nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2012‒03‒28
eleven papers chosen by
Angelo Zago
University of Verona

  1. Productivity change using growth accounting and frontier-based approaches – Evidence from a Monte Carlo analysis By Giraleas, Dimitris; Emrouznejad , Ali; Thanassoulis, Emmanuel
  2. Efficiency of Commercial Banks in Sub-Saharan Africa: A Comparative Analysis of Domestic and Foreign Banks By Kiyota, Hiroyuki
  3. Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework By Zschille, Michael
  4. Technological Change, Trade in Intermediates and the Joint Impact on Productivity By Bøler, Esther Ann; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
  5. Innovation vs imitation and the evolution of productivity distributions By König, Michael; Lorenz, Jan; Zilibotti, Fabrizio
  6. X-Efficiency of Innovation Processes: Evaluation Based on Data Envelopment Analysis By Rahobisoa Herimalala; Olivier Gaussens
  7. University Technology Transfer: How (in-)efficient are French universities? By Claudia Curi; Cinzia Daraio; Maria Patrick Llerena
  8. The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India.s Cities? By Sridhar, Kala Seetharam
  9. Firm growth and productivity in Belarus : new empirical evidence from the machine building industry By Cuaresma, Jesus Crespo; Oberhofer, Harald; Vincelette, Gallina A.
  10. Can governments do it better? Merger mania and hospital outcomes in the English NHS By Gaynor, Martin; Laudicella, Mauro; Propper, Carol
  11. Born global firms – do they perform differently? By Halldin, Torbjörn

  1. By: Giraleas, Dimitris; Emrouznejad , Ali; Thanassoulis, Emmanuel
    Abstract: This study presents some quantitative evidence from a number of simulation experiments on the accuracy of the productivity growth estimates derived from growth accounting (GA) and frontier-based methods (namely Data envelopment Analysis-, Corrected ordinary least squares-, and Stochastic Frontier Analysis-based Malmquist indices) under various conditions. These include the presence of technical inefficiency, measurement error, misspecification of the production function (for the GA and parametric approaches) and increased input and price volatility from one period to the next. The study finds that the frontier-based methods usually outperform GA, but the overall performance varies by experiment. Parametric approaches generally perform best when there is no functional form misspecification, but their accuracy greatly diminishes otherwise. The results also show that the deterministic approaches perform adequately even under conditions of (modest) measurement error and when measurement error becomes larger, the accuracy of all approaches (including stochastic approaches) deteriorates rapidly, to the point that their estimates could be considered unreliable for policy purposes.
    Keywords: Data envelopment analysis; Productivity and competitiveness; Simulation; Stochastic Frontier Analysis; Growth accounting
    JEL: O47 C15 D24
    Date: 2011–07
  2. By: Kiyota, Hiroyuki
    Abstract: Utilizing the stochastic frontier approach, this study conducts a comparative analysis of profit efficiency and cost inefficiency of commercial banks operating in 29 sub-Saharan African (SSA) countries by bank ownership (domestic bank, SSA foreign bank or non-SSA foreign bank), as well as by the bank size during 2000-07. Tobit regressions are employed to assess the impact of environmental factors on the efficiency of commercial banks. The key findings of this empirical analysis suggest that foreign banks tend to outperform domestic banks in terms of profit efficiency. In terms of efficiency by bank size, the smaller the bank, the more profit efficient the bank will be; medium or relatively large banks tend to be the most cost efficient.
    Keywords: banking, stochastic frontier, Tobit regression, Africa
    Date: 2011
  3. By: Zschille, Michael
    Abstract: The German potable water supply industry is regarded as being highly fragmented, thus inhibiting high potentials for efficiency improvements through consolidation. Focusing on a hypothetical restructuring of the industry, we apply Data Envelopment Analysis (DEA) to analyze the potential efficiency gains from mergers between water utilities at the county level. A conditional efficiency framework is used to account for the operating environment. Highest efficiency improvement potentials turn out to result from reducing individual inefficiencies. The majority of the 84 merger cases is characterized by merger gains, which are decomposed into a technical efficiency effect, a harmony effect and a scale effect. The results suggest to improve incentives for efficient operations in water supply and a consolidation of the industry structure.
