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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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    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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