," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Andrei Shleifer, 1998. "State Versus Private Ownership," NBER Working Papers 6665, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May. [Downloadable!] (restricted)
  6. William H. Greene, 1993. "Frontier Production Functions," Working Papers 93-20, New York University, Leonard N. Stern School of Business, Department of Economics.
  7. Anna Bottasso & Alessandro Sembenelli, 2004. "Does ownership affect firms’ efficiency? Panel data evidence on Italy," Empirical Economics, Springer, vol. 29(4), pages 769-786, December. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. Helpman, Elhanan, 1992. "Endogenous macroeconomic growth theory," European Economic Review, Elsevier, vol. 36(2-3), pages 237-267, April. [Downloadable!] (restricted)
    Other versions:
  11. Michael Fritsch & Andreas Stephan, 2004. "What Causes Cross-Industry Differences of Technical Efficiency?: An Empirical Investigation," Discussion Papers of DIW Berlin 457, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  12. Patricia Beeson & Stephen Husted, 1986. "Patterns and determinants of inefficiency in state manufacturing," Working Paper 8603, Federal Reserve Bank of Cleveland. [Downloadable!]
  13. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-51, June. [Downloadable!] (restricted)
    Other versions:
  14. Funke, M. & Strulik, H., 1999. "Growth and Convergence in a Two-Region Model of Unified Germany," Electronic-Only (EO) Working Papers 9905, Faculty of Economics, University of Cambridge. [Downloadable!]
    Other versions:
  15. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June. [Downloadable!] (restricted)
  16. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Blackwell Publishing, vol. 17(1), pages 79-112, February. [Downloadable!] (restricted)
    Other versions:
  17. Sickles, Robin C., 2005. "Panel estimators and the identification of firm-specific efficiency levels in parametric, semiparametric and nonparametric settings," Journal of Econometrics, Elsevier, vol. 126(2), pages 305-334, June. [Downloadable!] (restricted)
  18. Cubbin, John & Geroski, Paul A, 1987. "The Convergence of Profits in the Long Run: Inter-firm and Inter-industry Comparisons," Journal of Industrial Economics, Blackwell Publishing, vol. 35(4), pages 427-42, June. [Downloadable!] (restricted)
  19. Caves, Richard E., 1989. "International differences in industrial organization," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 21, pages 1225-1250 Elsevier. [Downloadable!] (restricted)
  20. Alvarez, Roberto & Crespi, Gustavo, 2003. " Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-44, May. [Downloadable!] (restricted)
  21. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  22. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March. [Downloadable!] (restricted)
    Other versions:
  23. Frank Siebern, 2000. "Growth and Convergence in a Two-Region Model of Unified Germany," German Economic Review, Blackwell Publishing, vol. 1(3), pages 363-384, 08. [Downloadable!] (restricted)
  24. Schmidt, Peter & Lin, Tsai-Fen, 1984. "Simple tests of alternative specifications in stochastic frontier models," Journal of Econometrics, Elsevier, vol. 24(3), pages 349-361, March. [Downloadable!] (restricted)
  25. Dirk Czarnitzki, 2005. "The Extent and Evolution of Productivity Deficiency in Eastern Germany," Journal of Productivity Analysis, Springer, vol. 24(2), pages 211-231, October. [Downloadable!] (restricted)
  26. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-74, October.
  27. Peter Schmidt, 1985. "Frontier production functions," Econometric Reviews, Taylor and Francis Journals, vol. 4(2), pages 289-328. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Seethamma Natarajan, Rajesh Raj S.N., 2007. "Technical Efficiency in the Informal Manufacturing Enterprises: Firm level evidence from an Indian state," MPRA Paper 7816, University Library of Munich, Germany. [Downloadable!]
Statistics
Access and download statistics

Did you know? Want to help out with this project? Look for volunteer opportunities.

This page was last updated on 2009-11-10.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.