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Productivity of Czech Small and Medium Entreprises: Lagging Behind Their Potential

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Abstract

This paper analyzes microeconomic production functions of Czech small medium enterprises. We use the data from 2002 to 2005 of thirty manufacturing industries (agriculture and services are not included), each divided into five subgroups according to the number of employees. We employ stochastic frontier analysis (SFA) to make statistical inference on the production process. Our results demonstrate that Czech SME depend in their functioning more on labour than on capital. The impact of investment or intangible assets such as software or patents is negligible. SFA strongly supports the presence of a systematic gap between common practice and best practice: the majority of firms significantly differ from top performers. Finally a simple test for time effect shows that between 2003 and 2005 Czech SME moved towards higher efficiency.

Suggested Citation

  • Jan Průša, 2008. "Productivity of Czech Small and Medium Entreprises: Lagging Behind Their Potential," Working Papers IES 2008/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2008.
  • Handle: RePEc:fau:wpaper:wp2008_32
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    File URL: http://ies.fsv.cuni.cz/default/file/download/id/9548
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    References listed on IDEAS

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    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, pages 777-795.
    2. Jeffery Carpenter & Samuel Bowles & Herbert Gintis, 2006. "Mutual Monitoring in Teams: Theory and Experimental Evidence on the Importance of Reciprocity," Middlebury College Working Paper Series 0608, Middlebury College, Department of Economics.
    3. Bohn, Henning, 1987. "Monitoring multiple agents : The role of hierarchies," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 279-305, June.
    4. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
    5. Robert Axtell, 1999. "The Emergence of Firms in a Population of Agents," Working Papers 99-03-019, Santa Fe Institute.
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    More about this item

    Keywords

    production; efficiency measurement; stochastic frontier analysis; small and medium enterprises;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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