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Conventional procedurevis-à-visbootstrap-based corrections of efficiency analyses

Author

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  • Vipin Valiyattoor
  • Anup Kumar Bhandari

Abstract

Purpose - This paper aims to evaluate the performance of basic metals industry in India and analyze its determinants, using data envelopment analysis (DEA) method. It also intends to compare the results through conventional two-stage and bootstrap-based inferences. Design/methodology/approach - Considering technical efficiency as a measure of performance, this paper specifically investigates whether the participation of a firm in the global market affects its performance. The conventional two-stage procedure is used to test the export intensity and firm performance nexus. The bootstrap-based algorithms (by Simar and Wilson, 2007) are used to correct the bias and serial correlation issues involved in the conventional approach. Findings - The result shows a negative relation between export intensity and firm performance while following the conventional procedure. Even after accounting for serial correlation, the relation remains more or less similar to that of conventional analysis. However, a strong negative relation between export intensity and firm performance is not observed in a more reliable inference obtained after correcting for possible bias as well as serial correlation. Research limitations/implications - This paper is based on cross-sectional analysis, and a more reliable result can be obtained by considering a larger sample and longer period. Originality/value - This paper shows how the conventional two-stage procedure may result in misleading inferences due to bias in the estimation of efficiency scores and the serial correlation during the second stage inferential analysis. This paper also empirically exemplifies how the double bootstrap DEA procedure can overcome these limitations of the conventional two-stage approach.

Suggested Citation

  • Vipin Valiyattoor & Anup Kumar Bhandari, 2020. "Conventional procedurevis-à-visbootstrap-based corrections of efficiency analyses," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 13(3), pages 505-536, February.
  • Handle: RePEc:eme:igdrpp:igdr-04-2019-0035
    DOI: 10.1108/IGDR-04-2019-0035
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    More about this item

    Keywords

    Data envelopment analysis; Firm performance; Export intensity; Manufacturing; Double bootstrap; Growth and development strategies; Trade policy; C14; F14; L25; L61;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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