    Keywords: conditional efficiency; data envelopment analysis; horizontal integration; nonparametic estimation; water supply
    JEL: C14 L22 L25 L95
    Date: 2012–01
  4. By: Bøler, Esther Ann; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
    Abstract: This paper examines the interdependence between innovation and imports of intermediates, and their joint impact on productivity. We do so by developing a quantitative model with heterogeneous firms and international trade where firms can invest in R&D and source inputs internationally. Innovating firms on average become more productive, thereby enabling them to cover the fixed costs of sourcing foreign inputs, which in turn also has a benign impact on measured productivity. Using Norwegian firm-level data on R&D and trade in intermediates, we structurally estimate the model and find that both imports and R&D investment play a key role in explaining firm-level productivity growth. Moreover, the estimated returns to R&D are significantly lower after controlling for the complementarity between R&D investments and imports. We exploit the introduction of an R&D tax credit scheme in Norway in 2002, which lowered the marginal cost of R&D substantially. The estimated structural model can explain most of the observed increase in trade in intermediates as more firms started to innovate, underscoring the quantitative importance of our theoretical mechanism. Moreover, one fifth of measured productivity growth among new innovators came from increased foreign sourcing, rather than technology upgrading, illustrating how trade can amplify productivity gains. An implication of our work is that lower input trade barriers promote technological change. Hence, our work offers a new mechanism through which imports increase productivity, which may help explain why a number of studies find firm-level productivity gains associated with input trade liberalization.
    Keywords: Imports; innovation; intermediate inputs; productivity; R&D
    JEL: F10 F12 F14 O30 O33
    Date: 2012–03
  5. By: König, Michael; Lorenz, Jan; Zilibotti, Fabrizio
    Abstract: We develop a tractable dynamic model of productivity growth and technology spillovers that is consistent with the emergence of real world empirical productivity distributions. Firms can improve productivity by engaging in in-house R&D, or alternatively, by trying to imitate other firms’ technologies subject to limits to their absorptive capacities. The outcome of both strategies is stochastic. The choice between in-house R&D and imitation is endogenous, and based on firms’ profit maximization motive. Firms closer to the technological frontier have less imitation opportunities, and tend to choose more often in-house R&D, consistent with the empirical evidence. The equilibrium choice leads to balanced growth featuring persistent productivity differences even when starting from ex-ante identical firms. The long run productivity distribution can be described as a traveling wave with tails following Zipf’s law as it can be observed in the empirical data. Idiosyncratic shocks to firms’ productivities of R&D reduce inequality, but also lead to lower aggregate productivity and industry performance.
    Keywords: absorptive capacity; growth; innovation; productivity difference; quality ladder; spillovers
    JEL: E10 O40
    Date: 2012–02
  6. By: Rahobisoa Herimalala (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211); Olivier Gaussens (UFR de sciences économiques et de gestion, Université de Caen Basse-Normandie, CREM-CNRS, UMR 6211)
    Abstract: Innovation in small and medium-sized enterprises (SMEs) is a source of regional development and enables enterprises to improve their competitiveness. However, the intensification of innovation effort depends upon a better understanding of the innovation process, in particular the assessment of its innovation capacity to process its resources and various activities in efficient manner into better results. This paper deals with innovation process modeling and innovation measurement, in order to provide answers to these recurrent questions of the entrepreneurs in these SMEs. Thus, first we propose a model of innovation process as a collective design process that involves the interplay of two categories of activities, such as exploratory activities and value oriented activities, centered on the entrepreneur. Then from this model, we evaluate: (a) the innovation capacity from the process activities and too the outputs of innovation process; (b) the X-(in)efficiency using multiobjective (MOLP) data envelopment analysis (DEA) model of innovation processes. Through MOLP-DEA method, we decompose the X-inefficiency in technical inefficiency and congestion to highlighting the miss-use or the under-utilization of innovation capacity, as resources of process. Finally we measure X-inefficiency by an overall index taking into account of all aspects of inefficiency as the enhanced DEA Russell graph efficiency measure. For the empirical analysis, we use the data from a representative random sample formed by 80 innovative enterprises of regional SMEs of Normandy in France. The results show that most of innovation processes are X-inefficient in SMEs of Normandy. This X-inefficiency is more characterized by the congestion problem than the technical inefficiency. That shows the difficulties of some entrepreneurs to implement the rules and standards of interplay between some activities.
