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A two-stage process for explaining the relative efficiency of small and medium-size firms in Chile

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  • José O. Maldifassi
  • Agustín De la Cuesta W.

Abstract

The objective of this study is the identification of the organisational characteristics that could help explain the reasons behind the relative efficiency of small and medium firms in Chile. This is achieved first by discriminating the efficient firms from the inefficient ones using the data envelopment analysis (DEA) technique, and second, using contingency tables for identifying the organisational characteristics that discriminate the efficient units from the inefficient ones. The analysis utilises data of 500 firms located in the Valparaiso Region, separated by size, economic activity, number of workers, and other qualitative and quantitative attributes. The profile of efficient small and medium firms that statistically emerged from the study is: large sales volume together with small amounts of purchases and expenses - this implies high value added to what they sell -, low levels of fixed assets and depreciation - they rent what they need instead of purchasing it -, higher salaries are paid to a workforce that is smaller, better qualified and more productive.

Suggested Citation

  • José O. Maldifassi & Agustín De la Cuesta W., 2016. "A two-stage process for explaining the relative efficiency of small and medium-size firms in Chile," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 20(1/2), pages 99-116.
  • Handle: RePEc:ids:ijeima:v:20:y:2016:i:1/2:p:99-116
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    References listed on IDEAS

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    1. Laurens Cherchye & Timo Kuosmanen & Thierry Post, 2000. "New Tools for Dealing with Errors-in-Variables in DEA," Public Economics Working Paper Series ces0006, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    2. Jose O. Maldifassi, 2001. "Entrepreneurship and innovation in Chilean firms: an exploratory study," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 1(1), pages 73-95.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Christian Cancino & Claudio Bonilla & Marcos Vergara, 2016. "The impact of government support programs for the development of businesses in Chile," Serie Working Papers 28, Universidad del Desarrollo, School of Business and Economics.
    5. Erol Taymaz, 2005. "Are Small Firms Really Less Productive?," Small Business Economics, Springer, vol. 25(5), pages 429-445, December.
    6. Jose O. Maldifassi & Manuel A. Rodriguez, 2005. "The impact of technology assets on small firms' productivity: empirical findings in Chile," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 7(2), pages 191-207.
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