Iceland, one of the smallest European economies, was hit severely by the 2008-financial crisis. This paper uses a firm-level Community Innovation Survey (CIS) data set to consider the economy in the period preceding the collapse of its financial system. We examine the linkage between the crisis and innovativeness from the perspective of technical efficiency by means of the Data Envelopment Analysis of 204 randomly selected firms. The results suggest that a substantial fraction of the Icelandic firms can be classified as non-efficient in their production process. The production scale of many manufacturing firms is too small to be considered technically efficient, while services firms typically use excessive resources in their production process. A remarkably weak performance in transforming R&D and labor efforts into successful innovations is observed. Based on the empirical results, suitable policy implications are suggested to remedy the inoptimal production structure and help economic recovery.
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Paper provided by Seoul National University, Technology Management, Economics and Policy Program(TEMEP) in its series Discussion Papers with number
200916.
Find related papers by JEL classification: C67 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Input-Output Models D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General L80 - Industrial Organization - - Industry Studies: Services - - - General
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