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The Most Efficient Czech SME Sectors: An Application of Robust Data Envelopment Analysis

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Abstract

This paper analyzes the efficiency of Czech small and medium-sized enterprises (SMEs). The main focus is on structural analysis of Czech SMEs in manufacturing based on their efficiency. The author uses sectoral data from 2002 to 2005 for 30 manufacturing industries, each divided into five subgroups according to the number of employees. He employs standard and advanced robust data envelopment analysis (DEA) to obtain cross-sectional rankings of individual industries. The results reveal substantial variance in the efficiency scores, variance which is only partly removed by the robust DEA specification. The author found that the majority of sectors operate below full efficiency, with only a few industries belonging to the top performers. The average efficiency lies between 50 and 70 percent of that of the best sectors. He concludes that only a minor proportion of Czech SMEs are able to generate high value added per unit of labor-capital.

Suggested Citation

  • Jan Prusa, 2012. "The Most Efficient Czech SME Sectors: An Application of Robust Data Envelopment Analysis," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(1), pages 44-67, February.
  • Handle: RePEc:fau:fauart:v:62:y:2012:i:1:p:44-67
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    References listed on IDEAS

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    1. Tomáš Jelínek & Ondøej Schneider, 2001. "Czech Social Security and Tax System and Their Impact on the Income Distribution," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 51(12), pages 639-657, December.
    2. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 431-455, September.
    3. Pedersen, Peder J. & Smith, Nina, 2001. "Unemployment Traps: Do Financial Disincentives Matter?," IZA Discussion Papers 274, Institute for the Study of Labor (IZA).
    4. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    5. Ondřej Schneider, 2004. ": Who Pays Taxes and Who Gets Benefits in the Czech Republic," Working Papers IES 68, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2004.
    6. Herwig Immervoll & Pascal Marianna & Marco Mira d'Ercole, 2004. "Benefit Coverage Rates and Household Typologies: Scope and Limitations of Tax-Benefit Indicators," OECD Social, Employment and Migration Working Papers 20, OECD Publishing.
    7. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    8. Giuseppe Carone & Herwig Immervoll & Dominique Paturot & Aino Salomäki, 2004. "Indicators of Unemployment and Low-Wage Traps: Marginal Effective Tax Rates on Employment Incomes," OECD Social, Employment and Migration Working Papers 18, OECD Publishing.
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    10. Zdenek Hrdlicka & Margaret Morgan & David Prušvic & William Tompson & Laura Vartia, 2010. "Further Advancing Pro-growth Tax and Benefit Reform in the Czech Republic," OECD Economics Department Working Papers 758, OECD Publishing.
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    More about this item

    Keywords

    production; efficiency measurement; data envelopment analysis; small and medium-sized enterprises;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General

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