    Keywords: Innovation Process, X-Efficiency, Multiobjective Linear Programming, Data Envelopment Analysis, Russell measure
    JEL: C61
    Date: 2012–03
  7. By: Claudia Curi (Banque Centrale du Luxembourg); Cinzia Daraio (Dipartimento di Informatica e Sistemistica "Antonio Ruberti" Sapienza, Universita' di Roma); Maria Patrick Llerena (University of Strasbourg, BETA (Bureau d'Economie Théorique et Appliquée))
    Abstract: This paper presents the first assessment of the efficiency of the technology transfer operated by the French university system and its main determinants. The analysis is based on a detailed and original database of 51 TTOs, categorized by type of university they belong to, over the period 2003-2007. Overall, we find a low level of efficiency and both intra-category and inter-categories efficiency variation. The analysis of determinants showed that French TTOs efficiency depends extensively on the nature of the category (with universities specialised in science and engineering being the most efficient ones), on institutional and environmental characteristics. We found that both the seniority of TTO and size of the university have a positive effect. In terms of environmental variables, the intensity of R&D activity (both private and public) has a positive impact; however, in terms of growth rate, only the Private R&D activity seems to be the main driver. Lastly, we find that the presence of a university-related hospital is detrimental for the efficiency. An extended discussion of the results within the existing literature is also offered.
    Keywords: Technology Transfer Offices (TTOs), French University System, Technical Efficiency, DEA, Bootstrap, Regional Growth
    Date: 2012
  8. By: Sridhar, Kala Seetharam
    Abstract: In this study an attempt has been made to assess the potential of land as a municipal financing tool in four Indian cities, to enable better public service delivery and attainment of the MDGs. The institutional arrangements for land use are fragmented in India.s cities between the urban development authorities, which are state agencies, and the cities. To determine whether or not transfer of revenues from land to cities from the para-statal entities is justified, stochastic frontier analysis is used to determine the efficiency of Indian cities and the Indian states. The efficiency of service provision is examined taking the case of roads.
    Keywords: land lease, efficiency of cities, India, urban infrastructure finance, stochastic frontier analysis
    Date: 2011
  9. By: Cuaresma, Jesus Crespo; Oberhofer, Harald; Vincelette, Gallina A.
    Abstract: Using a unique dataset comprising information for more than 900 firms in the machine building sector in Belarus, this paper investigates the determinants of firm growth for an economy where state ownership of enterprises is widespread. It uses panel data models based on generalizations of Gibrat's law, total factor productivity estimates and matching methods to assess the differences in firm growth between private and state-owned firms. The results indicate that labor hoarding and soft budget constraints play a particularly important role in explaining differences in performance between these two groups of firms.
    Keywords: Microfinance,Labor Policies,Economic Theory&Research,Economic Growth,Labor Markets
    Date: 2012–03–01
  10. By: Gaynor, Martin; Laudicella, Mauro; Propper, Carol
    Abstract: The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital mergers, arguing that such consolidations will bring improvements for patients. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. Given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals
    Keywords: event study; Hospital mergers; political influence; quality
    JEL: I11 I18 L13 L32
    Date: 2012–02
  11. By: Halldin, Torbjörn (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates whether born global firms perform differently compared to other newly founded manufacturing firms. A rigorous quantitative treatment of born global firms has been absent in the international entrepreneurship literature. The quantitative focus of the paper adds to this literature. To a simple OLS estimation is added a matching approach in order to circumvent the absence of counterfactual for born global firms had they not chosen to pursue a born global strategy. Measuring performance five years after firm foundation, born global firms are found to have higher growth in employment and sales per employee but no such effect is found when performance is measured by profitability or labor productivity. For robustness purposes, similar results are found when the analysis is augmented to include a wider spread of born global firm definitions and having performance measured three to seven years subsequent to firm foundation.
    Keywords: Born global firms; firm performance manufacturing firms
    JEL: F14 L25 L26 M13 M21
    Date: 2012–03–16

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