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Microenterprise Origins and Efficiency in Mexico

Author

Listed:
  • Rafael Otero

    (Department of Finance and Economics, The University of Texas at Brownsville, U.S.A.)

  • José Pagán

    (Center for Health Innovation, The New York Academy of Medicine, U.S.A.)

  • Steve Lovett

    (Department of Management and Marketing, The University of Texas at Brownsville, U.S.A.)

Abstract

This study focuses on the technical efficiency of microenterprises. We use data from Mexico’s National Survey of Microenterprises to estimate a stochastic frontier production model, and we find that the reason the owner started the business is significant in explaining variations in the levels of technical efficiency. Those who inherited the business or started it because of family tradition initially ran more efficient operations. These owners may have benefited from better knowledge and contacts. Over time, however, those who started their businesses to increased their income or, because they could not find a job, became more efficient. We argue that these owners benefited from greater motivation to be successful.

Suggested Citation

  • Rafael Otero & José Pagán & Steve Lovett, 2013. "Microenterprise Origins and Efficiency in Mexico," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 12(1), pages 73-83, June.
  • Handle: RePEc:ijb:journl:v:12:y:2013:i:1:p:73-83
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    References listed on IDEAS

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    1. Mixon, Franklin G, Jr, 1993. "Estimating Learning Curves in Economics: Evidence from Aerial Combat over the Third Reich," Kyklos, Wiley Blackwell, vol. 46(3), pages 411-419.
    2. Goldsmith, Arthur H. & Veum, Jonathan R. & Darity, William Jr., 2000. "Working hard for the money? Efficiency wages and worker effort," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 351-385, August.
    3. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    5. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    6. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-286, July.
    7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    Citations

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    Cited by:

    1. Antonio Báez-Morales, 2015. "“Differences in efficiency between Formal and Informal Micro Firms in Mexico”," IREA Working Papers 201516, University of Barcelona, Research Institute of Applied Economics, revised Jun 2015.

    More about this item

    Keywords

    microenterprises; technical efficiency; ENAMIN; Mexico;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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