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Firm size and efficiency in the German mechanical engineering industry

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  • Alexander Schiersch

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Abstract

Research usually finds a positive size-efficiency relationship, but few studies focus on sectors dominated by small and medium-sized firms (SMEs). This paper fills this gap by analyzing this relationship in the German mechanical engineering industry sector, which is both successful and increasingly dominated by SMEs. The analysis, using a large and representative dataset, finds that small and large firms are, on average, the most efficient ones, while medium-sized firms have, on average, the greatest inefficiencies. Thus, the size-efficiency relationship is U-shaped rather than monotonically increasing. Additionally, the analysis finds that companies with active owner(s) are significantly more efficient and that capital firms are less efficient than firms with personally liable owners. Being located in either East or West Germany has no effect. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Alexander Schiersch, 2013. "Firm size and efficiency in the German mechanical engineering industry," Small Business Economics, Springer, vol. 40(2), pages 335-350, February.
  • Handle: RePEc:kap:sbusec:v:40:y:2013:i:2:p:335-350
    DOI: 10.1007/s11187-012-9438-8
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    References listed on IDEAS

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    Cited by:

    1. Fritsch, Michael & Changoluisa, Javier, 2017. "New business formation and the productivity of manufacturing incumbents: Effects and mechanisms," Journal of Business Venturing, Elsevier, vol. 32(3), pages 237-259.

    More about this item

    Keywords

    Efficiency; DEA; Mechanical engineering firms; Germany; C14; L25; L60; L26;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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